March 22, 2024, published in Wonen360
“Van Hool as symbol for decline of our manufacturing industry “Storm clouds over Belgian manufacturing industry”, “Another well-known furniture store closes: ‘Why would you still go to a showroom?”; hese are just some of the ominous headlines about the manufacturing industry. Too high energy prices, strong competition from China, and high labor costs ensure that we face a major challenge. Yet the future has never looked so bright.
Standstill is decline. This age-old saying remains relevant to this day. As a techno-optimist, I am firmly convinced that the coming period can become one of the most beautiful, fascinating and productive periods since the digital revolution.
The rise of AI and Robotics always create unprecedented possibilities. The challenge is to translate this into a business model that works for ordinary companies.
Let us therefore look at what we can learn from other, recent success stories. Tesla is undoubtedly one of them. Elon Musk was the first car manufacturer since 1956 (Ford) to succeed in going public and subsequently becoming the highest valued car company in the world.
Anyone who reads his biography will discover that Musk demonstrates a number of basic principles that ensure his companies differentiate themselves from the rest:
- Question all ‘common knowledge’. Why does something happen in a certain way? Is there a good reason for it? Remove all unnecessary steps.
- Deep vertical integration
That vertical integration starts with sales. Tesla was the first major automotive player to start with direct sales to end consumers. Via a simple configurator you can order a Tesla online. The classic garage-franchise model, which focused on customization, was scrapped. Furthermore, they produce as much as possible ‘in-house’. This makes Tesla’s profit margin much higher than that of classic automotive players. Last year it was about a profit margin of some $9,500 euros per car for Tesla versus $973 per car for Volkswagen*.
The only thing Tesla doesn’t fully produce itself are the batteries of their electric cars. This immediately explains why the Chinese car producer BYD was the first to succeed in knocking Tesla off the throne in terms of sales numbers. BYD goes one step further in its vertical integration and also produces the batteries of their cars completely in-house.
This new trend goes directly against what was long the modus operandi for many companies: outsourcing as much as possible.
As far as I’m concerned, it’s time to set aside this old principle, and focus maximally on vertical integration. Technological developments such as AI and robotics are in my opinion the keys to success that can ensure that every company is capable of this.
A number of progressive furniture manufacturers show that it’s possible.
With 3D Config we have developed a number of 3D configurators in recent months that are fully integrated with production, whereby the entire process from development, design, quotation, sales to production is digitized. The companies that introduced this principle immediately saw an increase in their sales, and an increase in their profit margin. By doing everything in-house, they also became less dependent, and obtained information that enables them to further refine their strategy for the future.
Our vision is that this is just a first small step towards the future. This vertical integration can be extended much further.
Imagine a future where a customer configures a product, all parameters are automatically sent to production and robots build the products through AI. Don’t be mistaken, this is not a pipe dream. With 3D Config we spend much of our time developing these kinds of things. For example, we are already busy connecting our configurators to robot controls.
In a knowledge economy like ours, we are obliged to play a pioneering role if we want to remain relevant. Our country once became great thanks to manufacturing industry in the furniture and textile sector. Let us embrace the rise of AI and robotics, and we can ensure that the manufacturing industry once again becomes one of the driving forces of the Belgian economy.botica omarmen, en we kunnen ervoor zorgen dat de maakindustrie opnieuw een van de drijvende krachten wordt van de Belgische economie.
