Transforming manufacturing: innovation and meaning

Recently, Process Online spoke with Tim Plenderleith, Market Director – Manufacturing at Aurecon, about how the connected world we live in will influence the success or failure of manufacturing in Australia. Plenderleith will be presenting the keynote address on Day 1 of the ACI Connect Conference and Exhibition, 12 August, Sydney Olympic Park.

According to Plenderleith, never before in history have world markets, economies and people been connected as we are today. New channels to market are being created on the back of new technologies and buyer behaviour. Free trade agreements are also opening up new export opportunities, but these can only be leveraged by those businesses that are able to respond.

“What we have today is a cohort of change led by technology and the internet. Not only have the costs of robotics and automation technology fallen, making them more affordable for manufacturers, but there are enormous trends in consumer behaviour that are affecting the way consumers buy manufactured products,” he said. “Consumers are shopping online more than ever — and they are more informed than ever before — so they are interested in knowing more about the products they buy so they can make informed choices. In fact, they have more choice now, and those manufacturers that understand this and effectively leverage this knowledge — collecting and using data to adjust to the needs of their customers — have an advantage over their competitors that will not only keep them in business, but even thrive and expand.

Innovation is a much overused word in the business world, according to Plenderleith, but in the context of reinvigorating Australian manufacturing, innovation is about understanding meaning. It’s about understanding why consumers want something before designing the product or service to deliver the desired experience. Innovation needs to be customer driven with design following meaning.

“Moving away from incremental product innovation to focus on meaning as the basis for innovation has the potential to triple current business performance,” said Plenderleith.

“For example, next to our Australian goods on our supermarket shelves we also have imported goods that are often a little cheaper — often in the form of ‘no-name’ brands,” he added. “But modern consumers are not just interested in price — they want to know about whether the cheaper product is as good. If they know that an Australian food product was made from fresh produce picked only last week and that the imported product may be a year old — or if they are clearly informed of the enormous difference in carbon footprint of an imported product as compared with the local product — then they will be more inclined to choose the Australian product.”

Carbon footprint, fair trade and support for Australian farmers are all things that interest Australian consumers today.

“But guess what — most manufacturers today already have the instrumentation and data acquisition technologies in place to monitor their raw energy and product consumption, and have information on hand about their supply chain,” said Plenderleith. “It really now comes down to providing that information in a simple-to-understand way to the consumer. Information like this can be seen as added value that makes the product more attractive.”

What this means for manufacturers is that there will be a direct correlation between their ability to connect with their customers and their future success. Manufacturing is highly susceptible to disruption, and the convergence of technology, demand, customer access and efficiency, each superimposing in a synergistic way, is a disruption that offers the chance to shape the future and supercharge manufacturing businesses in ways not dreamt of a decade ago — but ignored it will disrupt it negatively.

“What I am talking about is the need for positive disruption — a change in the business mindset of manufacturers that allows them to disrupt their business in ways that open them up to new ways of engaging with their customers,” he said.

But what about the upstream supply chain that is not serving the end consumer directly? Perhaps the processing industries or upstream manufacturers may feel that these issues do not affect them. According to Plenderleith, this thinking would be misguided.

“Innovative, consumer-facing or exporting manufacturers will demand more efficiencies and better information from their supply chains,” he said. “The drive to innovation will flow upstream. Those raw product processors and upstream suppliers will need to innovate in the same way in relation to their customers — the downstream manufacturers. In the same way that consumer-facing manufacturers will need to understand consumer behaviour and needs, upstream suppliers need to in turn keep up with what those manufacturers need from them. It’s not just about understanding the needs of your direct customer, but also about your customer’s customer, or your customer’s customer’s customer.”