Value Chain Opportunities in Construction
April 14, 2020
It’s hard to believe that CONEXPO-CON/AGG was held only a short time ago, as so much has changed with the escalation of a global pandemic. Regardless, the world’s largest consumer of raw materials, the construction industry, continues to be under pressure to reduce costs and time without sacrificing productivity or quality, all while demonstrating a decline in its carbon footprint. It’s a lot to ask. But with advances in innovation, construction, forestry and agriculture Original Equipment Manufacturers (OEMs) can be positioned well to help their end users tackle these challenges while turning a healthy profit.
McKinsey & Company writes, “The machinery industry, like so many others, is at a technology tipping point. If OEMs want to thrive despite the disruptions ahead, the key will be to create a compelling value proposition for customers to share data and pay for these new technologies. The winners will be companies that selectively disrupt their business models by prioritizing high-value technology to drive market share and earn recurring revenue streams.”
The value proposition cited by McKinsey & Company can include implementing “agile development methodologies,” a “deeper understanding of customer-decision journeys” and “rethink[ing] the talent model.” For OEM supply chain managers, there are ways you can contribute to capturing this value. Let’s explore some ways how:
Clamor for Data
Whether your end users are clamoring for better predictive maintenance (PdM) to reduce or anticipate ongoing equipment maintenance, or they want simplified access to their data to reduce project time or budget (or both) – your supply chain ecosystem can help. The Value Analysis/Value Engineering (VA/VE) services offered by Tier 1 metal fabricators, for example, can assist with the design of your parts and assemblies far earlier in the development process to refine the manufacturability of your latest innovation, well before prototyping. This collaboration has the potential to reduce waste while incorporating your design modernizations to get your product to market faster.
Other data-centric collaborative efforts can include vendor-managed inventory (VMI) and logistics optimization strategies. Keep finished goods inventory stocked based on your demand forecasts without the drain on your floor space and balance sheet by leaning on your supplier-partners and better integrating them into your demand schedule – which is even more critical during times of uncertainty.
And, regardless of your logistics provider, you can incorporate the oversight of your supplier-partners to maximize loads and optimize hauls. This way, your company’s focus can remain on product development and go-to market strategies, not supply chain logistics.
The Digital Denominator
Digital channels will continue to gain preference over traditional channels, according to McKinsey & Company. Never is this more true for the equipment manufacturer-supplier relationship, in this age of COVID-19. For OEMs, old ways of managing supplier-partner relationships will fall by the wayside as greater self-service options, more virtual meetings and other opportunities to work together as seamlessly as possible will rise in priority. Old objectives, like cost reduction initiatives, will lose their importance as production capacity, the financial health of your top-tiered supplier-partners, and quality standards reign supreme. The question for OEM supply chain managers becomes: is your supply chain ready?
Contact Miller Fabrication Solutions to see how Miller is prepared to play a role in developing your value chain opportunities for applications in the construction, forestry, agriculture and other industrial equipment industries.