Can You Compete in a Global Manufacturing Market?
One of the key transformations in today’s manufacturing environment is the expansion of the enterprise to include more partnerships, closer customer relationships, and greater geographic focus. Manufacturers are looking for additional distribution channels and global production. Even if you are not expanding, you may be seeing increased international competition and price pressures in your traditional markets.
Global business is fast, aggressive and complex. Are you ready to compete in this market?
In order to compete, you will need to be agile, efficient, and flexible. You will need to overcome the challenges that global manufacturing raise. You will also need the right systems in place to support your business. The extended business model requires that enterprise systems are interconnected between customers, suppliers, and subcontractors to ensure free-flowing information. Your business systems need to support data sharing, financial reporting, and traceability.
Global markets offer revenue and profitability benefits
No matter what your size, globalization offers opportunities for revenue growth. Most economic growth is occurring in developing countries and, in many industries, that means an untapped market for your products. By expanding geographically, you are able to focus on growth in your existing product lines.
The most effective way to move into a global market is by developing new distribution channels. In fact, complex supply chains are shown to result in higher growth and profitability. Leveraging your supply chain can lead to optimized performance and create a sustainable advantage.
Global markets are more complex and bring more challenges
When you go global, you have to consider more complex issues and more volatile monetary and political situations. Changes can be rapid and unpredictable. Here are some of the factors that must be considered.
- Monetary issues—exchange rates, taxes, monetary devaluation, currency volatility
- Political issues—corruption, sanctions, military actions, protectionism
- Demand fluctuations—local competition, subsidies, depopulation,
- Resources—volatile prices, shortage of talent
These factors bring new challenges to your business.
- Outsourcing production, engineering, or logistics can result in longer lead times, increased risk, reduced flexibility, and less agility.
- Dispersion of the supply chain means that you need to manage more complexity in your distribution. It will be more difficult to maintain visibility and sustainability of your suppliers and customers.
- You will have to address different languages, cultures, and technology levels.
- Your business will need to understand tax structures, contract law, and the regulatory environment.
How to compete in a global market
In spite of the challenges that a global environment brings, manufacturers need to learn to compete not only to protect their current markets, but also to increase revenue and profitability. There are strategies to follow that will help you compete.
- Diversify your supplier and geographic base. Segment and tailor your supply chain based on demand. This will spread the risk and help sustain profitability.
- Partnerships and collaboration are the key to success. Some parts of the supply chain can be delivered more flexibly and cost-effectively through third parties.
- Improve visibility of your supply chain with better data exchange between production, suppliers, and customers. Greater collaboration and enhanced integration are crucial.
- Focus on providing value to the customer through innovation and service.
- Maintain robust metrics to measure your success or identify areas for improvement.
To achieve these strategic goals, an ERP with business intelligence is foundational to your success. An ERP can increase visibility, manage growth, improve collaboration, reduce costs, and streamline processes. With an ERP, you can centralize financial systems and decentralize your resources. An ERP that will help you navigate the challenges of global manufacturing will include:
- Support for multiple languages, currencies, taxes, regulations, and special characters.
- Provide real-time, central database access for all who need it, in the format that they require. All disparate data are gathered into a single database.
- Automation of standard processes and workflows.
- Scalability and flexibility to accommodate large or small locations with functionality as it is needed.
- Current technology that is easy to implement and update no matter where it is located.
- Interconnection with external systems to enable a collaborative work environment. Web access and standardized protocols are needed to deliver seamless connectivity.