Angelo Hulshout has the ambition to bring the benefits of production agility to the market and set up a new business around that. He sees three big questions pop up with (potential) customers: what does it cost, what’s the return on investment and how long does it take to break even?
In publications about smart industry, on social media like Linkedin and on company blogs, we see a lot of technology descriptions, solutions that worked in one place (success stories) and bright outlooks to the future. What we don’t see – perhaps because it doesn’t fit the sales narrative – is the manufacturers’ side: how do they perceive things?
With Shinchoku, we try to take a different view, but as you can see by my earlier writings, we also get carried away by the solution we think we have. That’s fine. It gives a drive to the people working on the solution, but it doesn’t necessarily sell. To sell, we need to show the customer that after the initial investment in smart industry, they actually gain something. Show them that there’s a return on investment, that it’s not just a technology push.
We’ve been talking to a number of (potential) customers about the benefits of a MES system. Of course, they all understand that being able to plan is useful, and becomes even more useful if you get feedback about the production status from your production lines as well. Sooner or later, however, three big questions pop up: what does it cost, what’s the return on investment and how long does it take to break even?
Important questions for any business investing, but they also bite back at the asker as well as to us as a service provider. The customer asking the questions knows why the investment is needed but is also very much aware that he hasn’t yet shown (or even quantified for himself) how big his current problem is. Partly because it’s sensitive information, partly because he simply doesn’t know (yet) how much time and money are currently lost due to inefficiencies, non-sustainable solutions and organizational mismatches in production.
As a service provider, we can make a proposal, but without this information, we can’t answer the three questions. That leads to the interesting situation that we have to ask the customer how much is lost now, match that with our proposed solution and then calculate the ROI and break-even point. Awkward for the customer, who has to either cough up sensitive information or admit that it’s not available. Awkward for us because we don’t know the numbers – often, finding this input is part of our proposal.
Chicken and egg
For example, we can offer to help a customer who notices that he’s losing money because he’s not optimally using the capacity of his production line, leading to late order delivery and loss of income. Also, part of the production is for material that’s not on order yet but may be needed in the future as parts of other orders. A certain amount of that material gets scrapped because the prediction was wrong.
If we propose to set up a system that helps find out the numbers that go with this case, the three questions become a chicken-and-egg problem: how can we predict return on investment if we nor the customer know the numbers? And how hard is it for the customer, often a middle manager having to defend our solution to a board of management, to admit he can’t even provide the ballpark numbers?
We have customers like this because our target market consists of manufacturing SMEs that have minimal or no automation in place yet. Our mission for the last months of 2021 is clear: come up with a startup solution for potential clients. A solution that helps them see the size of their problem in numbers and helps us answer these three awkward questions.
Main picture credit: Chuttersnap on Unsplash