Alexandra Baleta, Senior Director EMEA Industry & Manufacturing / Automotive Lead, VMware
Ryan Wehner, Industry Director, Retail & CPG, VMware EMEA
When it comes to manufacturing, times they are a changin’. What was once considered a disconnected, delivery function for retail is evolving to become an integral component of consumer-facing brands and shops we interact with on a daily basis.
What we’re seeing today is the connection between manufacturing and retail becoming far more integrated and connected from start to finish, moving away from traditional push or pull approaches for products to real-time interaction with end-customers / consumers and relationship and experience selling on top of products – whether that’s a container of yoghurt, a vacuum cleaner or a car.
Deliver an experience that excites and delights
One of the reasons we’re seeing retail and manufacturing becoming more connected is because consumers have a vested interest in the production of their products and how they move through the chain. Traditionally, the relationship with consumers has been held by the retailer but manufacturers have lately come to realise the tremendous amount of insights that can be gleaned from going direct to the consumer. The close proximity of customers and their immediate input (whether direct or indirect) not only drives optimized and personalized customer experience, but also puts new demands on manufacturing to move from mass or serial production towards customized x=1 quantities of products and at every step of the way also considering the sustainability aspects and impacts of features and functionality. Insights that can feed directly into R&D, product development, distribution and so much more.
It’s a virtuous, near real-time loop framed by the edge to edge connection between manufacturing, retail and end customer.
Let’s take the examples of car manufacturer Volvo, who has set a target that by 2030, all sales will be done directly and online with no more showrooms. While this may seem like a radical approach to selling cars, it’s not the first major brand to make the play of attempting to cultivate consumer relationships at a manufacturing level at the expense of retail (Tesla has set the online retail standard in the automotive industry a few years ago).
Interestingly enough, though, the two sports apparel behemoths, Nike and adidas, both previously suggested they wanted to move away from selling through retail but neither move came to fruition. Both made a 180-degree turn and are, instead, doubling-down on using retail as a means to get closer to the consumer through initiatives like; in-store events and limited edition experiences unlocked through QR codes.
Whichever way you look at change or turn in retailing, the genie is definitely out of the bottle on value-add services and experience selling as well as the seamless link between retail and manufacturing which also typically includes full product traceability to the origins of any given product. To fully realise the potential benefits of such tightly integrated product value chain, manufacturers and retailers need to align to deliver an experience that excites and delights consumers, building a community in the process.
Create a closer ecosystem
It’s not uncommon these days for FMCG brands like coffee, chocolate and even meat and fish, to use codes or apps to showcase the source of the raw materials – even down to the source farmer. A French grocery chain, one of the leading adopters of edge technology, now enables buyers to scan products including fish to see how it was farmed. As the world becomes more environmentally-conscious, this traceability from A-Z is not just a nice to have, but fundamental to meeting evolving regulations and reducing toxins, plastic, unnecessary packaging and reducing carbon output in the supply chain.
This kind of activity is not only meeting increasing consumer demand to help and protect the environment at every possible step, but it is also creating a wealth of data manufacturers can use to improve processes through technologies like digital twin. However, whether it’s food manufacturing, pharmaceuticals or automotive production, all parties need to come together through data exchange capabilities and open system architectures to create a much closer ecosystem which is predicated on sharing information and this requires technology at its heart.
Technologies to increase operational excellence
In a connected world to life, a holistic view of a product’s life and the value chain is key to success. This means digitisation and the adoption of the latest technologies to increase operational excellence from product design to manufacturing, distribution, selling, use and recycling are key. Manufacturers need the capability to build apps faster in order to engage the consumer in a way that is culturally relevant and obtain the data they need while simultaneously leveraging AI/ML to increase intelligence around this data and using it to transform operations, increase resilience, boost agility and the ability for strategic decision-making.
The processing of this information is best done at the user / consumer and product edge – in-location and where data points are generated because that’s where data matters most and in real-time. Being able to manage and analyze data at the edge reduces the lag of information flow between end-user and manufacturer or retailer, provides a unique experience for the consumer and above all, reduce cost for the manufacturer or retailer as not every data point has to be moved into the cloud and back to the consumer again. Every actor along the value chain can flexibly decide which data points to capture for more complex AI/ML model training and further ‘offline analytics’ without compromising the real-time experience for the end user.
Benefits of connection
Despite the well-publicised impacts of these technologies, very few retailers and manufacturers have yet to connect all the dots and establish the edge capabilities as outlined above. Certainly, those retailers that are engaging edge are leading the market and have reaped the rewards as part of increased brand loyalty, service upselling opportunities and increased sales volumes; the benefits are enormous and still to be further explored. Being close to the end consumer also bears lots of upside opportunities and benefits for manufacturers: better product engineering and planning, increase in production efficiencies, reduced maintenance costs and downtime, faster time-to-market with new products.
Consumers on the other side can do everything from find out where the steak on their plate comes from to order more directly from that same farmer, all while being presented with better experiences on products they want and reducing noise on the ones they don’t. They can choose their personalized label on the product or connect with other people or an entire community in the area who have chosen the same product.
Good for business, the consumer and the world
Despite the enormous potential benefits, many manufacturers have either only just scratched the surface with this or, in the majority of cases, have not engaged with it at all. That needs to change.
As time moves on, consumers are only going to expect both ends of the supply chain to be in harmony delivering improved service and excellent experiences in a sustainable manner. If they don’t get it, they’ll simply vote with their feet.
For more information about VMware’s Edge proposition and what we are doing in retail and manufacturing, come see us at VMware Explore
Here are some curated sessions for you:
For Manufacturing and Retail.
