Author: Paul Henriques in: Business Solutions
Competing in the globalized world of manufacturing has become increasingly difficult. With constant price pressure from nations with lower standards of pay, lower safety standards, and lower environmental regulations, developed nations have had to drastically improve their product quality and lead times. All while providing best-in-class customer service and looking for high tech solutions to the rest of their ongoing issues.
While many have thought that this would be the beginning of the end of manufacturing in North America, the truth is that there has been a resurgence of investment and productivity in the manufacturing sector. Some of the biggest reasons for developed nation manufacturing to return to its place as an economic driver for its local regions has been:
So, what can you do as a manufacturer to better compete on the global markets?
Developing countries may have a stranglehold on low-cost labor and resource intensive manufacturing. This may be a good thing for those developing nations, but it leaves manufacturers at the mercy of a global, and intricate, supply chain. This means that their contribution to developed economies starts and ends with their regional transport capabilities. These last two years (2020 and 2021) saw global disruptions that caused that supply chain to snap because of:
This has led many to start looking locally. From federal govts to family units, everyone is trying to find a way to buy local. To put it simply, your local factory strengthens your local region and your nation. This “return to home” has led to an unexpected windfall for local and regional firms that had been struggling before to meet cost demands: Your productivity increases over the past few decades to maintain competitiveness are in a prime situation to be rewarded with added attention and clientele.
By not needing intercontinental shipping, you can get orders delivered faster and often for the same cost or lower than your overseas competitors. Added to the faster delivery-time comes something that shops half a world away can’t provide: localized customer service.
With customizable orders quickly becoming the norm, your lower delivery costs, quicker delivery times, and local knowledge to help your partners are steps in the right direction. But you can clinch the competitive advantage by becoming adaptable and flexible with your part-making process. Some of the ways to improve your engineering team adaptability and productive flexibility is by switching to a central database with digital engineering records, relying on a pull-based production system, like Lean, and with a better ERP system that was designed on Lean principles.
You can’t fight the law because the law will win. Or, at least, that’s what we are led to believe in developed economies. In other parts of the world, the law is something that can be skirted, avoided, blinded, laughed at, or bought. While this can make the region an interesting place to conduct business, it leaves you at the mercy of regional powers that have more influence than your firm and want to take over your market segment.
Perhaps, when setting up a factory in a foreign land, you get a partner that knows that local area. You keep your end of the bargain and supply your know-how, etc., but within a few months you are removed from operations as your partner becomes the sole proprietor, taking the knowledge and local rights to your intellectual property (IP) with them.
The truth is that information technology (IT) and IP have an impact on competitiveness in developed economies. In IT, the information networks add an exchange of ideas that leads to better manufacturing. This has only become even more noticeable with newer tech, like the Internet of Things (IoT) or blockchain, which can lead to better developments in sustainable manufacturing. And the legal protections of IP rights in developed countries bring their own type of competitive advantage.
These issues have many thinking twice about outsourcing. What this means for you as a manufacturer is that not only is your production safer at home, but also that many larger corporations prefer to ‘shop locally’ for vendors, thus strengthening their supply chain. As a supplier, you can add to your value as a partner by investing in new future-ready technologies such as: barcode scanners, EDI, shop monitoring, predictive maintenance, and other full-featured ERP systems. You should also invest in your IT systems and respect your client’s IP. The last point is to invest in your firm’s processes and outputs to ensure what you bring to the table is easy (for you) to make but difficult to copy.
It is a time when staffing issues are the latest news of the day, or at least they are when the news isn’t telling us about disease or war. This may have you concerned. Perhaps a string of resignations has already hit your firm. The solution in many cases is more pay. But how can you stay competitive against economies where a lack of workers and pay raises aren’t a problem?
The truth is that the workforce in developed economies is a crucial part of what makes them able to compete against all comers. While you can’t match the low pay and low regulations that the developing economies of the world provide, you can be sure that you are getting more bang for your buck. Developed countries tend to have better education systems that are focused on:
What this means is that staff hired from developed countries can, on average, adapt to new environments and technologies faster while needing less oversight. Regardless of the experience on their resume, hiring happier people is a key starting point that will lead to better productivity. Once the staff are onboard, keeping your staff happy by helping them learn and grow within your company are crucial motivators that will ensure you are getting the most from your staff.
To compete against global players, your firm should:
Another thing that wasn’t discussed in this post is having a more value-based sales method, where you can become a more integrated partner for your clients.
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