1. Please explain how the democratization of technology and changing customer expectations have altered the marketplace.

2. How can organizations effectively respond to these changes in a way that will add value to the organization itself and their customers? What options do they have?

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Reference Article:

Manufacturers Reassess Role in Value Chain

In the face of disruption, some traditional manufacturers find themselves under pressure to connect more closely with potential customers and to reassess their position in the overall value chain.

The manufacturing industry is undergoing significant disruption. The democratization of manufacturing technologies, combined with changing consumer expectations, are leading new players to enter the manufacturing space and redefine the competitive landscape. In response, some traditional manufacturers are experimenting with connecting directly with customers, and are starting to create new roles inside their organizations to identify and capture value in this environment.

Disruption will likely affect all marketing industry segments, but it will not overtake them at once. A range of factorsincluding a product's size and complexity, and the regulatory environment surrounding itwill influence the speed at which industry disruption occurs. Less likely to be upended in the near term are manufacturers building industrial machinery, automotive, and aviation products. More likely to be disrupted are producers of jewelry, toys, apparel, consumer electronics, home appliances, and furniture, according to a recent report from Deloitte LLP's Center for the Edge.

Established manufacturers are recognizing that increased access to means of production is enabling nontraditional manufacturers to create competing offerings. For example, smaller manufacturers, such as toy or jewelry makers, can increasingly gain access to a 3D printer, perhaps at a local production facility if not in their own homes. Meanwhile, the boundary separating product makers from product sellers is blurring: Smaller manufacturers can not only create their own items for sale, but can also personally market them to clientele through online platforms that connect producers and buyers around the globe.

As shoppers realize they can reach a wider range of manufacturers and purchase personalized products at the same price as those that are mass-produced, an increasing number of manufacturers, large and small, are responding in kind. "Meaning and identity used to be tied to consumption. Now, consumers are finding meaning based on what they help produce," explained John Hagel, a director at Deloitte Services LP and co-chairman of the Center for the Edge, during an October webcast on the future landscape of manufacturing. "Getting involved in the design of products is becoming more important to consumers. There's a lot of co-creation happening in the marketplace."

Although many of these marketplace changes may first affect B2C manufacturers, B2B companies are not immune. "B2B companies may be protected in the short term, but when consumers demand new sorts of products, that demand works its way up the value chain, and there will be repercussions," says Duleesha Kulasooriya, a senior manager at Deloitte Services LP. For instance, as smaller manufacturers increasingly access 3D printers to create their own tailored products, consumer-driven demand for different materials beyond plastics on which to print is likely to trend upwards, and materials suppliers should be prepared to respond, he says.

Changes in the Value Chain

As these trends play out in a growing number of product manufacturing sectors, the likely result is a significant restructuring of existing manufacturers. Large incumbents can prepare for these shifts by focusing more tightly on business opportunities likely to cement their importance in the manufacturing value chain.

Some products could become less objects of value in their own right and more the means for accessing information. For instance, embedding Internet of Things (IoT) sensors into products can create more visibility into how those products are being used, introducing opportunities to both redesign products and to create whole new range of services around them, Kulasooriya says. Clothing manufactured to include sensors that monitor heart rates, glucose levels, and other bodily data, for example, could lead to the creation of jobs to build these new sensors, as well as to distribute and interpret the captured data. It's possible that clothing manufacturers, at some point, could even give away clothing for free in exchange for consumers consenting to share the information generated by its embedded sensors, he says.

In addition, while many large manufacturers today can create productssay, televisionswith greater ease and sell them at a lower price point than in the past, they must also be aware that some of the resulting value is migrating elsewhere in the value chain, Hagel says. For instance, companies that offer streaming media services, which are not involved in the actual production of televisions, are a beneficiary of cheaper, higher-quality TVs in more homes.

Given these shifts, traditional manufacturers are beginning to step back and reassess where they want to be positioned in order to continue to create & capture value. "A key question for existing players in the manufacturing space is, 'Can I focus on parts of the value chain that will concentrate rather than fragment?'" Hagel says.

Manufacturers have three main options to move toward establishing a strong position in this evolving value chain, Kulasooriya says:

From products to platforms. Some manufacturers are rethinking products as platforms, with each platform the center of an ecosystem in which third-party partners can build modular add-ons. Platforms are often thought of as software, such as computer operating systems, but platforms can also encompass nondigital objects, such as thriving aftermarkets that exist to customize and personalize automobiles for both utility and aesthetics.

From products to services. Expanding digital infrastructurelow-cost computing and digital storage, ubiquitous connectivity, and a multiplying number of connected devicesis causing some manufacturers to reconceptualize both virtual and physical products as services. This changes business models, moving the focus from ownership to access and giving rise to "pay as you go" approaches.

From products to data. Although this option is still largely speculative at this point, new categories of "smart" products are likely to generate an enormous amount of data, which manufacturers could have the opportunity to monetize, acting as a trusted agent to advise customers and connect them to their desired products at the right time.

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As shifts in the manufacturing industry change the competitive landscape, many traditional manufacturers are confronting shifting customer expectations and the emergence of new competitors. Manufacturers can respond by rethinking how they can adapt and grow their product offerings in the overall value chain.