Cut Costs, Spur Growth and Rejuvenate the Customer Experience Through Digital Transformation Implementers can enhance customer experiences in the wake of the Covid-19 pandemic.
Opinions expressed by BIZ Experiences contributors are their own.
After a year since the pandemic's beginning, digital transformation (DX) strategies continue to appear near the top of organizations' priority lists, with 92% of PTC's State of Industrial Digital Transformation manufacturing respondents at various stages of their respective digital journeys. Even with some having yet to implement DX into a production environment, it's on their radar.
The pandemic didn't necessarily introduce companies to DX. However, it rapidly accelerated the importance of digital projects seemingly overnight, as 69% of companies' board of directors say the effects of Covid-19 have accelerated digital business initiatives. The inability to interact in person and the disruption to business continuity triumphed other top-of-list strategic pain points, as mindsets shifted from "Adopt DX at my own pace," to "How do I implement DX in today?"
It is unprecedented for any project on an executive's list of priorities to make this overnight jump to the top, and now these digital projects are flourishing in three distinct value areas: cost, growth and customer experience.
Cut costs to model DX for future success
For many, a DX strategy is deployed to better manage and decrease operational costs. With a cost-first approach, adopters can essentially fund the future. This means implementing quick cost-cutting wins to provide a financial foundation to propel future projects.
Building a strong DX foundation through accurately demonstrating the financial value of the program will resonate with senior stakeholders and ensure ongoing commitment. Improving profit margins and other financial statement metrics speaks to the C-Suite – and this group is now leading the vast majority of DX initiatives for manufacturers.
Programs aligned to cost-centric metrics could be underpinned by the Industrial Internet of Things improving the efficiency of production equipment, augmented reality driving productivity gain for the workforce or optimized service operations. Initially targeting one or a few bottlenecks that are creating the greatest compounding costs is typically the starting place of DX initiatives.
DX provides an opportunity to transition from the historical thinking of operating your organization as cost centers to become profit centers, if executed accordingly.
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Spur growth with digital-driven programs
DX not only provides an opportunity to optimize existing processes to drive value, but also spurs novel growth-oriented initiatives.
Product-as-a-Service is one of many emerging business models rolling out where digital is infused into the process to generate alternative revenue streams. Specifically, manufacturers' customers are increasingly paying by the usage of their products instead of typical sales, a method akin to cloud subscription services replacing traditional software licensing.
Digital can transform how these products are delivered and consumed, as well as how they are developed. Engineering and product development teams are increasingly turning to new digital platforms and tools to rapidly introduce new products and expedite their time to market. Reducing design iteration times in these departments, as well as improving their manufacturing processes through increased throughput and reduced cycle times, are a few among many DX benefits for creating products of the future.
Manufacturers will continue to pull these growth levers to differentiate products and services and discount disruptive forces.
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Rejuvenate the customer experience
Customer centricity is becoming a tenant of business globally and manufacturing is not exempt. For global manufacturers, this is especially true; customers are increasingly demanding complex and customized products delivered on time with the latest innovative features and services wrapped into the user experience. Managing this ecosystem from a manufacturer's perspective is extraordinarily complex, but DX can alleviate these forces and drive engaging customer experiences.
Many are looking at maintaining and improving their product quality as a means to improve the customer experience. Consistently creating high-quality customized products with conformity for performance is an attainable goal through digital, reducing important quality metrics including scrap, rework, defects in the field and recalls.
Infusing new digital features or services into existing customer delivery models provides a mechanism to measure and alter their perception of the products. For example, analyzing the customer's actual usage of the product can inform future design iterations, supplier decisions or upsell opportunities.
Manufacturers who accommodate for their customer's current needs and fulfill their future ones can drastically reduce churn and increase loyalty.
Paving the digital path forward
DX is an inescapable topic and pressing market forces have only elevated its importance in the list of corporate initiatives. Now that the digital age is here, it has never been more critical to drive successful projects, which occurs through identifying company pain points across costs, growth and customer experiences.
