High-tech manufacturers create and produce technical products and components used by consumers and businesses across the globe. By many measures, the industry is growing and thriving. Successful high-tech companies innovate and deliver profitable products when markets are ready. A steady drive toward innovation results in more valuable products getting to customers who are glad to invest in them. Some of the more stable and well-resourced high-tech manufacturers create long-lasting, strategic relationships with brands that use their components, or they become highly rated, popular brands.
High tech is not an easy business
When you consider high-tech manufacturing in a more nuanced manner, it can be difficult to understand why some companies are so spectacularly successful, even over many years. For example, on one hand innovation opens opportunities for creating new products and service revenue. On the other hand, it also speeds the obsolescence of products a company may have made as recently as last month and which are still being distributed. Competitive challenges and surprises can arise anytime, from any of the world’s regions. Offshore manufacturers and their low-cost products may eat into your margins, and, if you are thinking about reshoring it might take time to get your manufacturing operations to run efficiently and produce the superior quality you strive to deliver.
Islands of innovation, continents of tradition
What most high-tech manufacturers have in common is that they let product innovation drive the business. In an unending spiral of increasing market demand met by new products that are more powerful, faster, and dependable, everybody tries to escape obsolescence. Companies make large investments in continuous R&D, and they often focus their internal innovation on that department. They may deploy cloud-based, virtual-reality technology to enable engineers to collaborate on new products, or create interactive cloud platforms to work with their most important clients on custom solutions.
But, once the handoff to manufacturing has happened, production management and distribution may be relatively traditional. Many high-tech companies use modern ERP systems, but others still rely on legacy technology or disparate systems that become ever more difficult to upgrade and operate. Product lifecycle management (PLM) solutions in many operations are not integrated with production technology, supply chain management, and business analytics. As a result, innovation may be forced into slowdowns and diversions, and a company’s output may reach the target market late or no longer be adequate for it. When your customers rely on you to provide products with new capabilities or ongoing improvements over successive iterations, any obstacle in the way of innovation can be dangerous to your profitability and brand.
Relationships as business assets
As high-tech manufacturers perform R&D and pursue profitable innovation, their relationships and collaborations with enterprise customers, distributors, suppliers, outsource production companies, and OEMs have to be carefully managed. The quality of the experience of these parties will determine whether relationships are can be sustained and be mutually beneficial. While many high-tech companies rely on software systems and optimized processes to harness growth and innovation, their management of important relationships is not always well considered and aligned with business goals. Instead of remaining vital, they can wither, or suffer from a history of missed opportunities.
Responding to customer requirements or communicating and engaging effectively with global OEMs or distributors may challenge high-tech manufacturers to be more agile than their current processes allow. Technology systems can help them gain that agility—or stand in the way of it. Production and demand planning may require rapid decisions that impact multiple businesses and thousands of people. Those require a degree of transparency and control to which many high-tech firms are not accustomed.
Data in danger
High-tech companies know that they need to share information and create value in every interaction with customers and across their supply chains. At the same time, they have to keep intellectual property, customer data, and proprietary processes secure from theft or cybercrime. Many high-tech companies are poorly equipped for the security challenges that come with increasing data masses generated by connected devices in the internet of things (IoT) or simply by larger numbers of transactions and customers.
Changing, increasingly stringent regulatory requirements for managing data and intellectual property may compound high-tech challenges and drive the need for solutions that can help streamline processes and mitigate risks.
Controlling productivity and profit in the high-volume business
Many high-tech manufacturers are used to high volumes of transactions and know how to make high-quality products at healthy margins. What they often find more difficult is aligning operations before and after manufacturing—consulting, sales, customer service, distribution, logistics, and post-sales support—with intense workloads, especially when they experience demand spikes. Solutions for managing these activities are often isolated from, not integrated with manufacturing and product development.
With multiple data sources and disparate processes, it also becomes more difficult for high-tech manufacturers to understand and forecast their true costs and margins from one moment to the next. Accurate reporting on the cost of creating a new product and taking it to market may for many of them be an aspiration that is almost impossible to accomplish.
When customers wish you could do more
Many customers of high-tech products expect quality-driven innovation to continue after the sale of the product. Some of these customers look for more from a high-tech provider than it can deliver. For instance, they may want better coverage than simple warranty maintenance, and may be ready to take advantage of services that lengthen their products’ life span or enhance them with feature upgrades.
Business systems need to be ready to support these extended product lifecycles, continuous innovation cycles, and the customer relationships within which their value is realized. However, even making basic warranty management profitable can be a challenge if you don’t have a full view of supply-chain conditions and cost elements, or if you can’t manage your field operations to consistent service levels. In this area, high-tech companies can incur financial losses and expose themselves to substantial competitive risk by not providing what customers expect. That becomes even more of a liability when they bypass traditional distribution and directly serve consumers.
How can high-tech manufacturers capitalize on their opportunities and resolve these concerns? We will discuss approaches and solutions in the next few blog posts.
Have any questions about which business systems will support high-tech manufacturers? Please contact us at any time!