Building Success in the Manufacturing Industry with API Management

Manufacturing has been one of the most prominent industries worldwide since the Industrial Revolution. Since then, from producing textiles to computer chips, manufacturers have always looked for ways to innovate. In the age of AI and APIs (or application programming interfaces), tech companies are looking for technological breakthroughs to gain an edge over the competition. 

In this blog, we’ll go over some of the primary issues the manufacturing industry faces, and how API management can help these organizations be more competitive by speeding up time to market, reducing costs, and unlocking new revenue streams.

Common manufacturing challenges

In my position at Kong, I've met with many businesses in the manufacturing industry. Times change and challenges evolve, and what I continue to hear today is that what used to be satisfactory for customers no longer cuts it in many cases. Let’s go over some of the persistent challenges that I see manufacturers trying to overcome. 

Finding new revenue streams

Historically, the manufacturing industry had a straightforward business model for revenue: create a product and sell it. There used to be a simple supply-and-demand correlation. But today, companies are looking to create new revenue streams and simultaneously better serve customers. 

Why is simply selling products no longer enough for manufacturers? First, the market is heavily saturated with different brands and makes of comparable products. Everything is being commoditized. For many manufacturers, it's difficult to differentiate themselves from the competition in the eyes of the consumers. To better incentivize consumers, manufacturers look to give customers additional services that add value on top of the existing products. 

Cost and time to market

In the manufacturing industry, assessing costs is paramount. In order to build factories, companies need to invest millions, even billions, of dollars. It's an incredibly cost-intensive — yet necessary — process. Companies are always looking to optimize the building process to minimize expenses, which could be the difference in millions of dollars in investment. 

Additionally, manufacturers are always trying to accelerate time to market. The sooner they can get a factory up and running, the sooner they can increase production and revenue. 

Once the factory is capable of making the product, manufacturers also want to see if they can optimize the building process. The faster they can make a product, the quicker revenue comes in. This is crucial for profitability and because more revenue is always needed to keep expanding and innovating.

A more recent issue that I've seen manufacturers struggle with is supply chain issues in terms of shortages and predictability. For big manufacturing companies, these problems can cost a fortune. The longer the problem lasts, the more money is lost on an exponential scale. 

In tandem with supply chain problems, manufacturers have also been experiencing an uncertainty in demand. Companies are trying to look for ways to get ahead of these issues to stop them before they happen.  

Benefits of API management in manufacturing

The first step for manufacturers to combat these challenges is to digitalize. This means developing software as a competitive advantage. Developing their own software can help to differentiate their products, as it can be used to improve customer satisfaction or even open up new revenue streams. The digitalization process and developing software themselves can also help to reduce the time and costs for new factories and products (digital twin). The experience gained out of these digital twin initiatives can be used to build IoT platforms that can be monetized with the customers that manufacturers are selling their products to. In today's world of modern software development distributed systems, microservice architectures as well as cloud and Kubernetes adoption are key to success. Implementing an API management strategy into the business model is foundational to these efforts. 

Software and services for revenue and competitive advantage

To gain an edge over competitors, manufacturers can leverage APIs to build their own software. In my experience, the most successful manufacturing companies have realized this need. This starts with strengthening software internally, which can then be packaged with the sold products, as a (software) product itself, or provided as SaaS. 

How exactly would an organization do this? Modern software development is leveraging microservices architectures and cloud services to be agile and fast. When going into the cloud and microservice architectures, organizations need APIs to enable connectivity. Ultimately, they'll need an API management solution that can simplify and handle this process. 

With API management, manufacturers can then use their software to create additional services. These features can accompany pre-existing products to entice customers. Due to additional services, customers might be willing to pay more for one company’s product compared to a competitor. For manufacturers, this means they can continue to expand their consumer base without needing to sacrifice pricing. 

These software and services can be sold alongside products to create a recurring revenue stream. Leading manufacturing companies have all expressed the importance of leveraging software and transforming the enterprise into a software business and SaaS company at one point. As another example, car companies have apps that accompany cars, providing a service to make customers feel more connected. 

Using APIs for software and services also has a major effect on cost and time to market. By leveraging APIs, manufacturers can assess their factory building process using digital twins, which can help in speeding up the building process and predicting unnecessary costs. 

For another stream of revenue, manufacturers can market their digital twins and IoT solutions as additional services. The IoT cloud of a manufacturer can also continuously monitor factories and production, while the data can be shared with customers, who can use the data to gain insights that can be used for cost optimization or predictive maintenance.

To combat downtime and supply chain issues, API services can carefully monitor trends within the company to perform predictive maintenance. For example, a company’s API may notice a potential supply chain issue arising from an anomoly around a specific part. Then, the internal team at the company can send extra parts as a precaution. Better to be safe than sorry, after all. Manufacturers can then minimize the cost risks that downtime poses. 

Over time, the organization collects more and more data, making its predicting skills more accurate. That is why manufacturing companies are looking to become data-driven. To achieve this, they need to have easily accessible data — and that requires APIs.

Choosing the right API management solution 

API management solutions are crucial to manufacturing companies. For businesses looking to become data-driven, how do you find the platform that's right for you? There are some key features that manufacturers should look for in their API management solutions to make the most out of their experience and investment. 

Considering your options? Check out our guide 5 Questions to Ask Your API Gateway Vendor.

Manufacturing success through modernization

Modernizing your manufacturing operation with Kong brings with it many benefits. For example, Cargill transformed its internal suite of APIs to be more dynamic by adopting Agile, DevOps, CI/CD practices, and an API-first microservices architecture, enabling the company to leverage its wealth of data from 150 years in business while accelerating the development and deployment of new digital products and services.

Here are a few other big benefits manufacturers report when modernizing with Kong.

• Reduced costs — Coming from a legacy system or a less-than-modern solution, an API management integration might seem like quite the undertaking. Not to fear! Kong’s API management services are lightweight, meaning they can be implemented easily while taking up less infrastructure than other options. Because of this, Kong products are more cost-effective in terms of total cost of ownership (TCO) than other solutions
• Unparalleled performance — While lightweight and requiring minimal infrastructure to run, Kong’s API management tools don't sacrifice power or functionality. Kong is tried and tested with large data sets and massive request loads and is one of the most performant solutions on the market, giving you peace of mind to know that you can handle whatever comes your way.
• Architectural freedom to break down silos — Kong’s products are also architecture agnostic, meaning they can fit into nearly every environment small, big, new, or old. Many manufacturers seek a solution that can manage older solutions while also leveraging modern cloud solutions to maintain agility. With Kong’s polyglot approach to API management, manufacturers need not worry about their current state. Kong’s products can run on various platforms of infrastructure and work together with other vendors' products as well. For example, Vestas found that the architectural freedom provided by Kong enabled them to support multi-cloud, hybrid, and on-premises deployments — meeting modern architectural requirements while supporting legacy environments
• Accelerated time to market — API management can also open up more possibilities to optimize and innovate, speeding up time to market. With Kong, APIs are discoverable and reusable. This can help communicate internally while also allowing for API communication with customers and users.
• Automation — In addition, Kong’ unlocks the benefits of automation for developers, allowing teams to focus efforts less on infrastructure and more on creating value for the business. With an automated API deployment, the time to market can be cut down even further. Automation can also help you safeguard supply chain operations. Kong makes it simple to secure your infrastructure with automated security and governance. In addition, Kong’s rich plug-in ecosystem allows for customization to address emerging or unique security concerns
• API monetization — Some companies are looking to expose and monetize APIs directly. For example, manufacturers in the “smart” buildings industry. While they've historically produced and sold building materials, they can now integrate API services that can track and monitor those materials. Now, each individual part in a building process can communicate with one another, making them interconnected with how they read and store data. While they have access to this information for their own data sets and analytics, they can also provide customers with the optional service to have access to this data as well. Ultimately, they are able to generate new revenue streams by SaaS offerings or by monetizing the access to data through APIs. This is one example of how manufacturing companies are experimenting with monetizing directly exposed APIs. It may be the next step for the future of the manufacturing industry, and Kong can help you get there.  

Manufacturing industry success stories

Want to learn more about some Kong customers in the manufacturing industry? Check out some of these success stories:

• Mercedes-Benz Connectivity Services optimizes digital interactions
• Cargill achieves 65x faster deployment
• Vestas powers its hybrid cloud API platform with Kong

For more insights around the advantages of API management, check out our guide to becoming a secure API-first company — and the benefits that come with it.

Ready to get started?

Want to learn more about how Kong can help modernize your manufacturing business? Contact us to chat about what you're looking to accomplish — and how Kong can help you accomplish it.