Space A: More efficiency and higher product maturity through digital optimization

 

Space A: digitization of production: industry 4.0

In some cases, digitization can be limited to optimization of production processes on one hand, and addressing solely existing customers on the other. Examples are CRM activities, digital service offerings and means of increasing efficiency and quality within the production itself. Digitization in these areas has a long tradition, starting with CAM and CIM in production or EDI in commercial transactions. Nearly every company is experienced in digitization of production processes to a certain degree. That provides a strong basis, and well-established firms often feel safe and secure in space A. Sometimes too safe. This is, as well, the space that can be shattered most by disruptive market transformations. The music industry had been intensifying auditory experiences, optimizing sales channels and perfecting recording media over decades. No industry executive had even considered the disruptive power of music downloads and streaming before it actually occurred.

Advantages of space A strategies

Enterprises that limit their digitization strategy to space A realize some relevant advantages. Know-how that is already available within the company can be utilized to a large amount. Customer relations will not be altered and thus can be managed more easily. This supports stability of business model and customer relations. If the overall strategy of the company is still adequate and future-proof and expansion of customer segments and portfolio are not perceived as expedient, space A strategy will provide a focused and resource-friendly approach. Brand essence of the firm will be strengthened, quality is likely to increase and efficiency can be fostered.

Risks of space A strategies

Digitization projects in space A are not necessarily small. Especially when complex manufacturing processes and logistics are about to be digitized, an amount of complexity will result that can be challenging. If the project fails core processes can be endangered.

More often space A projects simply do not realize the whole potential of digitization. That is why it should always be examined whether new value creation through products can be achieved or new customer groups reached (space B). The overall effort is not necessarily significantly higher than in pure space A strategies. Besides that it is always crucial to monitor activities of start-ups that can become competitors via a space E strategy by realizing completely new digital business models had intrude on your core market. File sharing and streaming had been such models for established music industries.

Success factors in space A

manufacturing control

manufacturing control - a decisive factor in space A strategies

All space A digitization projects affect core processes and core competencies. That means that the company’s capability to act is directly affected. While other strategies can be realized in cooperation with service partners over the long term, regarding space A strategies it should be considered carefully whether market position and know-how would be at risk if too many processes are in the control of partners. In most cases it will be advantageous to establish digital competencies within the company itself. Besides that, detailed knowledge and definition of affected processes should be available. That will be the basis for well-founded decision-making whether digitization might overstrain the organisation. To prevent this, a stepwise procedure that is geared to organisational learning is recommendable. Even big solutions like manufacturing execution systems (MES) should be scalable and should not be implemented as one major coup.

 

Overview: digitization strategies

 

 

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published: December 10, 2018, © Uwe Weinreich

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