Gartner recently named 3D printing as one of the Top 10 Strategic Technology Trends for 2016 – expecting it to yield a compound annual growth rate of 64.1% for enterprise 3D-printed shipments through 2019. However, some of us are wondering why this advancement is creating such buzz. Could it be the promise of product customization?
What started with a laser engraving on your MP3 player a few years ago has now developed into the option of printing your picture on chocolate sweets or choosing your favorite color combination for your headphones. Sports brands are already working with 3D printing to deliver running shoes with personalized 3D-printed soles in the near future.
But don’t be fooled: Product customization is not just a market – it’s a marketing element. A study by Bain revealed that the opportunity to customize products can increase customer engagement. In fact, it has such an impact that consumers tend to visit the e-commerce site more frequently, stay on the page longer, and are more loyal to the brand over the long term.
And the demand for customized products is not expected to stop with simple product adaptations. This trend will also affect companies that manufacture complex electronic products. The modular smartphone – such as Google’s Project Ara – might just be the first step in this direction.
Digitalization is the core of this development. But while the digitalization of the manufacturing process is underway, the flow of digital compliance information appears still to be in its infancy.
For a few decades now, the electronic industry has faced enormous pricing pressure. The supply chain has gotten more complex. At the same time, the vendor relationship is not as close as it used to be. Driven by function and price, substance knowledge has been largely ignored in the supplier relationship and communication. Meanwhile, the number of legal constraints that require in-depth knowledge of all substances contained in the product is increasing.
Table 1: Examples of legal requirements that are based on substance lists
|Conflict Minerals||Human rights||United States|
|Product recycling||European Union and China|
|Proposition 65||Consumer protection||California – United States|
|REACH-SVHC CL||Environmental and consumer protection||European Union|
|REACH Annex XVII||Environmental and consumer protection||European Union|
|CPSIA||Consumer protection||United States|
|Stockholm Convention||Environmental protection||Global|
To ride the wave of product customization in a global market, companies must know every single substance contained in any configuration of their products. Otherwise, the risk of noncompliance with any of these substance-based regulations is high. From a compliance perspective, customized products mean that you have an almost unlimited number of different product configurations. Today, they are differentiated only by their color; tomorrow, they will also vary in terms of materials used and their weight. This information is crucial when dealing with substance-based compliance requirements. Obviously, the relevant information is out there. But it seems that compliance-relevant knowledge is remaining within the first level of the supply chain – rather than being passed from one level of the supply chain to the next.
A digitalized and automated exchange of substance-related information must be achieved. It is not possible to enter new markets without the necessary information flow from your supply chain. Today, there are already various data formats and platforms that can be used to communicate substance information. However, none of them have reached broad acceptance across the electronic industry.
In contrast to the electronic industry, the automotive industry is a good example of an industry that managed to digitalize substance information exchange. Facing a broad range of national and international standards and restrictions, the automotive industry managed to establish a de facto standard exchange platform named IMDS. And if you think about it, the automotive industry has already been providing complex and individualized products for a long period of time.
So what should companies willing to step into product customization focus on today?
- Establish a trustworthy relationship with your suppliers
- Identify the contact person for substance-related matters for every supplier
- Automate the identification of missing supplier information within your company
- Set up a digital exchange process for substance-related information
The European Chemicals Agency, responsible for legislations such as REACH, once stated: “No data – no market.” In other words, if you want to do business in the European Union, you will have to provide data that proves that the substances contained in your product aren’t harmful to consumers.
Thinking about the market and marketing potential of customized products and the limitations which go along with lacking substance knowledge, it is probably safe to extend this expression and say: “No data. No market. No marketing.”
Want more future-focused marketing strategies? See The Modern Marketer’s Adventure Guide.