Adam Sharman, CEO LMAC Group, APAC

Throughout 2024 we have heard the mantra ‘survive to ‘25’ across a number of businesses and sub-sectors of our industry. In challenging economic times, manufacturing businesses face unique pressures from all directions – supply chain disruptions, decreased demand, and tightening credit markets.

However, history shows that companies taking decisive action during downturns often emerge stronger when the economy recovers.

In these times, organisation must be clear on what it is that sets them apart, in order to prioritise investment of time and resources in those activities that will accelerate their competitive advantage as markets recover.

But how many truly understand what sets them apart? A genuine competitive advantage isn’t just about being better—it’s about being different in ways that matter to customers and are difficult for competitors to replicate.

Looking Beyond the Obvious

Traditional thinking often leads manufacturers to focus on standard metrics like price, quality, or delivery times. While these factors matter, they rarely constitute a sustainable competitive advantage.

Every serious player in manufacturing strives to optimise these elements, making them table stakes rather than differentiators.

The key lies in identifying unique combinations of capabilities that create lasting value. Consider Toyota’s revolutionary production system—it wasn’t just about efficiency, but rather a holistic approach combining worker empowerment, continuous improvement, and waste reduction that took decades for competitors to understand, let alone replicate.

The Three-Step Analysis Framework

Customer Value Mapping

Start by mapping your customers’ entire value chain, not just their immediate needs. What challenges do they face upstream and downstream? A manufacturer of industrial fasteners discovered their true advantage wasn’t in the products themselves, but in their ability to provide engineering support that helped customers optimise their entire assembly process.

Document every customer touchpoint and gather data on:

• Problems customers face that they haven’t explicitly mentioned
• Inefficiencies in their operations that your company might be uniquely positioned to address
• Long-term trends affecting their industry

Capability Assessment

Conduct a thorough analysis of your organisation’s capabilities, focusing on:

• Proprietary processes or technologies
• Unique combinations of skills within your workforce
• Intellectual property and trade secrets
• Established relationships and network effects
• Historical knowledge base and institutional memory

The goal isn’t to list everything you do well, but to identify capabilities that meet three crucial criteria: they create demonstrable value for customers, are difficult for competitors to copy, and can evolve as market conditions change.

Sustainability Testing

For each potential advantage identified, ask:

• How long would it take a well-funded competitor to replicate this capability?
• What barriers protect this advantage?
• How might technological changes affect this advantage?
• Does this advantage strengthen or weaken as we scale?

The Three-Step-Framework in Action

Using this approach, a New Zealand based electronics business was able to identify that their greatest competitive advantage was not price, as previously though, but security of product and supply chain.

By doubling down on this dimension of their service, this company was able to win contracts in the defence and automotive industry away from cheaper, overseas manufacturers, significantly increasing their revenue and market reach.

Common Pitfalls to Avoid

Many manufacturers stumble by:

• Confusing operational effectiveness with strategic positioning
• Focusing on advantages that are easily replicable in the market (or in overseas markets)
• Failing to invest in maintaining and evolving their competitive edge
• Not aligning their entire organisation around their core advantage

Building for the Future

A true competitive advantage isn’t static—it must be continuously reinforced and evolved. Consider creating a dedicated team responsible for:

• Monitoring changes in customer needs and market conditions
• Identifying emerging threats to your competitive position
• Exploring ways to strengthen and expand your advantages
• Ensuring organisational alignment around your core differentiators

Taking Action

To begin this analysis:

1. Assemble a cross-functional team including operations, sales, and customer service
2. Conduct in-depth interviews with your most valuable customers
3. Map your capabilities against customer needs and competitor offerings
4. Identify gaps between current positioning and desired competitive advantages
5. Develop an action plan to strengthen or acquire needed capabilities

Remember, the goal isn’t to be marginally better at everything, but to be significantly different at something that matters. Your competitive advantage should be as unique as your company’s DNA—impossible to copy because it’s intrinsically tied to your organisation’s history, culture, and capabilities.

In manufacturing, sustainable success comes not from winning every battle, but from choosing the right battles to fight—those where your unique advantages give you the best odds of success.