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How CLM Is Digitally Transforming Manufacturing

Every business needs to keep growing by innovating or risk seeing their core markets shrink by 60% or more in three years due to rapid advances in digitization according to IDC.  Digital technologies are enabling entirely new ways of optimizing existing business strategies & models and growing launching new ones.

The following market forecasts and survey results reflect how integrating front-end, and back-end processes are catalysts of growth for manufacturers today and in the future:     

  • By 2021, the effectiveness of manufacturing IoT initiatives will be tracked by business outcomes continuously through their life cycle, up from less than 20% today.
  • 25% of midsize organizations engaging in Industrie 4.0 strategies will collaborate in cross-industry ecosystem initiatives by 2020, up from 10% in 2018.
  • 30% of manufacturing companies with more than $5B in revenue will have implemented Industry 4.0 pilot projects using blockchain by 2023, up from less than 5% today.
  • By 2023, 30% of Industrie 4.0 projects will also be using blockchain technology.
  • 62% of North American manufacturers integrating their Configure, Price Quote (CPQ) system to a CRM system alone are growing at least 5% a year based on a recent Configit survey.

Competing smarter, faster and with greater intensity in the future starts with the decision to digitally transform manufacturing today. Based on visits with manufacturers I’ve seen where digital transformation is paying off the greatest today. It’s immediately improving existing products with greater insights, reducing Cost of Goods Sold (COGS), Sales, General & Administrative (SGA) and revolutionizing customer experiences. Digitally optimizing inventory levels, production yields, and physical asset uptime while generating cash from operations are how many manufacturers are paying for digital transformation today.

How To Digitally Transform Your Business And Drive More Revenue

Tracking cost reductions generated from digital optimization efforts are easy to sell to any CEO and board of directors because they promise and deliver results that make an impact on financial performance.  Manufacturers are excelling at digital transformation start by optimizing every aspect of their operations, especially those directly aligned with customers.

By integrating the many front-end processes enabled by CRM, CPQ and product configuration systems with back-end systems comprised of ERP, PLM, and CAD, manufacturers are growing faster. They are digitally transforming their businesses using Configuration Lifecycle Management (CLM) as the foundation for future growth.  

Here are the areas where combining digital transformation and CLM are combining to create high-growth business models that will flourish in the years ahead:

  • Creating smart, connected products that integrate IoT sensors to provide a rich, real-time stream of data that opens up entirely new revenue opportunities.  CLM is the gateway to services-based revenue streams that have gross margins 2X and 3X that of typical hardware. Rather than fight pricing ways and rely on transaction revenue alone, manufacturers are designing and selling smart, connected products that are the future foundation of services revenue. And CLM is making the transition from transaction business models to service-driven ones possible. Configit’s latest study of North American manufacturers found 52% of them are planning to build IoT-enabled, smart, connected products in 2019.
  • CLM enables better sales and marketing coordination, in addition to streamlining new products and services launches, giving engineering teams more time to work on new products. 48% of manufacturers see higher product quality as a result of adopting a more CLM-driven strategy. Improvements in quote accuracy are improving product quality. 41% are seeing order turn-around times reduced, increasing customer loyalty.  And 35% are achieving more short-notice production flexibility. CLM contributes to growth by unifying front-end and back-end processes, enabling organizations to invest more in future products.

CLM is proving to be an excellent platform for manufacturers to define their digital transformation roadmaps supporting entirely new businesses. By orchestrating PLM, CAD, ERP and CRM systems to a common cadence when each has its own cycle time or speed, manufacturers are creating a platform for future new product and new business success. Digitally transforming manufacturing needs to always begin with the customer and work back into engineering (PLM & CAD systems), manufacturing (ERP), and sales and marketing (CRM). CLM enables manufacturers to plan and launch new products more efficiently and at a lower cost when all four systems are integrated from the customers’ perspective first. Improving time-to-market on new products and excelling at time-to-customer are two of the most important metrics customer-driven manufacturers rely on today.

Enabling executives to see more opportunities to excel in every area of customer experiences is fueling new product ideas and entirely new businesses.  When a single platform is enabling engineering, manufacturing, sales, and marketing to share a single, unified view of the customer, senior management quickly sees areas where they can excel even further. The following graphic illustrates how CLM provides every member of a senior management team with the analytics and insights they need to find new opportunities and expand into new products.