What changes can we foresee on the industrial horizon – and how can we navigate the challenges ahead?

How to navigate the challenges ahead during rapid change.
The solutions we use today will make a big difference tomorrow and determine our division into winners and losers. In the next decade, the role of retail, logistics and storage, as well as the logic of production, will change radically. Preparations are needed, but how can investment planning be carried out when no one knows for sure what surprises tomorrow will bring? How can you aim for success when the future is unknown? Is preparing for the future mere guesswork?

Ready for a time warp?

This article contains intertwining future scenarios that you shouldn’t ignore. To be successful you need to both concentrate on your current operations and be on the lookout for new business opportunities. Ask yourself, how will you remain viable in the market, and what will it mean in practice? Is your organization ready to tackle the scenarios below? If not, what can you do about it?

1. Data and automation drive demand-driven production

In the future, human-powered routine tasks are going to be increasingly replaced by automated solutions while human resources are going to be used for work where the human brain is needed – creating supreme value and carrying out the most complex tasks. 
Demand-based production will require a new type of data input, as consumption analyses and predictions start to automatically govern production. Maintaining large warehouses becomes unnecessary. Demand-based production relies on quick reactions and on an operation environment that forms an increasingly dense network. The end customer pays for value or performance and does not necessarily own the systems and equipment anymore – the role of the owner falls on another service provider in the same network.

2. Business environments form a network and the world speeds up

Networks involving several operators give rise to a new type of value. For example, a dairy can outsource the cleaning of their production facilities to a bundled hygiene service, where one operator acquires the necessary chemicals, another one provides the cleaning equipment and a third collects and analyzes real-time data sent in by sensors. The customer ends up paying a fixed rate, such as X dollars per a gallon of milk – not for the detergents or services purchased.
At the same time, the role of companies as producers of value will change, and new service integrator roles will emerge as services are bundled and sold to customers in new ways. Nothing stops the consumer from ordering just a single product directly to their home – think placing an order for fresh eggs for breakfast, delivered straight from the farm. The speed of delivery won’t be measured in days anymore, but in minutes or hours, placing new requirements on temporary storage and new types of logistics.

3. Environmental values and ecological choices rule

Ecological business practices and the carbon footprint of production play a major role in product selection. The end customer wants to have detailed information on where the product came from and how it was produced, and the information provided affects the purchase decision. Sustainability becomes crucial at the level of the organization as well as production. This presents a challenge to product development, which needs to consider things from a new angle and change prevailing modes of action. The history and origin of product components and materials need to be traceable, and knowing the remaining useful life of each part and material becomes a matter of course.
The circulation economy aims at maximizing the circulation of value bound to products and materials. This is achieved through recycling and reuse, but also through optimizing production and reducing waste.

4. Consumers are in charge – and want their services customized

One of the most important things to understand is the power consumers hold. Organization-led decision-making is bound to become increasingly rare, while listening to and engaging end customers and various operators in the value chain becomes widespread. B2B won’t remain isolated from other ways of doing business, as traditional roles are forgotten and discarded.
Customers will start to demand increasingly customized services that suit their daily routines. This will be accompanied by the development of biohacking: soon your fridge may be able to let you know what meals you can prepare out of the ingredients you have and propose adding vitamins to your diet based on the nutritional values of the foods you have consumed during the previous month. Are you out of OJ or running low on fresh fruits and vegetables? Your fridge will let you know what to get from the store.
Is your organization prepared for a future where the consumer is in the driver’s seat of the B2B sector?

Feedback or questions? Contact Vincit's industry experts

Sean Richards, SVP, Strategy & Partnerships, (480) 438-7450, sean.richards@vincit.com Hans Vallden, VP of Business Development, (949) 241-1151, hans.vallden@vincit.com

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