A new landscape of partnerships - businesses can no longer go at it alone

Traditionally, the knowledge a business possessed was the extent of its capability. Well, that was the general consensus. Even at Sandvik Coromant, an organisation with 80 years of metal cutting knowledge, it’s been easy to believe we know everything about the core offerings of our business. However, when it comes to a company’s digital offering, the reality is very different.

Achieving digitalisation at scale requires a multitude of disciplines to come together — namely machining knowledge, operational technology (OT) and information technology (IT), as well as more specific technologies such as artificial intelligence (AI) and big data. Uniting all these areas into a single strategy gives manufacturing the resilience to adapt to change, streamline operations and future-proof.

However, many companies that are attempting an enterprise-wide digital transformation are facing a major hurdle: they don’t know everything. When you think digital, nobody can say “I own everything, and I can do everything myself”. Going digital is a business where players need to collaborate to create a value system. Digitalization needs partners with complimentary capabilities to come together.

There are many reasons to partner with other businesses and each have their own approach and strategy. It could be to adopt a go-to-market strategy, for portfolio enhancement or to expand capabilities and skill sets. Irrespective of the reason, every successful partnership brings possibilities to the entire ecosystem.

First, let’s look at how partnerships support an organization’s go-to-market strategy. If we take a closer look at machine tool makers (MTMs), for example, they play a major role in the manufacturing value chain and hold a large influence over the customer purchasing process. They also play an important part in Sandvik Coromant’s go-to-market strategy, and we’ve been working with MTMs for decades to develop our core cutting tools.

However, when it comes to going digital, the way we engage with MTMs shifts. Our digital offering helps MTMs sell a higher level of value. For example, sensor embedded tools from Sandvik Coromant generate a wealth of cutting data, which together with existing machining knowledge could help MTMs deliver increased productivity and reduced waste as part of their machine value. Therefore, our partnership with MTMs moves from simply selling hardware to offering joint customer value creation, powered by data.

Historically, Sandvik Coromant would simply be passing on its 80 years of machining knowledge in the form of a physical product. Now, as we move to digital offers, we must work with MTMs far beyond the buying and selling point. Instead, we’re producing data that benefits players across the value chain — the customers using the MTMs’ equipment, the MTMs, and Sandvik Coromant. The data paradigm moves from “ownership” to “right of use”, creating a thread of differentiated value to all stakeholders. Where long term partnerships exist, long term benefits exist too.

Determining your core strengths is key to forming tangible and sustainable partnerships. For instance, businesses may partner to enhance their portfolio and understand more about an unfamiliar area. By joining forces, particularly for digitalization purposes, organizations can draw upon each other’s expertise to create innovative or complementary solutions, and extend these offerings to reach broader audiences and markets.

Partnering can help break down silos in the value chain, and if done well, such partnerships are extremely lucrative. This is particularly relevant if a partnership fills a customer need that could not be fulfilled independently. In fact, a 2020 Salesforce survey found that 69% of B2B customers want companies to offer new ways to access their services, and 54% want companies to offer more services and products.

Companies should ask themselves: what is our niche? Understanding where you can deliver value, in areas others cannot, is key to making your stake.

However, your business is just one piece of the whole value puzzle. In addition to offering your own niche, partnering up with other specialisms delivers a full-service solution. For example, Sandvik Coromant’s niche is machining and metal cutting. Whether it flies at 35,000 feet, drills into layers of hard rock, or excavates tons of earth, the machinery our customers produce demands quality, high precision manufactured parts. And our tools are key to delivering that accuracy. As a result of our machining knowledge, customers benefit from increased efficiency, improved reliability and repeatability and reduced waste. Now, if we think of a company such as Microsoft and its Azure cloud computing platform, its niche is very different, but it plays a very important part in helping our software solutions to deliver value.

When we combine niches from Sandvik Coromant in the manufacturing space with the niches from Microsoft in the IT space, we create a combined specialism that broadens the accessibility of both partners. The CoroPlus® portfolio of solution from Sandvik Coromant leverages our unique machining knowledge and integrates all elements of the production flow — people, machines, tools, and data — to empower customers to make better business decisions. The solution combines the company’s deep experience in machining with digital solutions from partners such as Microsoft for an enriched portfolio that delivers efficient processes, planning and operations.

It's a win-win model. Successful partnerships focus on how a business can enrich its own portfolio, while collaborating on different fronts with its partner for mutual benefits.

Partnerships can also be a good strategy for capability enhancements and skills. It’s no secret that manufacturing is facing a digital skills gap. A report by the National Skills Coalition in the United States found that more than one-third of manufacturers have limited or no digital skills, while just 29% possess the skills necessary to be most adaptable to changing technology. Currently, there are over 1.3 million openings for software roles on LinkedIn.

However, while partnering up with other technology businesses can help to plug a manufacturing company’s skills gap, there is a fine balance between what skills need to be nurtured in-house and what should be sourced externally. It is important to ensure that core skills and knowledge are still anchored within the business to ensure resilience and continuity.

For example, if a metal cutting business wanted to streamline its operational data with edge computing, it is prudent to partner with a technology provider for the edge skills and capabilities. But at the same time, the business needs to have the key technology skills within its own organization to own and anchor the architecture, direction and lifecycle aligned to its strategy. Do not handover your destiny to a third party. In addition, successful partnerships often involve an equal risk and gain for all stakeholders. These business and engagement models need to be built on trust and collaboration.

Had Larry Page and Sergey Brin never partnered, we wonder what we’d be doing in place of “Googling”. When defining their digital strategy, manufacturers need to make a confession — they don’t know everything. While a company can turn to a partner for several reasons, the benefits of doing so boil down to one main advantage. Collaborating helps manufacturers offer knowledge they cannot possess, while giving a new level of competence to their digital partners.

Vijay Anand

Senior Program Manager at Sandvik Coromant

Vijay is a passionate and experienced Digital Transformation enthusiast that is driving strategic initiatives in the expanded growth business of Digital for Sandvik Coromant. He has held several strategic business and technology roles in his rich professional career and his experience spans leadership in business, strategy, technology and transformation.