The Network is the Manufacturer
Once, manufacturers and distributors could win market share and margin by “inventing a better mousetrap”, or being just a little better capitalized than the next guy. That doesn't work anymore. Everybody knows everybody, and what's more, everybody knows how to make whatever it is you make. The genius of the iPhone isn't that it has a nice touchscreen or a good battery or that it plays music—many have tried to duplicate that with little success. Products that make money do so today because they are well designed and more importantly are constructed by an interconnected web of suppliers, manufacturers, distributors and service providers who can work in tandem to deliver a consistently high-quality product at a predictable and competitive price. That's why I say today, the network is the manufacturer.
Yes, this means being more transparent with supply chain partners. And why not? Sharing data with the manufacturing network makes all participants better able to survive the disruptions and disturbances of natural disasters, labor disruptions, shipping glitches and raw materials shortages. The network can forecast snags in the system and identify the right alternatives in the shortest possible time.
Moreover, a collaborative manufacturing network can collaborate on product design, with a forward-looking attitude that includes not just production but end-of-life contingency plans, complete with a system of partners who take on responsibility for rebuilding, replacing, redesigning and retiring aging and obsolete products. Building these inevitable processes into the manufacturing conversation gives suppliers and distributors alike a more complete understanding of the opportunities and rewards offered by your product.
A manufacturing network also brings you closer to the customer. I don't mean "closer" in the touchy-feely marketing guru sense of the word. I mean, literally, you can bring your products closer to the people you want to sell to. Look at Amazon and their serious push into same-day delivery. That will require a level of coordination and collaboration with their manufacturing and distribution partners which would have been unthinkable just a few years ago. It will only work if everyone in the network coordinates to bring the most popular products closer to population and buying centers. I'm not betting against them.
Don't feel like sharing enough information to create a healthy manufacturing network? You and I both know how that game ends. Hiding vital data from manufacturing partners leaves them with only one piece of data to work with—price. Margins are squeezed. Quality declines. Deadlines get missed and suppliers leave the game entirely. Everybody loses options. And when we compete on price alone, everybody loses, period. You're going to have to talk to your partners to succeed, and everybody needs to share in the network vision.
Roman Bukary - GM, Manufacturing & Wholesale Distribution Industry Verticals
Posted on Tue, July 31, 2012
by NetSuite filed under