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These trends can affect different manufacturing sectors at different rates. At the same time, as products become less objects of value in their own right and more the means for accessing information and experiences, creating and capturing value has moved from delivering physical objects to enabling that access. Together, these shifts have made it more difficult to create value in traditional ways. In this environment, intermediaries that create value by holding inventory are becoming less and less necessary. And numerous factors are leading manufacturers to build to order rather than building to stock. Manufacturers are feeling the pressure-and gaining the ability-to increase both speed to market and customer engagement.
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Meanwhile, the boundary separating product makers from product sellers is increasingly permeable. While large-scale production will always dominate some segments of the value chain, innovative manufacturing models-distributed small-scale local manufacturing, loosely coupled manufacturing ecosystems, and agile manufacturing-are arising to take advantage of these new opportunities. New market entrants with access to new tools can operate at much smaller scale, enabling them to create offerings once the sole province of major incumbents.
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Added sensors and connectivity turn “dumb” products into “smart” ones, while products increasingly become platforms-and even move into the realm of services.Īs technology continues to advance exponentially, barriers to entry, commercialization, and learning are eroding. Customers demand personalization and customization as the line between consumer and creator continues to blur. Changes in consumer demand, the nature of products, the economics of production, and the economics of the supply chain have led to a fundamental shift in the way companies do business. Manufacturing is no longer simply about making physical products. The changing economics of production and distribution, along with shifts in consumer demand and the emergence of “smart” products, are pushing manufacturers to explore radically new ways of creating and capturing value.