The manufacturing economies of the G7 group of nations face growing competition from the rest of the world, as globalization connects countries’ economic fortunes more closely. Huge changes have taken place within manufacturing as companies – particularly within the industrialized nations – turn to automation to tackle growing problems with skills and labor shortages and rising input costs, coupled with demand for greater efficiency and throughput. In addition, world events resonate within industry and the impact of global conflicts on energy costs and supply chains are affecting production.

Meanwhile, many of the BRICS nations have improved production capacity and output growth, as domestic demand increases. In the current climate, opportunities may exist for the BRICS economies to capitalize on weaker projected growth for the G7 nations and expand their manufacturing industries due to costlier exports and already strong production capacity. This begs the question, can the BRICS nations take advantage of the current slump in manufacturing output in the G7, and will they choose to do so?

In existence since 1973, the G7 is a political and economic forum of industrialized nations (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, with the European Union as a non-enumerated member). Formed much more recently, the BRICS geopolitical bloc comprises Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. As a whole, the BRICS nations have traditionally had lower production capacity than the G7 countries.

According to the latest data from Interact Analysis’ quarterly Manufacturing Output Tracker (MIO), 2024 will prove tough for manufacturing worldwide. Despite lower output being forecast for most nations, the dip for many will be relatively low. When China is excluded from the global data, production output is expected to drop to -0.9%. China, the ‘Factory of the World’ continues to prop up the figures, with the forecast at 0.6% when it is included in the data.

Manufacturing conditions remain difficult for the G7

Germany’s manufacturing industry has been the worst hit of the G7 nations as it attempts to shift its reliance on Russian gas, experiences falling business from China, and is undercut by cheaper production elsewhere. The overly bureaucratic industrial and political system continues to hamper recovery. Taking the German car industry as an example, Volkswagen recently announced plans to close two of its production facilities in its home country. And it is not the only major automotive company to do so, with others considering plant closures, including tyre giants Continental and Michelin. Ford has revealed it is cutting 3,500 jobs at a German plant, and Automotive Cells Company (ACC) has halted construction on battery manufacturing sites in both Germany and Italy.

Italy has seen minor effects of the global slowdown, but the severe problems in Germany have not manifested as acutely as feared, with machinery sales remaining robust. However, growth has flatlined and the current situation is wait and see. High production costs and production capacity in many large European economies mean they have struggled to increase production. Both Germany and Italy have witnessed companies moving factories to cheaper neighboring countries like Romania, Czechia, Hungary and Poland. The effect of this movement within the European Union benefits the wider G7 to some degree, but is to the detriment of individual G7 members.

We have yet to see any impact of France hosting the 2024 Olympic Games show within the manufacturing data, so it is unclear what effect, if any, the event will have on the nation’s economic fortune. Meanwhile, the UK continues to feel the aftershocks of Brexit, with import and export costs increasing. As the economy falters, it remains unclear whether a change of government will bring about changes in relations with the rest of Europe and policies that affect manufacturing.

Japan is the third largest manufacturing economy in the world, but it continues to struggle as the accelerating decline of the yen places households under pressure. As a net importer, the pressure on internal consumption is coupled with emerging southeast Asian economies undercutting it in some of its key manufacturing sectors.

Within the G7, the US is not experiencing economic pressures to the same extent and consumer demand has remained robust, despite rising prices. The Interact Analysis MIO Tracker is not currently forecasting a contraction for US output in 2024. Additionally, US industry has benefitted from government policies such as the CHIPS and Science Act. The US has invested heavily into the growing semiconductor industry to secure domestic production and reduce imports from China. This stimulus will likely continue to boost manufacturing in the US. With less proactive measures from the government, Canada’s manufacturing data is weaker, affected by a dip in global demand for metals. The latest drop has increased calls for action to boost production.

What does this mean for the BRICS economies?

With the current downturn largely affecting the Americas and Europe in particular, the BRICS economies have shown greater resilience. Despite China’s weak recovery in domestic demand, due to its fluctuating housing market, it is still expected to increase production output by +2.3% in 2024 as exports rebound. So far, the government has avoided large-scale economic stimuli, although reports now suggest that some form of stimulus is being planned. The real estate market is expected to stabilize in 2025, while higher rates of growth are predicted for production output into 2026 and 2027.

India has been particularly resilient and is on a strong growth path. Its high population density and poor availability of raw materials mean it is unlikely to become the ‘next China’. However, Interact Analysis has raised India’s long term growth forecast to +5.4%. India is capitalizing on weaknesses in the G7 through its manufacturing industry as it continues to trade widely with, for example, China, Russia and the US. A significant increase in investment is also being hailed as a key driver of growth. S&P Global has predicted it could rise to become the third largest economy in the world by 2030. It may well be that the Indian government’s ‘Make in India’ flagship program is starting to bear fruit. However, it is notable that India’s manufacturing industry is facing some challenges within certain sectors from smaller countries, particularly in areas such as semiconductor manufacturing from territories such as South Korea and Malaysia.

The overall picture is inconsistent across the manufacturing industries of all the BRICS nations. For example, according to the MIO, the Covid-19 pandemic affected Brazil more than any other large manufacturing economy and it is still regaining lost ground following a particularly difficult 2023. Brazil is not expected to see manufacturing growth return until at least 2025 and it remains heavily reliant on exports to China and the US, both of which have dipped. However, it is anticipated that monetary policy changes will return its economy to growth and boost manufacturing.

Russia’s economy has generally held up, despite the war in Ukraine, and it has spent heavily on military production. But it is not clear how long this will last. Additionally, some of the smaller BRICS economies, such as Ethiopia, South Africa and Egypt, have experienced a range of political and economic challenges that have affected manufacturing productivity. The UAE in contrast has seen diversification policies and increases in oil prices and production boost its output and economy.

So, can and will the BRICS economies capitalize on the current G7 manufacturing slump?

Any capital BRICS nations are going to make from the current downturn will need to be swift, as another manufacturing downturn is not forecast by Interact Analysis until 2029 or 2030. Looking at the MIO Tracker, the Americas is forecast to see a compound annual growth rate (CAGR) of 5.4% between 2024 and 2029, considerably higher than the 3.9% anticipated for Europe and Asia. Asia’s lower 5-year CAGR is mostly due to the sheer size of China’s manufacturing industry, as it is harder to achieve growth from a larger base. India’s manufacturing CAGR for the 5-year period is 6% and Asia as whole – excluding China – is 5.5%.

Growth trajectories are predicted for the 3 major manufacturing regions

There is little time for the BRICS nations to capitalize on the widespread manufacturing struggles of many of the G7, so it is unlikely that much additional growth will be generated in the short term. The post-Covid nearshoring trend is continuing and government incentives to generate domestic investment (such as the CHIPS Act in the US and Make in India) may become more widespread. With the G7 undoubtedly facing increasing competition from the rest of the world, this may be a means by which wealthier countries attempt to protect their manufacturing industries and reduce over-reliance on Chinese imports. However, China is such a dominant force in global manufacturing, with all the benefits that rich natural resources and domestic consumption bring, that it is unlikely to see any significant impact in the near term.

The picture is also far more complicated than simply G7 vs BRICS nations. We have seen smaller, more agile nations such as Indonesia, Malaysia, Czechia and Poland grow their manufacturing industries and specialized industries as larger territories experience output struggles. With such a wide range of variables in place and an imminent global recovery forecast, it appears that the BRICS nations are unlikely to make manufacturing capital out of the current downturn in many of the G7 economies.

By Jack Loughney, Senior Research Analyst – Interact Analysis

The post As G7 Production Falters, will the BRICS Economies Capitalize on it? appeared first on IndMacDig | Industrial Machinery Digest.

The five KPIs service leaders need to measure, along with why we need to them differently and how to incorporate Service Intelligence Metrics into your data-driven service organization:

Why Do We Need to Measure Service KPIs Differently?

The service industry has changed dramatically in recent years, and the way we measure success needs to change as well. Here are a few of the reasons why traditional KPIs are no longer enough:

The workforce is changing. There is a labor shortage, and the skills gap between new recruits and retirees is widening. This means that service organizations need to find ways to measure the effectiveness of their workforce, not just their individual KPIs.

Customers are more demanding. Today’s customers expect fast, efficient, and personalized service. Traditional KPIs, such as First Time Fix Rate (FTFR), don’t take into account the customer’s overall experience.

Technology is changing the game. New technologies, such as artificial intelligence and the Internet of Things (IoT), are giving us new ways to collect and analyze data. This data can be used to develop more accurate and insightful KPIs.

What are Service Intelligence Metrics?

Service Intelligence Metrics are a new generation of KPIs that are designed to provide a more holistic view of your service operation. They take into account not just the individual tasks that are performed, but also the impact of those tasks on the customer experience.

Here are five examples of Service Intelligence Metrics:

1. Customer Experience Index (CXI): The CXI looks at service from the customer’s point of view. It considers factors such as quality of service, resolution time, and effort required.
2. Mean Time to Stability (MTTS): MTTS is a measure of how long it takes to resolve a customer issue for good. It takes into account all of the interactions between the customer and the service organization, not just the initial service call.
3. Cost per Successful Resolution (CPS): CPS is a more accurate measure of service cost than traditional KPIs like Cost per Work Order (CPWO). It takes into account all of the costs associated with resolving a customer issue, not just the cost of the initial service call.
4. Mean Time Between Events (MTBE): MTBE is a measure of the average time between customer interactions. It can be used to identify potential problems and areas for improvement.
5. Customer Risk Score: The Customer Risk Score is a data-driven way to assess the likelihood that a customer will experience a service issue in the future. This information can be used to proactively address potential problems and prevent them from happening in the first place.

How to Implement Service Intelligence Metrics

The first step to implementing Service Intelligence Metrics is to identify the data you need to collect. This data will come from a variety of sources, including your CRM system, your service management system, and your customer satisfaction surveys.

Once you have collected your data, you can start to develop your Service Intelligence Metrics. There is no one-size-fits-all approach to this, as the specific metrics you will need to track will vary depending on your industry and your business goals.

However, there are a few general tips to keep in mind:

Focus on metrics that are actionable. The goal of Service Intelligence Metrics is to help you improve your service operation, so make sure you are tracking metrics that you can actually do something about.

Use a combination of quantitative and qualitative metrics. Quantitative metrics provide you with hard data that you can use to track your progress over time. Qualitative metrics can help you to understand the why behind the numbers.

Don’t get bogged down in too many metrics. It’s important to track a few key metrics that are important to your business, rather than a bunch of vanity metrics that don’t provide any real insights.

By following these tips, you can start to implement Service Intelligence Metrics and gain a more holistic view of your service operation. This will help you to improve the customer experience, reduce costs, and achieve your business goals.

By Aquant

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Learning how to identify and prevent these sins will reduce or eliminate unnecessary waste, improve efficiency and productivity, protect profitability and cash flow, and uphold your company’s reputation. If any of these sins are lurking within your business, here’s how to identify and rectify them.

1. Transportation

Delivering products on time to manufacturing customers is essential for building vendor loyalty. However, waste created by unnecessary movement of raw materials, finished goods, or work in process (WIP) can make it difficult to meet expected shipping dates, leading to increased costs and dissatisfied customers. In addition to wasting fuel and energy costs, excess transportation can also trigger other wastes such as waiting and motion.

Transportation waste often results from poor plant design, such as large distances between operations. It can also be generated by large batch sizes, poorly designed production systems, and multiple storage facilities, as well as inefficient material flows during storage, retrieval, and transfer. To prevent this kind of waste, design a sequential flow from raw materials to finished goods, don’t store WIP in inventory, and maintain consistency and continuity when assigning job priorities.

Value stream mapping (VSM), a lean manufacturing technique for analyzing, designing, and managing the flow of materials through the shop floor, can be very effective in identifying transportation waste. It involves full documentation of all aspects of your production flow rather than just mapping specific production processes.

The voice of customer (VOC) can be used in conjunction with VSM to add important information. If your VOC has information critical to success that is not supported in your VSM, (e.g. customer says they want delivery in X days, your VSM says the process takes greater than X days) the two documents together can guide the improvement efforts.

2. Inventory

Excess inventory is a form of waste related to the holding costs of raw materials, WIP and finished goods. In addition to driving up inventory costs, this deadly sin ties up capital, takes up space, and allows for inventory to age and become obsolete. Excess inventory is a good indicator of other issues within the production process.

Excess material purchasing resulting from poor forecasting and production planning is often caused by a poorly designed link between the procurement department and the manufacturing and scheduling departments of an organization. Due to a lack of visibility and an unknown future, procurement is forced to err on the side of ordering too much material.

Purchasing raw materials only when needed and reducing the need for safety stock will minimize this waste. ERP Inventory software simplifies this process by tracking inventory counts with remarkable accuracy to facilitate the reduction of over- or under-purchasing.

Mobile barcode scanning for inventory receiving and movement can reduce this type of waste by providing high levels of inventory visibility and control. It reduces the need for manual inventory and cycle counts, increasing accuracy of stock on hand. Real-time inventory data improves the performance of forecasting software so purchasers know when to order more stock.

3. Motion

This deadly sin consists of unnecessary movements by employees or machines that don’t add value to the product or service. Common sources of motion waste include poor workstation layout and negligent production planning and process design. Shared equipment and machines, siloed operations, and lack of production standards can be added to this list.

Motion on the shop floor can include reaching for raw materials, walking to get tools or materials, or moving finished goods out of the work area. Redesigning your shop floor to simplify the work will help reduce excess motion. In the office, wasted motion can include searching for files, sifting through spreadsheets or multiple folders to find what is needed, excess mouse clicks, and double data entry. ERP software can jettison a lot of this waste by automating processes to eliminate manual data entry, reduce paper, and simplify purchasing and receiving.

Implementing 5S, a five-step methodology that creates a more organized and productive workspace, can also play a role in minimizing motion waste:

• Sort – Keep only what you need
• Set in Order – Keep it organized
• Shine – Keep it clean
• Standardize – Keep it the same across workstations
• Sustain – Keep it consistent over a long-time horizon

4. Waiting

Wasting time waiting for materials, information, equipment, or people is considered a sin because it slows production, increases costs, and adds no value. Furthermore, it can prevent finished goods from being delivered on time – a bigger sin in the minds of customers.

A major source of waiting occurs when production employees don’t know which job to be working on now and what comes up next or have not been provided with the necessary raw materials. ERP software can solve that problem by making the information directly available to machinists without leaving their workcenters and providing the warehouse with a dispatch list of jobs slated to start.

To reduce this waste, use VSM to analyze the total time spent working on jobs from order to shipment and summarize the amount of time where value is not added to your product. Make the process flow as seamless as possible by creating buffers between production steps and create standardized instructions to provide consistency in the method and time required for each step.

Four rules to minimize waiting waste:

• Automate scheduling so workers always know what to do and when.
• Design processes to ensure continuous or single-piece flow.
• Have standardized work instructions.
• Develop multi-skilled workers who can quickly adjust to unexpected work demands.

5. Overproduction

Overproduction occurs when manufacturing the product is required or before it is asked for. Often referred to as the “just in case” sin, manufacturers tend to use overproduction as a backup in the event of unexpected increases in demand. However, it can lead to a rash of problems, from preventing smooth workflow and increased storage costs to hidden defects within WIP. All of which requires additional capital to fund excessive lead times and the production process.

Strategies for terminating overproduction include:

• Use a pull system to control manufacturing capacity.
• Make sure the rate of manufacturing between stations remains even.
• Reduce setup times to facilitate production of small batches or single-piece flow.
• Adjust the production pace to match the rate of customer demand.

A relatively new strategy consists of integrating artificial intelligence (AI) with your ERP system to more accurately forecast product demand based on historical data, market trends, and customer behavior. With AI you can also predict consumer demand for individual SKUs using data based on seasonality, pricing, promotions, and product life cycles.

6. Over-Processing

This waste can be hard to uncover because it often hides in activities that, from the customer’s perspective, don’t add value to your product. Over-processing gets uncovered when customers reject product features, capabilities, and services they don’t want or consider excessive. These can range from rework, excessive analysis, and over-engineering a solution in a way the customer doesn’t deem necessary or worth the additional cost.

Over-processing in the office typically involves administrative and workflow overkill. Customers see it as unnecessary steps in the purchasing process, unnecessary signatures on forms or documents, and other forms of red tape. For office personnel, it comes in the form of double data entry, unnecessary forms, and extra steps in a workflow.

Putting the brakes on over-processing starts with understanding the work requirements of the customer. This is where specification documents or prototype/first articles can be leveraged to ensure the customer and you are on the same page, especially for new product developments. If you don’t align, make adjustments to your manufacturing process so it syncs with what the customer wants.

Remember:

• Always have the customer in mind before starting production.
• Build a level of quality that meets customer expectations.
• Produce only the quantities needed.

7. Defects

Products that fall short of yours or the customer’s quality requirements certainly qualify as a deadly sin, especially if they get shipped out before the defect is discovered. The cost of the wasted materials, labor time, and rework are bad enough. Lost customers and the damage to your company’s reputation can extract a higher price over the long term.

The best way to counteract defects is to identify them as they occur, and implement corrective actions that will prevent them from reoccurring in the future. This is best done with ERP Quality Control software. Start by monitoring the completion of every step of the production process through your ERP system. When defects are detected immediately, enter the non-conforming part into the ERP system, halt production, analyze the problem, and outline cause and corrective action if necessary.

If you have frequent defects with particular parts, using tools such as a Fishbone Diagram, a visual way to look at cause and effect, can help brainstorm and identify the root cause of the most common faults and why they continue to happen. Then redesign the process so those defects don’t occur and standardize the work to ensure a consistently defect-free manufacturing process.

Anti-defect rules to remember:

• Implement a process protocol that brings consistency to all your manufacturing methods.
• Never pass defective items along the production process.
• Track non-conformance by vendor, customer, employee, department, and product.
• Always require engineering signoff before deploying a cause and corrective action.

Why waste time creating waste?

ERP software can help eliminate waste while you improve processes at the same time.

By Chris Pinaire, MBA, PMP, Director of New Implementations, Global Shop Solutions

About the Author

Chris Pinaire, MBA, PMP is the Director of New Implementations at Global Shop Solutions, where he has been a part of more than 350 ERP software implementations. His team has more than 250 implementations active at any given time. With Global Shop Solutions for more than 20 years, Pinaire daily helps manufacturers simplify their operations and become better.

The post 7 Deadly Sins of Manufacturing appeared first on IndMacDig | Industrial Machinery Digest.

A key indicator of the pace of change is the industry’s voracious consumption of semiconductor chips and Internet of Things (IoT) technology. The industrial sector is now a bigger consumer of chips and IoT technology than any other business sector. And industrial companies’ spending on IoT is growing at a rapid clip (see Figure 2).

The push to develop solutions has prompted leading machinery companies to redefine their markets. Many are developing customer solutions tailored to specific industries instead of producing standard products for a global market. That pivot means focusing on a smaller number of customers in specific vertical industry segments, but it increases the scope of what these leaders can offer those customers—it also means less fragmented supply chains.

For many machinery executives, the shift to digital solutions is the most sweeping change to the industry in a lifetime. However, the payoff is significant for firms that get it right. Digital solutions leaders outperform the industry on total shareholder return by 100%. Customers are seeking these solutions as part of their strategic evolution. Machinery companies that are among the first to meet that demand will generate higher revenue, bigger margins, improved customer loyalty, and software-like valuation multiples (see Figure 3).

The Pitfalls

In our experience, several common errors hinder machinery companies’ efforts to develop digital solutions. The first is failure to clarify the company’s ambition in digital solutions. In short, why invest? As they rush to join the race, many design digital products and services to sell more hardware and equipment instead of solving customer problems. As a result, their solutions are less competitive. Worse, these companies continue to focus on traditional products while rivals reshape the market.

A second pitfall is a lack of focus. One of the biggest challenges leadership teams face in the transition to digital solutions is selecting a few target markets. Companies that engineer digital solutions for a broad market will be overwhelmed by the heterogenous demands of multiple industries. Unable to scale their solutions, they will have to redesign or reengineer solutions from one customer to the next and won’t be profitable.

The Customer Mindset

Leaders scale digital solutions successfully by focusing on two questions: For which customers are we among the most relevant suppliers, and what solutions would solve the problems these customers face? Software companies excel at this customer-centric market approach and it has propelled their success over the past 20 years. Machinery companies that lead the digital solutions shift will do the same over the next two decades.

John Deere, for example, has invested billions of dollars over the past decade to pivot from a tractor manufacturer to a provider of solutions for precision agriculture, including machines combined with digital technology that make farming more efficient. In 2022, the company introduced self-driving tractors and sprayers that distinguish weeds from crops. The company plans to connect 1.5 million machines in service and use its cloud-based operations center to store crop data, hoping to sell farmers subscriptions to software that will help yield higher profit margins.

In our experience, machinery companies that have built successful digital solutions follow five guidelines:

Target a few customer segments. Address customer pain points in select vertical markets. Thermostat maker Danfoss provides solutions to food supermarkets that depend on reliable refrigeration. In addition to selling systems that monitor the temperature of refrigerated storage areas and shelves, the company’s connected thermostats also offer solutions for energy management, usage analytics, and predictive maintenance.

Become a digitalization partner. Digital solutions, such as software, change the way a company works. Software companies use teams of expert advisers to help customers adapt their ways of working and ensure that they get the full benefits of the technology they install. Machinery companies will also need to provide such services.

Embrace customer unit economics. Machinery and equipment companies build business plans based on product unit economics, ensuring that the price of a machine covers the costs of building it. Digital solutions, such as software, require a different approach as the most significant cost is not building the product but acquiring customers. Leading machinery companies create a business case for digital solutions based on customer unit economics, including customer customer acquisition cost and lifetime value. (The bad news: It’s not a fast payback).

Invest in an Engine 2 business. Machinery companies can use organic investments and acquisitions to build a substantial technology-based business to complement hardware sales. Partnerships offer the greatest value in back-end operations (including solution development and delivery). Leaders avoid outsourcing customer-facing parts of the business. The reason is that sector-specific knowledge and customer relations are key in winning sales and retaining core customers.

Use open technology architecture. Digital solutions built on flexible technology architecture have a big advantage in the market: seamless integration and interoperability with leading IT systems and operations technology (OT). Open technology architecture also complies with security standards.

The digital transformation of machinery is well underway. Successful OEMs are forging deeper relationships with their best industrial customers and developing solutions for the industry segments in which they are a leader. Future winners will scale solutions that can be used repeatedly in the same sector with minor adaptations from one customer to the next. As that process accelerates, it will change the competitive boundaries of the industry: Future markets will be defined by customer segments, not products. In this new era, machinery companies that have scaled digital solutions for a targeted set of customers will have a competitive advantage that is difficult to challenge.

By Adrien Bron and Neil Malik

About the Authors

Adrien Bron and Neil Malik are partners in Bain & Company’s Advanced Manufacturing and Services practice.

The post Digital Technologies Are (Finally) Reinventing Machinery appeared first on IndMacDig | Industrial Machinery Digest.

The campaign will include a series of webinars and in-person training sessions conducted nationwide. These sessions will cover key topics such as load stability, proper lifting techniques, and the importance of regular equipment maintenance. Combilift is also partnering with industry associations and safety organizations to promote the campaign and reach a wider audience. By raising awareness about forklift safety, Combilift hopes to create a culture of safety within the industry and reduce the number of accidents and injuries. The campaign is part of Combilift’s broader commitment to promoting safety and sustainability in the workplace.

Combilift’s safety campaign is a timely and necessary initiative, given the prevalence of forklift-related accidents in many industries. By providing comprehensive training and resources, the company is taking a proactive stance to address this critical issue. The campaign not only aims to improve safety standards but also to foster a culture of responsibility and awareness among forklift operators. Through its efforts, Combilift is contributing to the overall well-being and safety of workers, reinforcing its position as a leader in the industry.

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The TailoredPress is designed to offer modularity, allowing manufacturers to customize the press to their specific needs. This flexibility is a key advantage, enabling companies to optimize their production processes without compromising on quality or efficiency. The press also features advanced automation capabilities, integrating seamlessly with existing production lines to enhance productivity. With these enhancements, manufacturers can achieve significant cost savings in energy and operational expenses, making the TailoredPress a valuable investment for the future.

The partnership between Bosch Rexroth and Dieffenbacher highlights a broader trend in the industry towards the adoption of technologies that promote sustainability. As companies face increasing pressure to reduce their carbon footprint and improve energy efficiency, collaborations like this one demonstrate how innovative solutions can help achieve these goals. The TailoredPress serves as a model for future developments in sustainable manufacturing, offering a pathway for other companies to follow in their quest for greener operations.

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For consumers today, loyalty hangs by a fragile thread. With a single disappointing encounter, customers readily shift allegiance. This fickleness stems from facilitation by the digital age. Whether it’s subpar service, a flawed product, or a lackluster interaction, consumers swiftly abandon brands, seeking refuge. We recognize that each interaction is a make-or-break moment, where the slightest misstep risks losing not just a transaction but a customer’s trust and allegiance.

At the heart of the Experience Economy lies the recognition that in an era inundated with choices, customers seek more than just functional benefits. They seek memorable moments. Businesses that prioritize delivering exceptional customer experiences gain a significant competitive edge. These experiences foster growth, brand differentiation, and sustainable success in the long term.

Delivering great experiences to end users

Exceptional experiences forge deep connections, creating loyalty, advocacy, and repeat business. Satisfied customers become brand ambassadors, spreading positivity. Investing in exemplary experiences is no longer a choice—it’s an imperative for survival and success, but how do companies deliver great experiences to their customers?

While one traditional key principle in delivering great end-user experiences is getting the right product to the right customer at the right time, this doesn’t end in a vacuum. Companies must also consider cost implications, accurate demand forecasting, trend analysis, process automation, and logistics considerations.

Cost implications play a pivotal role in delivering exceptional experiences for end-users. By optimizing expenses, businesses can allocate resources to enhance customer satisfaction. Accurate demand forecasting and trend analysis enable companies to anticipate customer needs, ensuring products are available when required. Process automation streamlines operations, reducing errors and inefficiencies, thus improving reliability and consistency in customer interactions. Logistic considerations ensure convenience for end-users. Together, these factors create a seamless and satisfying experience.

Another way to ensure a great end-user experience is by improving customer interactions across multiple platforms—website, phone, chat, email, SMS, or social media. A user-friendly website offers intuitive navigation and personalized content, enhancing engagement and satisfaction. Responsive phone support operates efficiently and courteously. Live chat offers real-time assistance, resulting in instant rapport and problem resolution. Email and SMS communications deliver informed and engaged interactions. Social media platforms enable authentic engagement, allowing businesses to interact directly with customers, address concerns, and build trust. Through each touchpoint, companies cultivate meaningful connections, driving loyalty and advocacy among end-users.

While ensuring fantastic customer interactions is valid, it is important to note that roughly 85 percent of the issues that customer service agents deal with are rooted in not receiving products in the right quantity with complete documentation. Not receiving a child’s birthday present on time or not receiving paper instructions after purchasing a product can lead to frustrations. No matter how excellent customer service interactions are, issues like these deeply impact experience and ultimately brand loyalty.

Why do companies struggle to deliver great experiences?

First, siloed views within organizations can severely hinder the customer experience. When departments operate in isolation, critical information becomes fragmented, leading to inconsistent messaging, disjointed processes, and frustrated customers. Silos prevent a holistic understanding of customer needs and preferences, resulting in missed opportunities for solutions. Also, disjointed systems often lead to inefficiencies, delays, and errors, further eroding trust and satisfaction. To deliver seamless experiences, businesses need departmental collaboration and data sharing. Only through a unified approach can organizations truly prioritize and enhance the end-to-end customer journey.

Secondly, identifying root cause inefficiencies presents a formidable challenge for businesses. Symptoms of operational flaws often manifest in various departments, making it challenging to pinpoint the underlying issues. Additionally, interconnected systems and dependencies further complicate the analysis, obscuring the true source of inefficiency. Without accurate diagnosis, organizations risk implementing superficial solutions that fail to address the underlying problems. Overcoming this hurdle demands meticulous data analysis and a willingness to challenge conventional wisdom.

Lastly, specifically for manufacturers, shop floor productivity is lagging. Manufacturing shop floor productivity suffers as talent retention dwindles and fails to attract younger workers, and outdated perceptions render manufacturing less attractive to younger generations. The absence of modernization and technological integration exacerbates the issue. Additionally, inadequate training and career development paths hinder employee engagement and satisfaction. To revitalize productivity, manufacturers must invest in upskilling initiatives and embrace technological innovations. Cultivating a dynamic work environment that values diversity, innovation, and professional growth will attract the next generation of skilled workers, revitalizing shop floor productivity for sustained success.

Why are great customer experiences important?

A significant key performance indicator (KPI) around customer experience is the Net Promoter Score (NPS). NPS serves as a critical metric gauging customer loyalty by asking a simple question—”How likely are you to recommend our product/service to a friend or colleague?”—categorizing customers into promoters, passives, or detractors. Studies have shown a strong correlation between high NPS scores and revenue growth. Promoters, enthusiastic advocates of a brand, not only drive customer acquisition through word-of-mouth but also have a higher purchase frequency and lifetime value. By focusing efforts on elevating NPS, businesses can cultivate a loyal customer base, stimulate organic growth, and ultimately drive profitability.

Supply chain management profoundly influences Net Promoter Score (NPS) by directly impacting key customer touchpoints. Delays in delivery, whether due to inventory shortages or logistical challenges, can lead to dissatisfaction and diminished trust. Product availability issues frustrate customers, potentially driving them to competitors. Inadequate quality control results in defective products and erodes brand loyalty. Moreover, cost increases passed onto consumers can provoke negative sentiment. By prioritizing efficiency, transparency, and reliability throughout the supply chain, companies can mitigate these risks, ensuring consistent and positive experiences.

Find a partner that enhances customer experience

It is crucial to find a partner that understands that digital transformation alone is not enough. Unlike point solution vendors who solve isolated problems, prioritizing transformation requires a holistic approach that integrates people, processes, and systems.

A good partner will begin its approach by understanding what is actually happening with mission-critical processes in the supply chain like inbound and outbound logistics, order management, help desk, and financial processes. Understanding these root causes helps identify opportunities for improvement and automation. Analyzing data and feedback loops provides insight into performance within each process. Utilizing process mapping and performance metrics helps pinpoint areas ripe for enhancement. Automation technologies, like AI and robotics, can eliminate errors and enhance efficiency. By continuously assessing and optimizing these processes, businesses can improve responsiveness, reduce costs, and enhance customer satisfaction, driving competitive advantage.

In short, the Experience Economy underscores the critical shift towards prioritizing immersive, memorable customer experiences as a key differentiator for businesses. Leveraging solutions that enhance operational efficiency, customer engagement, and overall competitiveness is essential. Partnering with a company that offers an Industrial Transformation platform can boost operational excellence and workforce productivity. Such platforms integrate advanced technologies, analytics, and automation to optimize processes and deliver exceptional experiences consistently. By leveraging these platforms, companies can adapt to evolving consumer demands, drive sustainable growth, and thrive in the Experience Economy, securing their position as industry leaders.

By: Roy Arguelles, Senior Vice President of Supply Chain Sales, QAD

The post Unlocking Customer Experience: The Critical Role of Your Supply appeared first on IndMacDig | Industrial Machinery Digest.

OVERVIEW

As manufacturers face increasing competition and resource constraints, they need modern ERP systems that are secure, scalable and can improve organizational visibility. Companies are beginning to realize the value and importance of data and analytics for decision making. The data silos that often occur in legacy, on-premises deployments hinder both daily activities and high-level strategy objectives. As manufacturing operations grow in both size and complexity, ERP software must be able to extend and accommodate the changes that naturally occur with successful companies.

Other factors driving manufacturing ERP deployments to the cloud include rising software maintenance costs and burdensome maintenance processes that are necessary to keep on- premises deployments running. Cloud solutions have a lower total cost of ownership (TCO) when compared to similarly sized legacy ERP implementations that are internally managed (Nucleus Research s102 – The cloud benefits companies of any size, September 2018).

Moving to the cloud, and consolidating costs and services into a single package, forces customers to review their existing business processes and evaluate the usefulness they bring to their overall objectives.

WHY CLOUDER FOR MANUFACTURERS

From research conducted on manufacturing customers who migrated from on-premises ERP deployments to the cloud, Nucleus identified four areas that companies cited as key factors in the decision:

REDUCED IT COMPLEXITY

Simplifying technology setups was the most common reason for transitioning to cloud ERP solutions among manufacturing companies. Those who switched were able to consolidate many of their siloed processes into a single platform. Cloud migrations also enable companies to delegate application security and update management to the vendor.

Keeping up with update schedules for various systems often becomes overwhelming, and it’s all too easy for a company to end up with multiple versions behind the current update. The change allows the vendor to deliver performance and uptime improvements much more quickly, compared to legacy on-premises deployments. Companies who moved to the cloud were able to eliminate unnecessary solutions and redeploy IT resources to different value-add work because of their decreased administrative responsibilities.

INCREASED BUSINESS AGILITY

Cloud technology enables greater responsiveness and increases organizations’ ability to process and respond to changing business environments. As internet speed and connectivity have improved, highly visible and cross-functional ERP systems have democratized responsibilities that previously required specialized knowledge and experience. With new advancements in usability and real-time access to company data, cloud ERP users can react quickly to changes and see how the subsequent ripple effects will influence their business. Customers can also create new dashboards or reports natively without needing to draw in IT resources. As a result, users can ask questions and drill down into data for insights, resulting in more streamlined operations and decision-making processes.

INDUSTRY 4.0 CAPABILITIES

By migrating ERP deployments to the cloud, manufacturing customers can leverage new functionalities that don’t come as quickly to on-premises systems. New data configurations and sophisticated analytics are necessary for modern functionalities such as predictive analytics and improved security and are usually more widely available on cloud deployments. With ERP data in the cloud, manufacturing customers can supplement conventional analytics with machine learning to identify areas of weaker performance and provide contextual insights that can reduce costs and increase productivity. Functionalities such as predictive maintenance that rely on the Internet of Things (IoT) often require cloud frameworks in order to deliver value to customers, which can further entice manufacturers to leave their familiar on-premises ERP deployments.

KEY 2 BENEFITS

Despite the high upfront costs of transitioning from on-premises deployments, manufacturers still realized significant benefits from their cloud ERP implementations. Nucleus identified three key benefit areas from customers moving their on-premises ERP workloads to the cloud:

Reduced costs. By transitioning from an on-premises legacy system to a cloud solution, customers can reduce operational costs by eliminating equipment and related IT department resources. Reducing the burden of support for customers led to cost savings as the associated headcount was reduced or redeployed away from managing system updates and integrations.

Increased user productivity. Cloud ERP solutions enable users to access and leverage company data from anywhere with an Internet-enabled device. With readily available information, customers saved time on performing analysis and generating reports while redeploying resources to new value-add tasks that were made possible through cloud deployments. Many customers were able to automate repetitive accounting and reporting tasks to save time and increase the productivity of all of their ERP users.

Improved organizational visibility. Cloud ERP systems enable manufacturing organizations to improve access to data by breaking down information silos to provide interdepartmental visibility to customer data. On the cloud platform, finance and operations staff can collaborate to reduce friction between departments, resulting in more productive daily activities. Cloud ERP deployments can deliver value to organizations by helping them pinpoint inefficiencies and develop new workflows to improve performance.

LOOKING AHEAD

While many customers are not in a position to undertake a full cloud transition for their ERP deployments, the benefits of moving to the cloud are becoming too large to ignore.

Nucleus observed that eliminating the costs associated with maintaining an on-premises deployment helped customers identify areas in need of improvement and streamline their operations. The advancements to employee productivity and organizational visibility enabled customers to develop new use cases for their ERP software, despite the high costs of transitioning away from on-premises deployments.

Some manufacturing ERP customers are currently unable to move away from their on- premises ERP systems, but centralizing processes in the cloud and adopting a standardized data model are necessary steps towards long-term success. Nucleus expects that the growth of cloud deployments will accelerate as next-generation capabilities, such as predictive analytics, mature and become easier to adopt. The flexibility and extensibility of cloud ERP deployments will drive value for manufacturers as long as they are willing to forego their outdated legacy practices.

ANALYST: Andrew MacMillen

The post The Value of the Cloud for Manufacturing ERP appeared first on IndMacDig | Industrial Machinery Digest.

Let’s examine what are the key economic indicators as well as other data to determine the true state of the U.S. economy. According to the website, USA Facts, the key economic indicators are: GDP, inflation, Federal Reserve interest rates, workers’ average hourly wages, unemployment rate, ratio of unemployed people related to job openings, labor force participation rate, trade deficit (imports vs. exports), and Federal debt. USA Facts only reports the figures at the end of the year so the data shown is for 2022 since 2023 hasn’t ended yet.

Labor Force Participation Rate

The rate is calculated as the labor force divided by the total working-age population. The working age population refers to people aged 15 to 64. This indicator is broken down by age group and it is measured as a percentage of each age group.

The labor force participation rate was 66.0% in 2008, and gradually dropped down to 63.3% by January 2020. As a result of the COVID-19 pandemic, it dropped to a low of 61.5% in November 2020 before gradually rising to 62.8% in November 2023.

Ratio of Unemployed People to Job Openings

According to the Bureau of Labor Standards, “The ratio of unemployed people to job openings ranged from 0.8 to 1.0 during 2018 and 2019. Over the past 5 years, the number of unemployed people per job opening reached a high of 4.9 in April 2020, when there were 23.1 million unemployed people and 4.7 million job openings. Since October 2021, the ratio has been 0.5 or 0.6 every month…When ratios equal 1.0, there is approximately 1 unemployed person per job opening. When less than 1.0, the labor market is tight, as job openings outnumber the unemployed. When greater than 1.0, there are more unemployed people than available jobs..”

The unemployment rate of the United States, which has been steadily decreasing since the 2008 financial crisis, but spiked to 8.1 percent in 2020 due to the COVID-19 pandemic. The annual unemployment rate of the U.S. since 1990 can be found here.

Federal Fund Interest Rates

The Federal Reserve raised interest rates seven times in 2022 and four times in 2023, increasing the target rate from nearly zero (0.25%) in 2020-2021 to 5.25%-5.50% currently. The Fed is expected to hold rates steady when they meet this month. The Fed rate affects the consumer interest rates for mortgages and installment loans for things like cards, home furnishings, and other consumer goods. Mortgage rates have risen from 2.75-3.25 in 2021 to 6.0%-7.9% in 2023. This has stagnated sales for homes and automobiles.

National average wage indexing series, 2001-2022

It looks like wages have nearly doubled in 21 years, but the value of the dollar has changed over time. According to the CPI Inflation Calculator, the ”U.S. dollar has lost 42% its value since 2001; $100 in 2001 is equivalent in purchasing power to about $173.73 today…The dollar had an average inflation rate of 2.54% per year between 2001 and today, producing a cumulative price increase of 73.73%.” Thus we need to deduct 42% from the 2022 wage to compare it to 2001 ($63,795.13 – $27,431.91 = $42,363.23). Thus, the wages only went up by 34% while inflation increased 73.73%.

Table: National average wage indexing, 2001-2022

Data source:  https://www.ssa.gov/oact/cola/AWI.html

Trade Deficit

The last year that the U.S. had a positive trade balance by exporting more than we imported was 1979. The trade deficit grew gradually from 1980 – 1999, but accelerated after China was granted Most Favored Nation status in the year 2000. In 2022, the trade deficit of $948.1 billion is a 3.9% increase from 2021.

U.S. Private Sector Job Quality Index

The November Job Quality Index report by The Coalition for a Prosperous America states, “The Job Quality Index measures job quality for U.S. production and nonsupervisory workers by comparing workers’ weekly wages to the mean weekly wage for all non-supervisory workers. Those jobs above the mean are classified as high-quality and those below the mean are low-quality…Over the past three decades, the JQI declined because the U.S. economy created more low-quality jobs than it has high-quality jobs. As shown in the Job Quality Index graph, the JQI is down 12.8% from 1990 illustrating the disproportionate growth in low-wage, low-hour jobs.”

For my industry of manufacturing, there are two other measures that can be examined to determine the true state of the economy. They are:

1. US ISM Manufacturing PMI

The Institute of Supply Management Purchasing Managers Index “is a diffusion index summarizing economic activity in the manufacturing sector in the US. The index is based on a survey of manufacturing supply executives conducted by ISM. Participants are asked to gauge activity in a number of categories like new orders, inventories, and production and these sub-indices are then combined to create the PMI… A PMI above 50 would designate an overall expansion of the manufacturing economy whereas a PMI below 50 signifies a shrinking of the manufacturing economy.

US ISM Manufacturing PMI was at a level of 46.70 on November 30, 2023, unchanged from 46.70 for October and down from a recent high of 64.70 in March, 2021. The PMI dropped to 49.00 for the November, 2022 report, so we have been in a shrinking economy for 13 months.

2. U.S. Manufacturing Technology Orders

According to the November report published by AMT, The Association For Manufacturing Technology, “orders for manufacturing technology…continued to fall relative to 2022. Through October 2023 orders totaled $4.05 billion, 13.5% behind the total for the first 10 months of 2022.

Conclusion

Adding to the above data is the fact that vehicle gas prices have escalated since 2020. According to Finder, “Gas prices in over the last 12 months are well above the national average over the last six years, hitting $4.99 a gallon in the week of June 16, 2022 — a week in which Californians paid a whopping $6.43 per gallon…The national average gas price this week [December 7th] is $3.22, down from $3.27. US gas prices over the last year are among the highest since 2018. California has the highest gas prices in the nation, followed by Hawaii as a close second, and Washington, Nevada, and Oregon making up the top five. Texas has the lowest gas price ($2.68) in the nation followed closely by Mississippi ($2.72) and Oklahoma ($2.74).

According to the U.S. Government Accountability Office, “Last year, U.S. consumers saw the largest annual increase in food prices since the 1980s. While food prices generally increased about 2% in prior years, they increased about 11% from 2021 to 2022…Food prices also varied by locality. For example, the highest increase between 2021 and 2022 was seen in Detroit Michigan (about 14.5%). The lowest (about 5%) occurred in the Miami-Fort Lauderdale, Florida metro area…Finally, food price increases from 2021 to 2022 varied by food group. For example, prices for grains and bakery products increased by about 13%, while fruits and vegetables increased by about 9%. Similarly, dairy products increased by about 12%, but meats, poultry and fish increased about 10%.”

I am not an economist qualified to do an educated analysis of all of the above data, but it is obvious to me that the U.S. economy has some serious problems that need to be urgently addressed if we want to avoid a prolonged recession. The question that voters ask themselves in an election year, “Am I better off now than I was under the previous administration.” The answer to that question will determine the outcome of the next election.

By: Michele Nash-Hoff

The post What is the State of the U.S. Economy? appeared first on IndMacDig | Industrial Machinery Digest.

This is true in most industrial facilities, even if the changes are positive for the company and the personnel doing the work. When trying to drive change for the adoption of a new process, “We’ve always done it this way,” may be heard. For many good reasons, this mindset is especially hardwired in the maintenance and reliability world. So how do we combat it?

Take Advantage of Training Opportunities

Encourage and reward personnel who continuously strive for improvement. Acknowledge as they work to build toward their next role in the organization while aiming for excellence in their current role.

Tribal knowledge is great, but team members must be willing to evaluate and accept external information and guidance. Therefore, training (in the facility and outside) is critical for individual and team growth. In addition, as team members train outside our facility, they bring new techniques and knowledge to the plant that they can share with everyone else.

Building a culture based on continuous improvement and development sets personnel up to accept and support changes. It also sets them up for success. If rewards are built into this culture, acceptance may be even greater.

Buy-in from Everyone

Success is only realized if everyone lives the culture and accepts it. Managers and supervisors cannot be the only people who believe in the strategy. Champions on the plant floor or within the sales team must be identified and allowed to encourage others to use the new technology or try the new technique.

Ownership of the changes must live with the people who make them happen. They should have decision power and be applauded for pushing ideas and questions up the chain of command.

Empower Personnel

Continue to encourage fresh ideas and strategies; listen to everyone. Conversation, introspection, and debate can lead to new strategies and the refinement of old ones. Let personnel know that they can and should bring new ideas to your management team. They need to feel empowered to think for themselves and know that they are heard.

One Example: Reinforcing Our Safety Culture

SEPCO has had a dedicated safety team in our facilities for many years. However, from time to time we wrestle with the challenge of an us-against-them environment. To combat that potential and to decide how to better integrate safety policies and procedures, we empowered a safety committee. This committee was made up of volunteers of both plant and office personnel.

While policy changes must ultimately be approved, the committee designs and recommends change. Perhaps most importantly, this committee is backed by a budget. The committee members regularly have additional external training opportunities. Employees have a “train the trainer” mentality and bring their knowledge back to work. This more fully involves all team members.

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