Innovation is not an option for today’s manufacturing industry. For the past decade, globalization and transformation of the flat-world economy have produced vast new challenges for global manufacturing. Traditionally, manufacturing was defined as “a process of making things” that converts raw materials into a physical or a functional product. To be competitive, companies focused on quality, costs, and productivity. For decades, manufacturing depended on skills and cost-effective labor, often moving from high-cost regions to lower-cost regions for production.
Recent products such as the iPhone and iPad have changed the definition of manufacturing.These focus on innovation allowing customer-driven value creation, based on a collaborative innovation platform that allows users to develop boundary-free service needs. Such products are now redefining manufacturing as “a process of making things happen” that converts previously invisible needs to visible value.
Most companies, however, are still clinging to the “invention” model of innovation, centered on a bricks-and-mortar product development R&D approach. But the world’s innovation landscape has changed. Innovation is not just about new product development; it increasingly refers to the creation of new value-added services to transform productivity and business performance and better meet customer needs. And as the practice of product design has expanded in economic and social impact and =in technological complexity, so have the demands upon innovative service systems. In the U.S., many companies are now changing their traditional manufacturing model to more globally integrated and customer-centric value creation.
Companies are eagerly looking for ways to add more innovation to their products to deliver value-added services to their customers and expand their bottom line.
For example, GE Medical has changed its name to GE Healthcare Technologies to help expand its business opportunities into new areas. Companies such as IBM, John Deere, and others are also transforming into smart service business leaders. Companies now need to learn how to develop niche expertise with value-added innovation to compete globally.
One approach is “dominant innovation,” a system and a set of tools designed to help create new products and services that can succeed in a changing competitive global market. It helps formulate gaps between a product and customer’s invisible needs, using an innovation matrix and application space mapping tools. Ultimately it may help both world-class companies and small- to midsize enterprises transform themselves into innovative leaders.
Since the beginning of industry, manufacturing has been undergoing a constant process of revision and improvement. Early examples of great strides in Manufacturing processes include Eli Whitney’s use of interchangeable parts during the production of firearms, and Henry Ford’s introduction of worker specialization and the modern assembly line.
These revolutionary specializations greatly changed the face of manufacturing, despite their simple nature. Over time, machines increasingly replaced human workers, but the general concept of assembly line specialization remained the same. Modern developments in the world of manufacturing fall into four main categories: engineering design, production requirements, processes, and business strategy (see Figure 1)
In the distant past, the only key issue facing companies was how to create marketable products quickly. In the arena of engineering, companies were merely concerned that products be easily assembled by an increasing number of robots. Design was not yet computerized and therefore took a long time to be realized and applied. In this era, businesses were concerned with independently developing their own product as much as possible to gain the greatest possible amount of profit.
In the modern world, the engineering focus on manufacturing has changed to involve digital design, manufacturing, and service. Computer programs communicate directly with machines that build parts, and more data can be taken from sensors on machines used in manufacturing. The result of this is faster service, repairs, and restocking within the manufacturing process and also for products after they have left the factory.
The focus on manufacturing processes has also shifted toward the area of e-operations, where the business is concerned not only with what happens within the factory, but also with how the product gets to the consumers. Online buying has helped greatly expand this area since it almost always involves shipping. Customers must be satisfied with the product and its features, but it is also important that they approve of the services that the company can offer in conjunction with its products. To maintain market viability, companies have begun to share information and collaborate. Collaboration helps companies develop new ideas with the aid of outside research and viewpoints. Since different companies have unique research and findings, data sharing is mutually helpful.
Figure 2 shows how the current value shift has transitioned product focus to beyond-the-product service intelligence, transferred manufacturing focus from flexibility in production to velocity in customer delivery, and pushed the quality focus from the factory setting to a customer-centric focal point. This is bringing about a value shift that is driving today’s industries into reaching beyond their current core product offerings and establishing smart product-service systems.