The rise of globalization and outsourcing has done more than affect traditional manufacturing operations. It has changed the very way we think about product innovation and introduction; growing market share; and managing the people, process, and technologies in our increasingly global organizations.
As CEOs, we are asked to think about these issues holistically and strategically: How does this change the way we do business? How do I manage the operations and inventories of partners that exist outside my four walls, but which are critical to my company's service levels? And how do I empower my people and partners to make good decisions and deliver superior service to our customers?
Complexity is the name of the game in today's global marketplace, and as business leaders, it's our responsibility to translate this complexity into clearly defined, strategic goals and an overall business model that enables the right people to make intelligent decisions based on the most accurate and timely information. This is no small feat, but it's certainly one of our most pressing goals.
An increasingly global and hypercompetitive landscape has ushered many organizations towards outsourcing (or nearshoring), which for CEOs means managing well beyond the traditional four walls of the enterprise. And while this is perhaps most pressing for larger manufacturers and brand owners, service/solution providers and midsized businesses can also learn from this paradigm shift. Regardless of size or product mix, today's businesses are more interdependent, international, and complex than ever before -- with more information than we know what to do with and less time in which to make key decisions.
In this environment, many of us have become accustomed to a degree of uncertainty and imprecision, making the goals of consistently reducing costs, improving the efficiency of current assets, and increasing revenues all the more elusive. So what questions should you be asking of your internal organization and of your external suppliers and trading partners?
Let's start with these: How quickly do you find out that something went wrong in your manufacturing process or go-to-market strategy? (These come in all shapes and sizes: earthquakes, flash floods, critical component shortages, poorly planned promotions.) When you do find out about a disaster or disruption, how quickly and effectively are you able to resolve the issue? Are the people in your organization (including external partners) empowered to make intelligent, corrective decisions -- before problems in your go-to-market operations hit your end consumers?
In my experience, these questions are most effectively tackled by taking a closer look at the following three critical elements of a business operation:
- People: Today's multi-enterprise, multi-national business models require much more careful, strategic management of human resources. It's no longer good enough for teams to work cross-functionally (although this continues to be important); in order to reap the benefits of outsourcing and globalization, teams need to start working across organizational boundaries. Trust, common goals, and shared systems and technologies are a huge part of better personnel and relationship management. Towards this end, it is critical to emphasize the importance of executive leadership and commitment of major projects and initiatives, and also to empower cross-organizational teams to make informed, time-sensitive decisions to resolve disruptions and mitigate risk.
- Processes: Cross-network visibility and collaboration are fast-becoming the "gold standard" of leading international companies. With suppliers, contract manufacturers, logistics providers, and customers spanning the globe, the ability to view and exchange information in real-time is critical to make intelligent, timely decisions, to correct unplanned disruptions, or to meet changing customer demand.
In a recent study published by SCM World and Kevin O'Marah, former vice president of supply chain research at Gartner Inc. , "truly collaborative" partnerships and processes were shown to minimize risk, cut costs, and facilitate better organizational learning and innovation. Of course, the goal of any business process is consistent, timely execution. In my experience, good execution is built on the foundation of collaborative, automated processes that allow the right people (either within or outside your four walls) to access the most current information in order to make the most profitable decisions.
- Technologies: A reliable, business-to-business IT infrastructure is a cornerstone of any successful international manufacturer. After all, a key challenge of today's fragmented supply chains is the many-to-many synchronization of the information flows that are needed to source, make, and deliver products to market. ERP and planning systems are not equipped to handle operations outside the traditional four walls of the business, and can make it exceedingly difficult to break down siloed operations and multi-enterprise information gaps. Increasingly, organizations are recognizing the unique potential of cloud-based technology systems, and are beginning to transition their systems and processes into the ever-flexible, scalable cloud environment.
While the move to outsourcing (or nearshoring) is nothing new, it's important that we get "back to basics" with a strategic eye towards our people, processes, and technologies -- all of which are fundamental to achieving the highest level of return on both our capital and our time.