So how are manufacturers responding to these challenges and are they really employing new technologies in a bid to take advantage of market opportunities? We recently undertook some research of over 220 global manufacturers and found some stark contrasts between those who are forging ahead and those who have yet to recognise the need for change. Whilst many manufacturers are already implementing digital strategies centred on improving the customer experience as a way to grow sales and streamline operations, others are not. 15%, for example, have been using an e-commerce solution for more than five years, but 13% still don’t yet use e-commerce at all.
E-commerce improvements are typically part of a wider digital transformation programme: 68% of manufacturers saw e-commerce as playing a vital or very important role in digital transformation, and a further 20% saw it as playing a somewhat important role. When it comes to rolling out digital transformation, approaches vary widely. 27%, for example, say they want to complete the project in the tightest possible time frame, while 28% are taking a more cautious approach, starting with pilot projects before identifying wider opportunities.
The top reason given for e-commerce adoption by those already up and running was to increase sales volumes (60%). Other important reasons included to offer a 24/7 self-service portal (46%), to improve sales processes (41%), to be able to share all product and price information online (40%), to keep up with competitors (38%), and to drive global export sales (36%).
Those that have implemented e-commerce are reaping the benefits. 91% reported that they started to see a financial return on investment in less than 2 years. 10% saw a return in as little as 1- 2 months, and 21% in 2- 6 months. 88% saw profitability improve by at least 10%, with 9% saying profits had increased by more than 50%.
Other benefits reported include improvements in order process efficiency (89%), an increase in order processing speed (78%), a reduction in order errors (71%), and faster inventory turnover (70%).
Confident that e-commerce is the way ahead, many manufacturers are moving to second generation e-commerce solutions. 38% plan to upgrade within the next year and 36% within the next two years. Only 3% have no plans to upgrade at all.
But upgrading presents a variety of potential challenges. Manufacturers recognise that the success of implementation hinges on the need to upgrade IT infrastructure (85% of respondents) and review security (83%). There are also integration issues such as getting the right and complete customer data into one system (85%), product information not being available in a single system (80%), and availability of real time inventory (80%).
The first step in any successful e-commerce project is certainly to ensure that a solid ERP system is in place, providing a central hub for data and processes. But with the right choice of e-commerce platform, integration issues need not be a concern. Today’s systems allow data to flow seamlessly between ERP hub, webstore and customer. This allows businesses to unlock data tucked away within the ERP software and provide a sophisticated and personalised customer interface offering comprehensive real-time product information.
A further driver for investment in e-commerce is the growth in the range of products being sold over the web. Despite the technical and bespoke nature of many manufactured products, 68% of manufacturing respondents agreed that 100% of the industry’s products will be sold online. This indicates a market readiness, alongside confidence that e-commerce solutions can and will offer the sophistication required to handle even the most complex purchases.
Manufacturers are ready to take advantage of the opportunities that e-commerce provides. And many believe that it can help open up new markets. 71% of manufacturing respondents believe that they will sell direct to the consumer, cutting out wholesalers and retailers, in the future. This is another huge change, disrupting traditional manufacturing marketplaces and supply chains. Forward-thinking manufacturers will need to choose systems that will work successfully in both B2B and B2C markets and, as importantly, be able to make the best use of the data it already has to offer better customer experiences.
The research also revealed that many manufacturers are moving beyond e-commerce and embracing some of the newest technologies. 73% say they use or intend to use artificial intelligence (AI) to enable automated and/or predictive ordering. Similarly, 81% already use or intend to use machine-to-machine communication for automated/predictive ordering.
As customer expectations of online speed and convenience continue to grow and competition ramps up, successful business strategies will increasingly depend on using technology in selling as sophisticated a way as it is used in the manufacturing process itself. It’s clear that manufacturers who accept that the market is changing and respond accordingly will be those best placed to succeed.
