A peek inside the crystal ball: Three manufacturing trends for 2021

Jan. 14, 2021
Trend #1: The digital customer.

By Sean Riley, Software AG global industry director for manufacturing & transportation

As manufacturers continue to adapt to COVID-19 realities, they are realigning their organizations to stay competitive in 2021. Choppy demand, broken supply chains, urgent changes to work safety environments—these are just a few of the challenges facing manufacturers, forcing them to reassess their operations and business models.

Next year, and for years to come, they will need to remain agile to respond quickly and remain relevant, no matter what is thrown at them. Here are the three major trends I see for 2021:

Trend #1: The digital customer. The customer journey has been transformed, driven by a new desire for touchless, digitally enabled buying channels. Digital enablement is a top commercial priority for manufacturers, but many will struggle to implement digital tools and sales channels in their environments. Once implemented and staff is trained, these new digital tools will help customers to not only understand their initial product-acquisition costs, but also implementation, utilization, and any other post-sale requirements. This is a balancing act for manufacturers, as digital enablement must take place while they remain “easy to do business with" for customers.

Find more predictions in our 2021 Crystal Ball Report. Click the cover to get your copy.

Trend #2:  Revenue resilience. Manufacturers are transitioning to innovative selling models such as Anything-as-a-Service (XaaS) and outcomes-based offerings to create recurring revenue and improve revenue resilience. Both offerings allow companies to stay connected with customers throughout a product’s subscription life, typically three years or more, and increase the total customer lifetime value. 

As they expand the sales of these integrated products and services, they are tasking distributors to help originate and support software solutions. But, although these offerings benefit customers by reducing their capex costs, manufacturers are finding it difficult to articulate the full value—finding them a hard sell.

Trend #3: Evolving channel strategies. As face-to-face customer contact diminishes, manufacturers are re-thinking their channel strategies—both direct and indirect. With noted success in virtual selling, manufacturers will continue to increase their digital investments to stay in contact with their targeted customer base, while balancing the safety needs of their employees. Despite the rise of digital channels, manufacturers are not moving en masse to purely direct-selling models. Some manufacturers have their own e-commerce channels, while others prioritize distributors with full online capabilities. With direct channels, manufacturers are expanding enterprise programs and increasing efficiency with sales specialists and hybrid inside-sales roles.

Conclusion: In 2021, while most will have recovered from the initial economic shock of COVID-19, manufacturers will still be learning to operate in an uncertain, remote environment. Face-to-face interaction is still required for longer and more complex sales cycles, but that success is also dependent on wary customers who are slowly and unevenly allowing more access to outside sellers.”