In the upcoming issue of Industry Week, MFG.com COO Stephen Cook shows how for contract manufacturers, keeping a sharp eye on global sourcing trends can better align their priorities with the marketplace and move effectively on new business opportunities.
The primary issue of this article is that US manufacturers must become more cosmopolitan in their approach to - and perceptions of - the golbal manufacturing ecosystem:
For U.S. buyers, how do countries in the Western Hemisphere stack up to the rest of the world? First, the United States traditionally carries low logistics costs and low risks -- think border crossing and political stability. Typically, U.S. suppliers can meet the requirements of high-tolerance work. Communication is easy, and U.S. buyers don't run the risk of drastic changes in exchange rates. The con: higher costs than low-cost countries (LCCs). To the north, Canada can match U.S. manufacturing quality. However, due to current exchange rates, it can be a harder location to justify when sourcing.
Mainly, though ... the game has changed for small- and medium-sized shops and plants because the supply chains they are (or have been) nodes within have expanded and the velocity of information and logistics have accelerated:
Sometimes the riskiest approach is to do nothing. This is especially true during economic upheaval, and for manufacturers their comfort zone might be the riskiest place to be right now. The analogy I like to share is that of Olympic indoor speed-skating: Nobody passes on the straightaways. Positions are gained and lost on the turns. The critical practice of sourcing is in a particularly sharp turn. Companies that understand today's dynamic sourcing universe -- and are rebidding and rethinking their business in light of it -- almost surely will pass the ones that don't.
Think of it this way: The US has traditionally had the luxury of living within and serving the greatest economic market the world has ever seen. We didn't have to go anywhere, because the market that bought and consumed our products were right here. But now markets are emerging with amazing speed. Competition is constantly improving in areas we scoffed at a short time ago (anybody remember Japan in the '60s and 70s?).
Becoming more global as exporters will require an acceptance of and embracing partners and prospects outside our comfort zone. And an excellent start to that process is watching what buying companies and OEMs are doing.