New Strategies Inspire Big Growth For Manufacturers With Smaller Footprints

Innovation New Strategies Inspire Big Growth For Manufacturers With Smaller Footprints SAP BRANDVOICE Storytelling and expertise from marketers | Paid Program Aug 10, 2022, 08:52am EDT | Share to Facebook Share to Twitter Share to Linkedin The inclusion of product and service innovation, new business model development, and sustainability performance in business strategies poses an exciting opportunity for growing manufacturers. getty By Judy Cubiss, Director and Global Marketing Lead for Industrial Manufacturers, SAP The past couple of years has been particularly turbulent for most midsize manufacturers. In fact, our survey of 10,000 reports have shown that many companies in the industry have lost more than 10% in sales, on average, when affected by mandated closures, logistics delays, and labor and supply shortages.

And even if the impact wasn’t significant, most organizations’ ability to competitively scale and grow was severely limited. Despite the uncertainty, innovative manufacturers are looking to build back fast. But their optimism around revenue growth is tempered by their desire to improve operational efficiency and mitigate risk.

According to SAP Insights research , this mix of enthusiasm and caution is compelling manufacturers to focus on revenue growth, operational efficiency, and risk mitigation by combining strategies for product and service innovation, new business model development, and sustainability improvements. While directly associating nearly three-quarters of their future improvements with digitalization, senior leaders from midsize companies indicated high interest in new products and services development along with sustainability and business model transformation. Rising from – and beyond – turbulence The inclusion of product and service innovation, new business model development, and sustainability performance in business strategies poses an exciting opportunity for growing manufacturers.

Their smaller footprints and fewer financial resources make them more vulnerable to even the slightest shift in market dynamics. However, innovation around servitization business models is helping to drive more predictable revenue and organic growth by satisfying customer demand for value-added experiences, more reliable outcomes, and subscription billing. Manufacturers have long understood the importance of Industry 4.

0 technologies – including process automation, equipment monitoring, and operational analysis – to make every production step smart enough to detect change immediately and respond appropriately. However, the desire to capture growth and protect long-term profitability with product-related services drives organizations to expand their digital strategies even further. Respondents to the SAP Insights survey viewed the flexibility and adaptability of cloud computing, cyber security infrastructure, and employee collaboration tools as key to driving competitiveness.

As a result, more than 70% are progressing in their digital transformation. In most cases, this means elevated levels of connectedness, reliability, efficiency, and predictiveness across business operations. As companies continue to scale up from isolated, on-premise technology implementations to cloud-based transformation, new use cases and revenue streams are emerging and evolving depending on their vision and ability to execute.

Such business model changes include innovating new product designs based on customer feedback and delivering first to market with agile and data-driven supply chains. Organizations can also leverage robots, chatbots, artificial intelligence, and augmented reality to increase efficiency while introducing services – such as usage- and outcome-based equipment-as-a-service offerings – that enhance the overall product experience and open pathways to new markets. At the same time, manufacturers are leveraging their technologies to add a flair of sustainability to product, service, and business model innovation that is delighting customers and improving brand recognition and reputation.

Internal efforts include increasing sustainability in existing offerings and operational processes and strengthening supply chain resiliency with ethical workplace practices, social accountability, and environmental responsibility. And for customers, the advantages of sustainability are being extended to them with services – for example, benchmarking, predictive maintenance, and energy or water consumption analysis that help them optimize product use. Pioneering positive impacts to drive growth Manufacturers are keenly aware that transformation and innovation are critical for driving revenue.

But with top-line growth as a top priority, how can they ensure opportunities to improve efficiency and mitigate risks don’t fall to the wayside? As the SAP Insights research data indicated, defined initiatives across product development, services, and business model innovation are critical – and that includes intertwining sustainability performance. Midsize manufacturers that do this well will ultimately win customer trust and loyalty and experience immense growth no matter the size of their footprint. Discover how manufacturing leaders from midsize companies are rethinking organizational priorities, opportunities, and risks in the SAP Insights research study “ The Transformation Mindset: How Manufacturers Are Balancing Profitability and Efficiency with Sustainability .

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