Product Value Chain: it’s all about creating value at each step of the way to keep businesses thriving and achieve sustainable growth.
In this journey, SMEs play a crucial role as suppliers to larger industrial corporations. Often, these companies require specialized equipment or tools to enhance their production processes or provide customized services to their clients. These are often developed and produced together with specialized SMEs that have the necessary experience.
Yet, this comes with its own set of challenges: SMEs need to innovate to achieve the highest level of standardization while still creating a unique product and keeping profit margins safe.
The thing is: how can they achieve this?
These SMEs need to refine solutions continuously across the entire product development lifecycle, working closely with clients to understand their evolving needs. Their product range is very diverse, covering everything from specialized equipment and tools to unique manufacturing process services. But they have one thing in common: the requirements are usually very individual.
Their commitment to innovation and their ability to adapt quickly is what sets them apart. They’re not just suppliers; they’re seen as innovative partners who deliver suitable solutions accordingly.
This partnership mentality fosters a culture of collaboration and problem-solving. The know-how and interaction between development and production is essential for smooth processing, from conceptualization to delivery.
Client requirements are assessed collaboratively to deliver solutions that meet technical specifications while remaining cost-effective.
Each product is treated as unique, and the requirements are usually highly customized. Products are made as individual units or small batches and are not very standardized. Though, where possible, standard assemblies are utilized which are tailored to the specific application to maximize standardization.
Customization involves exchanging materials or assemblies, adjusting quantities, or altering production processes, for example. A supposedly similar product can thus have very different manufacturing costs and profit margins.
In addition, industrial corporations expect transparency and full traceability of products during the whole process.
The thing is, all these activities are often done outside the ERP system because it’s just too rigid, and costs can’t be seen right away. The lack of ERP integration frequently means work plans are not up to scratch, or costs and prices are inaccurate. Plus, the manual communication back and forth between development and production slows things down and causes frustration and delays.
Overcoming these hurdles requires a blend of technological investment and cultural adaptation.
While customization presents opportunities for innovation, it also poses challenges, especially when it comes to managing costs and keeping things running smoothly. SMEs need to find optimal business processes to remain unique and competitive.
It is a journey of transformation and discovery, where quality, reliability, and transparency set companies apart. To thrive sustainably, suppliers need to digitize their processes without losing their ability to adapt and stay flexible.
What‘s your take on this? Let’s chat.
