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Why Every Manufacturer Needs a Technology Strategy Now (and Where to Begin)

Why Every Manufacturer Needs a Technology Strategy Now (and Where to Begin)

Approximately 2,500 years ago, Greek philosopher Heraclitus of Ephesus proclaimed, “Panta Rhei” (“life is flux”), and we’ve been trying to accept the meaning of his words ever since:

Change is the only constant in life.

Every industrial era introduces new technologies that change the way manufacturers work. Industry 4.0 is here, and digitizing manufacturing is imperative for companies to succeed.

Competitive manufacturing leaders are implementing technology strategies to advance and secure a spot in the market. Companies that delay the adoption of technology and innovative solutions risk losing business and seeing profits decline. Ultimately, companies that don’t embrace change, might not survive.

4 Reasons You Need a Tech Strategy — Now

1. Rising labor costs

With labor costs steadily rising in China and other foreign countries, offshore manufacturing operations don’t provide the competitive advantage they once did. Manufacturers can no longer expect significant profit gains from extending their supply chains overseas. In some cases, the risks of offshoring may outweigh the benefits.

2. Domestic potential

Technology strategy can assist in the growth of domestic manufacturing. Top talent is attracted to working with the newest technology. Companies that can provide high-tech environments will have a hiring advantage over their peers. And when manufacturing stays local, there’s more domestic job creation as well.

3. Increased demand

A massive global consumption wave is on the horizon, and manufacturers in every country will need innovative tech solutions to meet the demands of global consumers. U.S. manufacturers have an opportunity to take advantage of this increasing demand.

Did you know that 3 billion people currently burn wood to heat their homes and cook their food? The demand for manufactured goods among that population is low, but it will increase over time as the global economy expands and as those people begin to consume at developed country per capita GDP levels. Manufacturers will need to ramp up their capacity to support higher demand, and they’ll need technological solutions – such as automation and robotics – to do so successfully. This is even more important now, since it’s becoming harder to find manufacturing talent.

4. Technological advancements

Once complicated, laborious, and expensive, technology is now more accessible and integrated with our everyday lives. Disciplines such as material sciences, robotics, artificial intelligence, 3D printing, machine learning, and customization are becoming more democratized, and tools are easier to use than ever before.

The Most Important Step to Creating a Solid Technology Strategy: Defining Value

Manufacturing leaders sometimes delay adopting high-tech strategies because they don’t know where to begin. But the first and most crucial step to creating your technology strategy is quite simple. Ask yourself this question:

“What value do I create for my customers?”

The value is not the same as your company’s product or service; rather, it’s the benefit customers receive by choosing to work with you. Are you faster than the competition? Do you offer superior customer service? Lower pricing? A unique process or model that sets you apart?

Action step: The definition of “value” can vary from shop to shop. You may need to ask a few clarifying questions before proceeding:

  • “What does our customer really want?”
  • “How can I create something that meets their needs?”

If you’re stuck, here’s a hint: the two things customers value most in manufacturing are generally speed and ease. In other words, how can we improve how quickly and easily our customers get the products or parts they want from us. Reducing the friction in the buying process can create compelling value creation opportunities.

Meeting quality requirements is an imperative and cost is a consideration for many. But above all, most customers want their orders fast and friction-free. With short lead times, flawless customer service, and stellar products, price sensitivity decreases.

Identify Opportunities for Technological Improvements

Technology is a conduit to creating value for your customers – if it serves a purpose. To determine how technology can enhance your business, identify where technical systems and tools can improve your current processes.

For example, if speed is one of your values, you might know that you need to implement automation but aren’t sure where to begin. The solution? Audit your operation and discover where tech solutions can increase your speed. Get curious about tech that can streamline workflows, accelerate manufacturing operations, and shorten lead times.

At Alchemy Industrial, we’re laser-focused on increasing speed and reducing friction for our customers. We constantly audit our procedures to determine areas of improvement.

Action steps:

  • Audit your current processes and procedures to uncover opportunities to increase speed.
  • Review every facet of your business, from the front office to the shop floor, as well as partnerships and third-party vendors.
  • Write down how innovative tech solutions might help you deliver value via increased speed to your customers for each business area.

How and Where to Prioritize Tech Implementation

Once you’ve identified how technology can improve speed (as one of your value creation areas), the next step is to start using it.

Pick the most important area in which tech integration would be helpful by assessing the impact of the outcome you’re seeking. Map out how your investment adds immediate value, positively impacts your bottom line, and helps you achieve your business goals.

Action step: Rate each tech integration opportunity you identified during your operation audit. (Note: While this exercise isn’t an exact science, it will help you determine which opportunities to prioritize.)

  • On a scale of 1-5, score each opportunity for its likelihood of impacting your desired outcome.
  • On a scale of 1-5, score the likelihood of success for each opportunity.
  • Look at those two scores together and add them together, and start with the initiative that has the highest score.

Implementing a technology strategy doesn’t happen all at once — it’s an iterative process. Consider adopting a quarterly cycle and commit to implementing one high-tech tool, system, or solution every 90 days.

Focusing on the value you provide customers, auditing your operation for tech improvement opportunities, and implementing advanced technologies will set your company up for success. By starting now and innovating often, you might even create an unbridgeable lead on your competitors and secure your spot in the market. Get going.

Want to see how Paperless Parts can bring your business into the new age of technology?


Mush Khan is the Co-Founder of Alchemy Industrial, a Houston-based contract manufacturing company that leverages advanced manufacturing technologies (“Industry 4.0“) like additive manufacturing (3D printing), robotics, and others.