As we all know, the world's economy is in an ongoing state of flux. Much like fashion designers who travel the world looking for the "hottest styles," I have spent much of the first half of 2012 traveling and meeting with companies and government agencies around the world to learn what the electrical and electronics (E&E) sector is doing really well and where it can improve.
Since the beginning of this year, I have visited Korea, Singapore, Japan, Thailand, and Malaysia and have had delegations visit China. The purpose of these trips was to ensure that we as a company are doing the right things with our clients and also to find out what we can do better to add value to the supply chain. Along the way, I witnessed many things that I think are worth sharing.
In today's global economy, you can count on a few things, including the following:
Change is constant and the new normal is still being defined.
New vertical markets will emerge and yet others will disappear.
Clients in the E&E sector are demanding more value from suppliers than ever before.
The marketplace is global. Western countries are not the only genesis of great ideas.
I have seen some wonderfully creative things in my travels this year: public and private initiatives that are creating real value in the global manufacturing marketplace. I hope we can put some of them to work here in the US and in other countries where manufacturing is struggling. Here are some examples:
Distributors are adding more services to their offerings.
In many emerging countries, governments are rolling out the red carpet for SMBs (small to midsize businesses) who want to invest in their countries.
Governments have created agencies dedicated to optimizing government so as to not squander any resources.
Large multinational organizations are creating partnerships with key vendors to drive down costs through "localization" efforts.
Work forces in many emerging countries are well-educated and mostly bilingual or even trilingual.
R&D increasingly is a global collaborative effort.
What can those of us in countries like the US and the UK do to offer the kinds of additional opportunities that many manufacturers in developing countries are enjoying? It seems to me that there are a number of things we can do to reverse course and reinvent ourselves.
Recognize that manufacturing "in-country" can be done cost-effectively
so long as adjustments are made to pay scales and other expenses to allow for competition with emerging countries. The days of "steady work" for 30 years at the plant will have to give way to need-based workforce utilization.
Seek out investment
from global companies that mesh with our local workforces and incentivise those companies to locate here.
Retrain workers
whose skill sets are increasingly being performed more competitively elsewhere.
Improve processes
to facilitate rapid transfer from one project to another to squeeze waste out of manufacturing.
Partner with "peer-competitors"
in other countries when the scale of the work justifies manufacturing offshore.
Work with your existing suppliers
to drive down both direct and indirect costs.
Demand better supply chain pricing
both from your suppliers and your purchasing teams. The cost of components in the US often is higher than in many other parts of the world not because of differences in quality but because of the way the US model works and due to brand "monopolies." Using alternate brands can drive real cost out of product without compromising quality.
Garner better support for growth initiatives
from local, state, and federal government for job creation. In many parts of the world I visited, the government agencies actively served businesses to help them grow.
My questions to you are:
What has your company done to reinvent itself in this new global marketplace?
What insights have you gathered in the process?
What are you doing to add value to the supply chains that you are a part of?
Where do you believe the best opportunities for the industry will be over the next five years, both domestically and international?
Mark, your first point is very much valid, especially in terms of 'economic'. That's the one reason most of the companies are opening their production facilities, where raw materials are abundantly available. Local production of the associated components can help the manufacturing facility inorder to reduce cost and avoid hectic logistic issues.
"Governments have created agencies dedicated to optimizing government so as to not squander any resources. "
In my state, and possibly throughout the US, government exists to perpetuate itself. The agencies that seek to optimize government are just ceating more government jobs. I get the concept--it's a good one--but in reality, the agency that's created to watch another agency probably needs watching--by yet another agency...
@tirlapur, i agree with you. Many developing nations are too slow - may be due to management and corruptions. You could take a tour to other region, infact, you will be amazed at acceleration of growth there inspite of governments' nonchallant behaviours towards implementation of policies. There are some rising star nations in Africa worthy of looking at.
The word "politics" and/or "elections" comes to mind.
@Barbara, very true. Politics is one major hindrance to grwoth. For example India is planning to setup a fab from last so many years but the idea is still on papers. Government is not taking any major steps like infrastrcture building to build the fab.
Mark: So much good stuff here. As I was reading your tips, I was also thinking of the barriers to implementing them. The word "politics" and/or "elections" comes to mind. On one hand, you have a politician that supports the ideas that you outline in your blog. On the other, implementing these will alienate one or more constituencies important to re-election. As I watch the US presidential campaign progress (or regress) I see compromises being made every day to win votes, versus being the right thing to do for voters. Shouldn't they be the same thing?
Strong relationships between suppliers and customers is essential. In the event counterfeit parts turn up, channels of communications are open and issues are easier to resolve.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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