Digital Strategy

Top 5 Market Trends from Propulsion 2021

November 30, 2021

Discover the five market trends Propel CMO Dario Ambrosini took away from Propulsion, Propel’s annual event for digitally savvy manufacturers.

My favorite part of working at Propel is interacting with so many of our amazing customers. This was on display last month at Propulsion, our annual event dedicated to helping digitally savvy manufacturers achieve product success. As Propel’s head of marketing, I had the pleasure of meeting with all 16 customers who participated in the event, as well as thought leaders like Geoffrey Moore, Peter Bilello with CIMdata, and Julie Fraser with Tech-Clarity. And of course, the fantastic Manufacturing and HLS leaders at Salesforce - Achyut Jajoo, Cindy Bolt, Kevin Chien, and Tony Kratovil - who are always so generous with their time. Insights from this cross section of experts is vital to our understanding of future trends - which is how we develop our strategy and roadmap. Here are my top five market trends from this year’s virtual event.  

1. Industry clouds are taking off. Veeva pioneered the industry cloud concept 15 years ago. Salesforce doubled down on this strategy with their 2019 Manufacturing Cloud launch and 2020 acquisition of Vlocity. More recently, we’ve seen new manufacturing industry cloud offerings from Google and Microsoft, joining established providers like Salesforce, SAP and Oracle. This is the future of cloud solutions because a shared platform with unified data, comprehensive analytics, and dedicated user capabilities makes it much easier to complete the digital transformation that manufacturers are embracing. This is a huge value driver, especially for companies that value a unified customer experience. 

Many manufacturers choose Propel because responsiveness to changing customer needs and market conditions is imperative to their success. An industry cloud solution on a single platform makes it easier to find the right data, ensures it is shared with everybody who needs it, and enables company-wide collaboration to make the best decisions as quickly as possible. The right decision made quickly can deliver significant revenue gains and cost savings. Here’s a great overview from Brent Lewis, Director of IT at Advanced Sterilization Products.


2. More partnerships between Med Tech and High Tech. With so many high tech and medical device customers, Propel has had a front row seat to an increasing number of these types of partnerships. High tech manufacturers, especially those focused on consumer wearables, are moving toward medical devices and Software as a Medical Device (SaMD). At the same time, more and more medical devices are connected and delivering innovative patient care that was not available just a few years ago.

These two industries are converging, with high tech manufacturers understanding the need for and value of integrating quality and compliance with their design process, and med tech companies understanding the need for efficient and fast product development processes that allow them to bring products to market faster. Given the different historical strengths of each side, expect to see more partnerships between med tech and high tech companies, as well as more cross hiring to leverage best practices each industry can bring to the other. The integration of product development, quality and compliance - another key benefit delivered by comprehensive industry solutions like Propel - will be key to successfully connecting everybody needed to deliver product success in this area. Xiaoyi Wang, Head of Quality and Regulatory at HP, explains the convergence taking place.


3. Integrating quality and compliance with product development is a must. Most manufacturers focus on quality and compliance starting with the manufacturing phase and continuing through the service life of their products. That’s because their QMS providers were built to meet this specific need. Finding and addressing quality issues after a product is built or even shipped is only half the battle. 

More advanced manufacturers understand that including quality and compliance as an integral part of the product development process will accelerate time to market, reduce the cost of compliance, and improve long term quality - all benefits that improve the bottom line while increasing long term customer loyalty. Making this a reality requires collaboration between Engineering, Quality and Compliance departments, integrating quality processes with selection of Approved Vendor Lists and individual components on a Bill of Materials, and automating workflows across every department and person who touches the product. Cynthia Hitchcock, SVP RA/QA & Compliance at PrinterPrezz, provides a great overview of how this approach to quality benefits the bottom line for manufacturers.


4. This is just the beginning of a long term supply chain shift. With all the understandable focus on this year’s supply chain disruptions, the market is missing the bigger picture about the long term supply chain shifts that will have significant impacts for years to come. The long term de-coupling between China and the US will completely change the supply chain model focused on global low-cost sourcing that has developed over the past 30 years. The Chinese supply chain is not going away - if anything, it will gain importance worldwide (see our Modern Manufacturing Report on the impact of their Belt & Road Initiative) - but it will become a challenge for some manufacturers based in countries that don’t play well with China (such as the US).

This uncertainty is made worse because these changes are driven by geopolitical factors, such as the rise in nationalism, rather than economic factors. Whereas supply chain trends driven by economic factors are a bit easier to predict for the long term, an election in the US could have an immediate and unexpected change in policy that impacts supply chains. When you add the supply chain disruptions into this mix, the message is clear for manufacturers: a truly resilient supply chain requires multi-threaded partners across different geographies, and you need to pivot quickly and onboard new suppliers remotely if they are needed. Anything less puts your entire business at risk. Here’s Bruce Mehlman, Founding Partner at Mehlman Castagnetti Rosen & Thomas, with an overview of these long term supply chain trends.


5. Inflation will continue to rise. Inflation surged to 6.2% in October, and feedback from our customers shows why this trend is likely to continue. First, the move from a global, single-threaded supply chain to a geographically distributed, redundant supply chain (as described in #4) will increase the cost of goods sold for American manufacturers. And they will incur that incremental cost because it will be necessary to make their products. The more digitally savvy manufacturers will reduce costs by having complete cost visibility across multiple suppliers and quickly adjusting to lower cost components. But most manufacturers are lagging in this area, so any supply chain interruption will force their hand with higher-priced suppliers, which will be passed on to the consumer in the form of higher prices.

Additional inflationary pressure is also being driven by challenges with both local transportation and hiring. The challenges with ground shipping are being managed with higher cost air freight - with some manufacturers absorbing the incremental cost if they can find efficiencies elsewhere, while others are forced to pass along the additional cost to their customers. Some of the hiring challenges and employee cost pressure can be offset by enabling a worldwide, remote workforce, as Vicky Carl, Senior Manager Quality Management Systems at Rockley Photonics, describes in this clip. 

But many manufacturers are still lagging behind on the technology and even culture needed to make a hybrid work model work, and the additional expense of having to hire talent locally is resulting in higher prices. Over the long term, the more nimble and digitally savvy manufacturers will prevail, because they will leverage their distributed workforce to deliver products faster and at lower cost. But in the short term, we should expect to pay higher prices for products across a variety of industries.


Conclusion

Our Propulsion event was chock full of great information. I encourage you to watch all our sessions at your convenience.

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Dario Ambrosini

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