By Setrag Khoshafian, Ph.D.

Digitization is having a remarkable impact on all industry sectors. Manufacturing in particular is in the midst of a major digital transformation shift often characterized as Industrie 4.0 (aka Industry 4.0 or Smart Manufacturing (especially in the US)).

The transformation of Manufacturing goes beyond the confines of intelligent factories. With smart products, Customers and Business are increasingly “connected.” This “Connectivity” includes of course the Internet of Things (IoT). But it also involves Artificial Intelligence (AI) as well as end-to-end Value Stream digitization and automation. New business models are emerging and transforming – even disrupting – age old Manufacturer-Distributor-Customer Relationships. Connectivity with AI, evolved CRM, and end-to-end Value streams are enabling new opportunities for Innovation – involving the Customer with ever increasing demands for Personalization.

Here are the contributing factors …

• Digital Transformation Technologies:  From the bottom-up technology perspective the Industrial Internet of Things (IIoT), Artificial Intelligence, Three Dimensional (3D) printing, Augmented Reality (AR), Digitization of Value Streams through Digital Transformation (Low Code/No Code) platforms, Robotic Automation, and more recently Blockchain enabled cryptocurrencies, are among the key pillars driving this shift. There are others. Each of these enablers on their own are already having significant impact on Manufacturing. Their combined effect is a formidable digital transformation tsunami that will sweep away those that lag behind and are slow to adapt. Furthermore, digitization is enabling a shift from isolated and siloed business practices to digitized and automated Value Streams: Customers, Dealers, Suppliers, and Manufacturers all participating in continuous innovation. 
   

• Cultural and Business Model Shifts: The ramifications of this tsunami is being realized in a new Costumer-Manufacturer Relationship cultures. Manufacturers used to be reactive and or at best relying on time consuming surveys to assess the business impact of their products or assess customer experience feedback. Now they are always connected to the products. Through the smart products they are also always connected to the customer. Now the customer is also increasingly demanding and getting involved in personalizing or recommending innovation for product offerings. The innovation is not just in the capabilities of the products. It is also in new financial transaction models. Age old assumptions about product ownership are being challenged. From cars to appliances to just about any manufactured product the shift is to either lease or business value based purchases. Product-As-A-Service is becoming a reality. Learn how the product is used. Offer new services. Offer Pay as you Use. Pay as you Get Value. Payment that makes sense in a digital era!

Through these factors, there are now unstoppable disruptive changes in the way Customers and Manufacturers interact with each other. The demands and sometimes the involvement of customers in personalization, as well as the deep understanding of the Manufactures as to how, when, where their products are being used are empowering a new dynamic shift in Customer Relationship. Manufacturers are becoming extremely aware of the Customer effectiveness of their smart products: what works and what needs to improve. This is really a cultural shift through proximity, deep understanding (enabled through AI empowered CRM) and speed in responsiveness (enabled through smart manufacturing through DX platforms) for the Manufactured products. It is also a shift challenging traditional norms and assumptions: especially in sales and “ownership” of manufactured products. What is often overlooked are the disruptive engagement implications of this digital proximity between the Customer and Manufacturer.

The most profound impact of this shift is resulting in entirely new models and pragmatic possibilities within Customer Relationship Management (CRM) - especially through IoT connected devices. We are evolving from omni-channel to omni-device: connected devices are offering numerous opportunities for optimizing the customer experience. With Manufacturers understanding their customers through connected devices, coming up with new product-as-as-service offering, providing extreme personalization possibilities for the customer, leveraging AI as well as digitization of value streams within CRM to service the customer – all these factors are fueling a new era in Customer Engagement through Manufacturing.  

Very much a disruptive but exciting cultural shift. 

After all, Culture always trumps Technology!

This article was originally published on COGNITIVE WORLD in 2018.