[#strategy - 03] Manufacturing like ... services.

Manufacturing and service operations answer different questions and formulate different strategies when it comes to planning and managing the way in which an organization is run.

Manufacturing operations produce tangible goods, which are physical products that can be held and seen. Manufacturers have a standardized way of producing goods. One finished product is generally the same as the next. 

On the other hand, service operations provide certain intangible services that may not be easily identifiable and repeated. Service operations have more opportunities to customize the services they provide and match customers’ needs.

Both sides of the moon face similar issues, when they need to provide competitive prices to customers and still turn a profit. They both forecast demand for products and services and struggle to stay competitive in the marketplace.

The key difference factor is time. When you engage a customer in a potential commercial relationship, the time laps between actual demand and supply can deeply vary.

Recently it has happened to me that manufacturing companies have asked insights on how to get their process along a services like approach. That’s because there is more awareness on the need for developing the capability to get closer, in time and space, to the evolving customers’ demand and the sensitivity to rapidly understand such changing demand. That means (1) finding new ways to hear customers’ voice and (2) turn it into new products.

Here I focus on the second point.

The operational approach which has traditionally been focused on efficiency is often an obstacle to new product development. That’s because, apart from the expectable difficulties related to designing a new product, setting up the production process, integrating with the existing go-to-market or creating a new one, what needs to be overcome is a lot of internal resistance. That comes out of (too) much confidence on (well) performing consolidated processes. It’s a cultural resistance.

If you want to provide you established, manufacturing company with a more agile ability to develop new product, you cannot just claim a rapid and radical revolution. Your company is a rich set of competencies that need to be valued along that new direction. 

Self-providing the ability to rapidly move from an idea to a prototype that can be market-tested on a selected subset of early adopters is key to accelerate the New Product Development process, shorten the distance with customers and, definitely, improve the relationship with them. That means shortening development cycles.

A sustainable approach, in my view, would involve:

• Setting up and internally spreading a common business language on innovation (requirements and needs).
• Establishing a proper “innovation appetite” at top management level, based upon such language.
• Diagnosing own Innovation Maturity model and define a tailor made Roadmap
• Defining a strategic innovation strategy, through the adoption of lean evaluation model for new ideas/business opportunities.
• Providing with the ability to rapidly develop new market proposition in terms of prototypes. Those will allow anticipating the moment you validate such propositions with your customer base and prospects. Such new ideas might very well come from intense and continuous scouting, which can be external and internal. In the latter case, that’s a great way to value the huge capital of competence that lies in the human capital of the company.

DP

Here a few notes on Manufacturing and Services.

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