Are consumers about to become partners in the manufacturing process?

The maker movement has seen a massive resurgence in recent years, allowing ordinary people to get involved in the technology manufacturing space. And with cheap, easily programmable products like the Raspberry Pi on the market, people don’t have to have all around expertise.

Right now, it’s a subculture. But if a new report from Deloitte is to be believed, everyday consumers could soon become a crucial part of the manufacturing process as whole.

According to the report, changes in consumer demand, the nature of products, the economics of production, and the economics of the supply chain have led to a fundamental shift in the way companies do business.

As Deloitte Africa Manufacturing Industry Leader Karthi Pillay notes, consumers’ rising power and unmet needs around personalisation, customisation, and co-creation are causing niche markets to proliferate.

This is already evident all about us: added sensors and connectivity turn previously ‘dumb’ products into ‘smart’ ones, while products increasingly become platforms—and even move into the realm of services. “Advancements in materials science are enabling the creation of far more intricate, capable, and advanced objects, smart or otherwise. At the same time, the nature of the product is changing, with many products transcending their roles as material possessions that people own, to become services to which they buy access,” says Pillay.

As technology continues to advance exponentially, the report says, barriers to entry, commercialisation, and learning are eroding. The result is that new market entrants with access to new tools can operate at much smaller scales, enabling them to create offerings which were once the sole field of the major incumbents. Although large-scale production will always dominate some segments of the value chain, innovative manufacturing models—distributed small-scale local manufacturing, loosely coupled manufacturing ecosystems, and agile manufacturing—are arising which can take advantage of these new opportunities.

Technologies such as additive manufacturing are making it possible to cost-effectively manufacture products more quickly, in smaller and smaller batches. Digital technologies are also narrowing the distance between manufacturer and consumer, allowing manufacturers to bypass traditional intermediaries. Numerous factors are leading manufacturers to build to order rather than building to stock. In this environment, intermediaries that create value by holding inventory are becoming less and less necessary. Together, these shifts have made it more difficult to create value in traditional ways.

“These trends,” says Pillay, “have the capability of affecting different manufacturing sectors at different rates. To determine the speed and intensity of the coming shifts in a particular sector, companies should consider factors including the extent of regulation, product size and complexity, and the sector’s level of digitisation.”

According to the Deloitte report, manufacturers should focus their strategies on concentration and consolidation, rather than fragmentation. Due to competitive pressures, large manufacturers may experience increasing pressure to focus on just one role, shedding aspects of the business that might distract from the company becoming world class in its chosen role. The likely result is a significant restructuring of existing product manufacturers.

Rather than focusing solely on ‘make vs buy’ options, large players will have an opportunity to connect with, and mobilise, a growing array of new entrants, many of which will target fragmenting portions of the manufacturing value chain in order to deliver more value to their customers. Two emerging business models, ‘product to platform’ and ‘ownership to access’, seem particularly promising in terms of driving leveraged growth strategies.

Finally, given the emergence of more complex ecosystems of fragmented and concentrated players across a growing array of manufacturing value chains, businesses that understand emerging ‘influence points’ will have a significant strategic advantage. As the manufacturing landscape evolves and competitive pressure mounts, driven by the needs of ever more demanding customers, position will matter more than ever.