With the rapid development of the C2M trend and the gradual normalization of the demand for customization, how do discrete manufacturing enterprises cope with the operational challenges brought by this background? This white paper shares Siemens Avendar’s thinking on this issue from the perspective of digital transformation.

Executive summary

C2M (Customer-to-Manufacturer) realizes the direct connection between users and factories, eliminates all intermediate circulation and price increase links, connects designers and manufacturers, and provides users with cost-effective products. Since 2020, affected by the epidemic, C2M demand has grown explosively, greatly increasing in breadth, depth, and granularity, and it is expected to become a trillion-level blue ocean market in the future.

On the demand side, with the development of e-commerce and digital technology, through the online purchase behavior, cognitive process and demand interaction of consumers, with the e-commerce platform as the medium, the complete extraction and capture of consumer personalization has been achieved, and the development of C2M has been greatly promoted. On the supply side, the operation level of production enterprises is not enough to support the C2M model, and it is necessary to comprehensively promote digital transformation and greatly improve the operational efficiency of design, planning, supply chain and production links in order to enjoy the dividends of the C2M market.

In the discrete manufacturing industry, the customization brought by C2M has also gradually become the norm, whether it is consumer goods (such as automobiles) or industrial products (such as machine tools, forklifts), users have put forward more and more customized needs, which need to be met by discrete manufacturing enterprises.

For discrete manufacturing enterprises, the development of customization trend has brought many challenges to enterprise operations. From the perspective of value chain, in the value chain of business performance, enterprises face the challenges of difficult cost estimation, low efficiency of product design, slow generation and transformation of bill of materials (BOM), difficult supply chain coordination, low production efficiency and long delivery time and high cost. In the product management value chain, it is difficult to grasp the needs of users, and the complexity of product verification and product portfolio management has increased significantly. In the asset operation value chain, flexible production, production line commissioning and verification, and equipment parameter tuning are the core challenges.

1, the rapid development of C2M trend, through the demand side reverse customization, to promote the supply side structural reform

The C2M trend is on the rise

C2M (Customer-to-Manufacturer) realizes the direct connection between users and factories, eliminates all intermediate circulation and price increase links, connects designers and manufacturers, and provides users with cost-effective products.

For consumers, the C2M model emphasizes user-centered, organizes production according to users’ individual needs, and attracts consumers to join the product design process, effectively stimulating market vitality and social creativity. For manufacturing enterprises, the C2M model improves the productivity of traditional production factors and promotes the transformation of enterprise production lines, supply chains, internal management systems and even the entire business model.

Since 2020, affected by the epidemic, C2M demand has shown explosive growth, rapid development in three aspects of breadth, depth and granularity, and will become a trillion-level blue ocean market in the future.

Breadth: The covered categories continue to expand, including automobiles, shoes and clothing, digital, home appliances, sports equipment, bags, accessories and other dozens of categories;
Depth: The links involved in the previous relatively single product design and development, to the complete product life cycle penetration, including pricing, marketing, service and so on; Massive accurate data mining analysis services, but also allow consumers to fully enjoy the most suitable for their own goods and services;
Granularity: The Internet platform continuously subdivides the granularity of population and region analysis, and meets the needs of each subsegment and region through more accurate data and more mature analysis.
Demand side: With the development of digital technology, users are personalized

Requirements are fully captured

The personalized needs of users have always existed. However, in the traditional business model (B2B2C), consumers’ purchasing behavior and cognition process of goods are all offline, and the production side cannot effectively capture them, so it cannot meet the individual needs of consumers.

The rise of e-commerce and digital technology has changed that. First, make consumers’ purchasing behavior online and convenient; Second, e-commerce helps brands transfer consumers’ cognitive process (mental cultivation) of new products online; Finally, consumers can connect with e-commerce through social networks, so as to extract and capture consumers’ personalized needs through e-commerce platforms.

The world’s leading e-commerce penetration rate allows China’s Internet retail platforms to have big data that reflects the needs of each market segment, and thus complete data mining to guide the manufacturing side. Since 2018, Jingdong, Ali, Pin-duo, Suning and other mainstream e-commerce companies have launched C2M platforms, with the help of a large number of users and channel resources accumulated in the traditional business model, supplemented by strong capital, to rapidly promote the development of C2M.

Supply-side: Enhance competitiveness through differentiation, but internally

The degree of digitization is not yet sufficient to fully support the C2M model

On the supply side, with the development of market economy, domestic and foreign enterprises compete to enter the Chinese market. The fierce competition in the industry leads to the homogenization of products and marketing, and the phenomenon of price war is not uncommon. In order to compete for a larger market share and find incremental markets, enterprises have embarked on the road of differentiation, providing customers with more product choices, and looking forward to breaking through the siege in the competition.

In order to cope with the challenges of fierce competition in the air conditioning market, under the boost of low-carbon development trend, the enterprise takes the lead in launching frequency conversion air conditioning with technical advantages, and then launches fluorine-free air conditioning, formaldehyde removal air conditioning, etc., to find a differentiated foothold, upgrade the health and environmental protection concept of air conditioning, and provide consumers with more choices.

A domestic mobile phone brand, in the competition of more than 200 brands in the mobile phone industry, in the face of strong international brands Apple, Samsung, as well as domestic brands Huawei, Xiaomi, etc., the brand broke through the functional boundaries of traditional mobile phones, launched music phones, “extreme beauty” beauty camera phones and “five minutes to talk for two hours” high-endurance fast charging mobile phones. To consumers repeatedly convey the concept of differentiation of its products, the first to find the effective positioning in the minds of consumers.

However, the current product differentiation measures on the supply side, strictly speaking, are still in the category of production and sales, but thanks to the big data analysis of the e-commerce platform, the factory can learn which types of products have the potential to become explosive, and then more confident production and sales, not the real sense of C2M. The complete C2M model puts forward new requirements for product design, operation planning, supply chain coordination, and production management on the supply side. Production enterprises need to vigorously promote internal digital transformation, significantly improve operational efficiency and production flexibility, in order to enjoy the C2M market dividends.

2, discrete manufacturing enterprises are facing more and more customization needs

In the discrete manufacturing industry, customization trend also exists, and the discrete manufacturing enterprises are facing more and more customization needs.

Customization of consumer goods has gradually become normal

Automobile: Under the trend of diversified demand, consumers are no longer satisfied with the simple choice of car body color and displacement configuration. In response to consumers’ personalized requirements for cars, more and more car companies have begun to provide more customized services, which has significantly increased consumer participation. In the sales selection process, Siemens Avendar survey shows that more than 75% of consumers want to be able to customize the leather, color and texture of the interior, as well as the body color; In addition, consumers also put forward higher demands for vehicle functional features, with more than 70% of respondents having custom needs for the car’s engine, suspension, damping, etc. For the purchase stage experience, consumers hope that car companies can provide AR/VR assisted display, three-dimensional model multi-scene switching, intelligent car selection advice and assistance and other customized services. In the automobile production link, the vast majority of consumers are very concerned about the quality of the automobile production process and delivery, and hope that the enterprise can show the real situation of the production site. All in all, the customization needs of the automotive industry show a diversified and complicated trend.

Other consumer goods: For consumer goods such as electronic products, home appliances, shoes, clothing and bags, the trend of customization has long been the norm. Consumers can customize the scope mainly covers the appearance of the product (such as: color, shape, texture, etc.), product materials (such as: leather wallets, wood furniture, etc.) and product functions (such as: low-sugar rice cookers, adjustable tables and chairs, etc.). The customized products meet the diversified needs of consumers, show the personality of consumers, and conform to the development trend of the industry.

The trend of customization of industrial products is developing rapidly

Under the influence of the trend of customization, traditional industrial products have gradually shifted from standardized and mass production to small-batch and multi-batch production.

Machine tools: With the vigorous development of industry 4.0 and digital factories, “customized” services are no longer limited to spare parts processing, and the market demand for customized machine tools is also increasing. For different application scenarios, equipment manufacturers can customize machine tools according to customer requirements in terms of design, power distribution capabilities, and blade positioning accuracy.
Forklifts: Nowadays, forklifts play an important role in all walks of life. Forklift customization can determine the fork width, rated load capacity and other configurations of the forklift according to the size of the factory door, the bearing capacity of the site, the company’s product counterweight size and other factors, and can be customized for customers to effectively meet the material handling needs.
ETO type industrial products, that is, industrial products designed to order, such products are generally based on project needs, the process is more complex, and the degree of customization is high.

High voltage switch: In order to meet customer customization needs, high voltage switch manufacturers usually combine customer site layout, current and voltage conditions and other factors, according to customer needs, in the appearance of the high voltage switch color, shape, voltage level, insulation mode and other dimensions of customization.
Steam turbines: As an essential part of industrial power generation, steam turbines have a wide range of applications, and the demand for customization is also very strong. The design of steam turbine needs to be designed and customized for customers according to their application industries, scenarios and energy types.