Supply Chain Commentary: Why Manufacturers Should Adopt an Ecosystem Strategy

Customers have always expected suppliers to quickly respond to their needs, but now they’re more demanding than ever.

As the needs of buyers become more unpredictable and complex, and as they begin to demand more frequent product launches and extreme personalization, manufacturers are struggling to keep up, let alone profitably.

One of the core challenges they face is the state of their current production networks, which are rigid, capitally constrained, and geographically misaligned.

Supporting this, research from Accenture Strategy found only about one in four manufacturers globally have an operating model that helps enable them to dynamically shift resources and activities around their network in response to market developments or changes in demand. This is particularly true of manufacturers that primarily operate their own facilities. Slow adoption of digital even further hampers manufacturers’ ability to respond to these changes. According to the research, only about three in 10 manufacturers have implemented key digital manufacturing-related technologies.

With increasingly complex customer demands, it’s clear manufacturers can no longer afford to “go at it alone.” Manufacturers that do will find themselves being sidelined by competitors that realize the future of manufacturing depends on an ecosystem of partners.

In fact, research from Accenture Strategy found manufacturers that use a higher percentage of third parties are more likely to have higher productivity, revenue, and margin than those that try to build and own the entire network.

In order to capitalize on these capabilities, manufacturers must think much more creatively about how they structure and run their business. Here’s how to build a stronger manufacturing ecosystem:

  • Use traditional players in unique or a more aggressive manner. This could mean leveraging contracting manufacturers in new roles around design and service or using third- or fourth-party logistics providers as advanced postponement centers to meet individualized customer needs.
  • Bring on new entrants that may be currently overlooked, such as third-party product and manufacturing design services that can complement their own capabilities and third-party labor pools, which offer services such as quality, engineering, safety, or maintenance.
  • Apply new concepts that change the ecosystem and how it’s used. For instance, manufacturers can repurpose Maintenance, Repair and Operations (MRO) centers as central hubs for common parts or assets within an industry or a manufacturing process type. Or, they can take advantage of the digital marketplace, where they can buy digital representations of products and augment them to meet specific needs.

In the coming years, manufacturers across industries will undergo a steady evolution toward a new manufacturing model: one in which third parties assume increasingly greater responsibility for various facets of innovation, production, and distribution. It’s time for manufacturers to start planning for this future and begin creating the ecosystem they’ll need to dominate their markets. If they don’t, someone else will.