Information technology as a competitive advantage for manufacturing companies

A competitive advantage refers to one or more unique characteristics that enable a company to outperform its competitors. A competitive advantage enables a company to create greater value for its customers, achieve higher profitability and maintain its market position over the long term. The advantage must be difficult for competitors to reproduce and give the company a long-term market advantage. How can IT achieve this advantage for production?

A competitive advantage can take various forms, such as superior product quality, cost efficiency, innovation, brand reputation, customer service, or access to unique resources. “Our information technology is our competitive advantage,” is something you rarely hear from manufacturing companies.

Basic criteria for using IT as a competitive advantage

In order to gain a competitive advantage in the manufacturing industry through information technology, the technology stack used in particular must be modern. A modern IT infrastructure offers significant advantages such as scalability, security and optimized processes, which are crucial as a basis for creating a competitive advantage.

Since today's information technology is usually purchased, it's important to evaluate the vendor's mindset. A focus on innovation and agility is necessary. The challenge is that there is often a certain level of vendor loyalty, which makes it difficult to change providers frequently. In addition, a software company's attitudes may change over time, which is beyond the customer's control. But that still allows an assessment of the current situation: For example, a company that does not offer an API in 2024 is unlikely to be a good long-term partner.

Differentiation in the market as a decisive criterion

One definition of strategy is that it must set your company apart from the competition. The idea is closely linked to Michael Porter, a prominent professor at Harvard Business School. He formulated this concept in his book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” (1980). Porter argues that the core of a strategy is choosing a unique position that differentiates a company from its competitors and enables it to achieve a sustainable competitive advantage.

The challenge of an undemanding approach to software for production is significant. Key functions are often taken over by industry giants such as SAP, which is the solution of choice for many companies. As a result, there is little scope for differentiation where differentiation is an advantage — this may not apply to incoming goods booking or audit (mainstream software certainly has its place), but production planning, productivity management or problem solving has differentiation potential for a manufacturing company. In the meantime, other functions are managed by outdated software that does not add contemporary value to the production function. This approach does not create a solid basis for achieving a sustainable competitive advantage.

It's clearly worth exploring another approach to stand out from the competition: opting for a world-class software stack from specialized providers rather than relying on outdated or mainstream solutions. As the saying goes, “You won't get fired if you buy SAP,” but using the same software as everyone else won't give you a competitive advantage either.

The technology to bring the various components together is easily available with a factory data hub. The concept is also known as “infrastructure as code.” The architecture of an IT landscape, which enables separation from the crowd, is best illustrated in the following graphics:

The sustainable advantage lies in entering into a close partnership with a specialized software provider and working together on long-term innovations. This deep integration and co-innovation is critical to achieve the differentiation needed to secure a competitive advantage in the market.

oee.ai provides the competitive advantage

With a strong track record and a commitment to future innovation, the dedicated team behind oee.ai aims to be the differentiating partner for manufacturing companies. By focusing exclusively on manufacturing intelligence, oee.ai delivers advanced solutions such as gamification, artificial intelligence, a mobile app, a chat interface, and anomaly detection—just a few examples of its latest innovations for customers.

If you're interested in how oee.ai can help you gain a competitive advantage in your industry, don't hesitate to contact us at info@oee.ai.

Author: Linus Steinbeck