As distribution and manufacturing becomes more complex, more competitive, and more top-heavy, it’s more important than ever to work smarter. Whether that’s shoring up your processes or taking steps to become cheaper and more efficient, there are many potential paths to success.
In two recent blogs exploring the rise of Amazon Business and the best practices to compete, we noted that there were many ways to embrace and evolve your business. While this introduced a variety of ways to compete through partnership and defensive measures, there is another way to thrive, according to a recent whitepaper from NetSuite.
From Product-Centric to Customer-Centric: One Way to Elevate Your Status in Distribution
Manufacturers and wholesale distributors are going through a significant transition from primarily or exclusively selling physical products, to more diverse business models in which they also provide a variety of services. Resulting from the rise of the “outcome economy,” in which customers demand and pay for specific outcomes rather than just products, roles are evolving and so is the relationship with the customer.
The Evolution of Manufacturers and Distributors
While manufacturers were once “make only” organizations and distributors bought and resold those products, recent trends have pointed both of these traditionally product-centric organizations closer and closer to becoming holistic organizations. As manufacturers and distributors offer these richer outcome-based services, they take on more risk and responsibility for the success of their customers in exchange for bigger rewards.
Why and How Business Models are Evolving
As it becomes easier to track data from the products you make (through IoT), use it more effectively (AI and Machine Learning), and optimize the service, more companies are becoming more embedded in their customers lives.
This has pushed creators away from a transaction- or even relationship-based approach and into a world where a firm is a part of the customer’s operations. For example:
- The Rise of IoT: When a product, machine, or system is outfitted with sensors, connectivity, and intelligence, it enables remote monitoring and predictive maintenance which can significantly lower the cost of service, while simultaneously dramatically improving uptime. From here, these sensors can deliver more insights into how a firm can serve its customers better.
- AI and ML Create Predictive Maintenance Opportunities: Imagine pairing the power of IoT with a system that learns. Not only could you receive warnings when something breaks down, your solution could inform you when similar systems may come close to failure, giving you the power to help your customers before they need your help.
- Intelligence Based Maintenance and Optimization: With these two levels embraced, distributors and manufacturers can further use AI/ML to understand their customer’s usage patterns, to help the customer optimize their business. For example, a truck manufacturer might use AI/ML to help the fleet owner improve fuel economy and safety, optimize maintenance, and optimize their load planning.
All of these services give you more visibility, more control, and more ‘embeddedness’ into your customers’ lives, allowing your firm to establish and reinforce its value, even if you can’t compete with Amazon. If you’re looking to learn even more, a recent NetSuite whitepaper explored this topic in much more detail, discussing the risks, opportunities, and first steps that exist when you opt to diversify.
New Guide: How Manufacturers and Distributors Are Diversifying Their Business Models to Gain a Competitive Advantage
In order to secure your product centric business’s spot in the future of manufacturing and distribution, it pays to diversify. While digital transformation may be one part of the equation, it may be worth considering your company’s expansion into a new business model.
A recent report from ChainLink Research titled The Rise of the Multifaceted Business explored just this and is available for free from our friends at NetSuite. This report explored a variety of important topics including the move away from product-only to value-added and how putting yourself closer to customers can bring your business into the outcome economy.
Among the topics discussed in this report:
- What it means to be multifaceted in the outcome economy
- How new technologies are making it easier to discover and embrace new opportunities
- How expansion and evolution will require new people, skillsets, and culture
- Why a platform is such an important requirement for becoming a multifaceted business
Get to Know NetSuite: Meet MIBAR
At MIBAR, we have worked with NetSuite for years to consult, customize, and deliver NetSuite for our ever-growing client base. As one of the leading implementation partners not only in the NetSuite community but in the entire value-added reseller world, we have the experience and expertise to help companies like yours to do more with the resources they have.