On course for lot size 1?

Digital transformation is here, it’s well underway, and is set to continue. In the retail sector in particular, digitization is moving at a breakneck pace – driven by rising consumer demand for speed and convenience on the one hand and the availability and unprecedented processing capacities of new technologies on the other.

There is also growing pressure on retail manufacturers to deliver increasingly flexible and efficient production processes to cater ever more individually to customer requirements, as well as significant pressure on the retail sector as a whole to improve the flexibility of its sales and distribution processes and structures to increase the response time to new trends and developments.

Even today, many consumer goods manufacturers are no longer confining themselves purely to the role of producer. Companies that combine the production side of their business with an e-commerce platform of their own or with retail e-commerce platforms and social media can open up completely new revenue streams and turn the entire value chain – from product design through sales – to their advantage. This step is ultimately the logical consequence of a sea change in consumer behavior: Consumers who have a world of information at their fingertips and use social media as a source of inspiration expect nothing less than an individually targeted approach and straightforward purchasing processes.

The consumer as product engineer – digital process chains

Digital transformation continues to reduce time to market, offerings are becoming increasingly personalized, even to the extent of extreme product individualization – lot size 1, and communication between purchasers and manufacturers is at an all-time high, meaning that product improvements or product line expansion suggestions that are posted online can flow directly into planning and production. Future consumers can even be involved in product design itself. Innovations in handling and usability can be rolled out faster and new products or solutions can be made in line with actual demand.

The aim of an omnichannel, or the ‘one channel’ model, is to network the online stores and physical stores, serving as the interface to the market. Dynamic changes, such as rising or falling product demand, new trends, price levels, and competitor behavior, can be recorded and forwarded to production over digital networks, creating a digital process chain direct from the omnichannel platform to the smart factory.

Delivering custom products on demand

By combining their potential, manufacturers and retailers can take personalization to a whole new level: on-demand digital production with fluid digital process chains through the individual configuration of consumer goods. The customer's order triggers the production process in the smart factory, initiating a fully automated process from production through the delivery of the product by drone to the customer's current location.

With the aid of new real-time technologies, manufacturers can manage production volumes with greater efficiency and flexibility. Where previously it was only possible to manufacture in high quantities, intelligent digital resource management in a smart factory now permits the production of small batches, which are ordered directly over a B2B commerce platform. The result: production that is even more individual and personal.

Retail-based usability and process expertise for the benefit of manufacturers

For the networking of retailers and manufacturers to succeed, a transfer of knowledge is also required; an example being the development of user-friendly production control software interfaces: The usability knowledge required to operate a successful online store can easily be adapted for the development of touchscreens for production plants. Ergonomic design, intuitive operation, and efficiency of successful usability engineering in commerce are also required in Industry 4.0.

Industrial manufacturers can also benefit from the knowledge of the retail sector omnichannel transformers in the digital transformation process itself.