Responding to the Great Change of Science and Technology Manufacturing Industry

Made in China is at a crossroads. With the depletion of population and resource dividends, Chinese enterprises urgently need to re-find their position in the new round of global industrial transfer; at the same time, with the rapid development of the Internet, especially the mobile Internet, the "new economy" The concept has been welcomed by the market and capital, which is both a challenge and an opportunity for Chinese manufacturers.

Interactive topic: Guo Taiming: Is 3D printing just a gimmick?

Three new trends

In this era of paradigm shift, we can see a dizzying array of innovations such as smartphones, social networks, 3D printing, smart homes, and more. Innovative concepts are rapidly changing many industries, including manufacturing. Upstarts such as Google, Facebook, and Tencent have risen one by one. At the same time, some former bigwigs have suddenly declined due to their inability to keep up with new trends.

Therefore, China's manufacturing and technology companies urgently need to recognize the current and future industrial development trends in order to be invincible. Specifically, Paul Brody, vice president of IBM, general manager of the electronics industry, and expert of IBM Industry Academy, believes that the global manufacturing and technology industries are facing increasingly fierce price competition, increasingly personalized consumer demand, and the continuous rise of new technologies such as the Internet of Things. Trends, and the driving forces driving these trends include changes in global supply chains, the use of multi-channel marketing such as the Internet, and the rise of new business models.

The status of "world factory" allows products made in China to be sold globally, but the reality of being only a "foundry" makes the product homogeneity problem of Chinese manufacturers serious, and there is a lack of discourse at the high end of the global industrial chain It is easy to fall into the quagmire of price wars. The accelerated rate of product development and updating and the rise of Internet sales models such as e-commerce have increased the intensity of price competition.

As consumers' demands for products become more specific and more personalized, product development and sales have entered a consumer-driven era. In the past, the mode of manufacturers simply relying on functional integration and technology superposition to stimulate demand has become less and less up to date.

Mobile Internet and Internet of Things are undoubtedly important trends in future technological development. We can see from Facebook's $19.2 billion acquisition of mobile social software Whatsapp and Google's high-priced acquisition of smart home startup Nest, the next round of manufacturing and technological development will make breakthroughs in these areas.

Three drivers

What are the factors driving these trends? Many people might automatically think that Moore's Law will continue to play a decisive role. But we gradually found that the breakthrough of hardware performance is no longer a sufficient and necessary condition to win the competition.

In Paul's view, there are more factors that are disrupting the manufacturing and technology industries. First and foremost is the transformation of the supply chain. (Technology) Manufacturing is a lengthy and complex supply chain that has been established and matured to give manufacturers a competitive advantage. However, the birth of new technologies and new production models such as 3D printing, intelligent robots, and open source hardware has gradually fundamentally changed the way of production and manufacturing, and has transformed to a "Software Defined Supply Chain". This change, according to Paul, marked the beginning of a supply chain revolution.

With the help of the software-defined supply chain, enterprises can break through the physical constraints brought by traditional mold manufacturing and mechanized production, and through 3D printing and other means, with lower costs, simpler and more flexible ways, more Small batches, faster to make products.

Under this model, the time and cost of an enterprise's supply chain to respond to market changes will be greatly reduced, enabling the sale of the latest products produced on a small scale at a reasonable price. For consumers, the development of a "software-defined supply chain" means faster access to customized products.

But many remain skeptical that new technologies will truly revolutionize existing supply chains. For example, Foxconn Chairman Guo Taiming once bluntly said that 3D printing is just a gimmick and cannot be mass-produced for commercial use. "If 3D printing is really useful, my 'Guo' will be written upside down," he said. In this regard, Paul believes that with the development of technology and the expiry of some 3D printing patents, the cost of 3D printing will be reduced by 80% after five years, and by 90% after ten years. In this way, the possibility of commercial 3D printing will be greatly increased.

Following this assumption, Paul and his team disassembled four products, a printer, a monitor, a cell phone, and a hearing aid, at the component level, each of which was 3D scanned to see if it could be used with a 3D printer. Can it be assembled with a low-cost and efficient assembly robot after it is printed and printed. Through this experiment, it was found that the cost of producing these four products through this mode is not low, but after five years, as the patent protection of 3D printing expires, the production cost will be reduced, and after ten years, it can be lower than the traditional production cost. twenty three%.

In addition to cost reduction, the more important significance is that the minimum production volume required to produce each product is greatly reduced. As a result, the competitive situation of enterprises will be profoundly changed. Reduce the risk of production, inventory, and respond more quickly to market changes while maintaining a competitive price.

Another major factor influencing the development of the manufacturing and technology industries today is e-commerce. According to Paul's observation, e-commerce has moved from the first stage to the second stage. The current mainstream e-commerce model has copied and imitated the previous model of department stores and moved it online.

In the future, Paul believes that manufacturers and brands will face their customers more and more directly, and the boundaries between them and e-commerce will become increasingly blurred. Simply put, manufacturers and brands will provide products and services directly to consumers through online and offline O2O models, providing an experience that is branded and unique, rather than the same as that of platforms like Amazon. , commoditized experience. At the same time, e-commerce giants like Amazon are also waiting for the opportunity to enter the hardware market such as tablets.

E-commerce has entered the second stage, in addition to giving manufacturers and brands more marketing channels, another major role is that the production and research and development of enterprises has changed from "inside-out" to "outside-in". ”, becoming a consumer-driven landscape.

The third driver that Paul sees is the rise of emerging business models like crowdfunding and crowdsourcing. "Crowdfunding" as a new model of fundraising and pre-sales can help creative small and medium-sized enterprises and startups grow rapidly. The biggest difference between this model and traditional venture capital is that the enterprise does not need to sell even 1% of the equity. At the same time, this is an excellent opportunity to test the market acceptance of the product. Therefore, the "crowdfunding" model can greatly reduce the cost of innovation and entrepreneurship. And "crowdsourcing" allows companies to effectively use global supply chain resources to produce, transport and sell products in the most efficient way while only retaining core business and design departments.

Is the "crowdfunding + crowdsourcing" model a plaything for geeks, or is it serious practicality? Paul believes that this is indeed a viable business model for the future. For example, crowdfunding raised $100 million, $480 million, and $700 million from 2011 to 2013, with rapid growth. At the same time, more and more manufacturing technology companies are using the creativity of the Silicon Valley team and the design and production of the Shenzhen team to build a global collaborative supply chain.

How should Chinese companies respond?

After recognizing the trend, what are the countermeasures of Chinese enterprises? Paul believes that Chinese enterprises can be invincible only by following the trend, actively changing, and making breakthroughs and innovations.

For manufacturing enterprises, the "software-defined supply chain" represented by 3D printing and intelligent robots has impacted their original supply chain form, which is a "trouble" for enterprises. But if you actively embrace this change, companies can quickly bring new products to market through small batches of rapid production trials, while reducing the cost of trial and error. If this transformation can be completed, the competitiveness of the manufacturing side of the enterprise will undoubtedly be greatly improved.

Of course, enterprises should also realize that the supply chain model constructed by 3D printing and intelligent robots is still in its infancy, and a large number of production processes still require the coordination of traditional supply chains. In this case, manufacturing enterprises need to have a clear understanding, learn from each other's strengths and complement their weaknesses, take advantage of flexibility in some places, and standardize in others.

It is undoubtedly a must for traditional enterprises to embrace the Internet and e-commerce. This is not only the broadening of channels, but more importantly, it can bring about innovation in the thinking of enterprise product development. As mentioned earlier, we have entered the era of "consumer-driven", and the Internet and e-commerce are one of the best channels for companies to directly face consumers and obtain consumer feedback.

Going a step further, emerging business models such as "crowdfunding" and "crowdsourcing" also depend on a high degree of connection and interaction between enterprises and the Internet. If Chinese companies, especially small and medium-sized enterprises, want to get rid of the shortcomings of high R&D costs and insufficient innovation capabilities, the emergence of these new models is an excellent opportunity for overtaking in corners.

Paul said that many manufacturing and technology companies are not fully prepared for the new round of changes. He believes that the companies that will win in the future are innovative companies that have no burden and the courage to take advantage of new technologies; and large companies that can see trends and are willing to acquire, digest and absorb startups.