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Competing in a Global Manufacturing Environment

15 January, 2016 - 09:50
Available under Creative Commons-ShareAlike 4.0 International License.

If there is one area in particular that has been most affected by global competition, it is the manufacturing sector. Manufacturing is generally the quickest route for developing countries to increase their wealth and increase the wages of their citizens. Further, business as a whole and manufacturing in particular know no national boundaries in the rapidly growing global marketplace.

For instance, several Asian countries have become major players in the automobile industry—competing heavily in the U.S., Australia/New Zealand, and European markets. Automakers (as well as manufacturers in a host of other industries) have been forced to become lean, automated, customer-focused, and efficient organizations in order to survive. Recent studies have documented marked improvements in productivity—particularly in the United States.

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In a survey of over 900 manufacturing executives in 35 countries, Deloitte and Touche identified five key strategic issues that manufacturers must address to compete 1 :

  • Confront the Realities of Globalization: Global sales are imperative for survival. In the coming years, sales leaders will have manufacturing and assembly operations distributed globally.
  • Craft a New Agenda for Product Innovation: Survival will require complete integration of the product development life cycle from design to manufacturing to customer processes. Information technology will continue to take an increasingly important role in breaking down the functional barriers within organizations and in enhancing the integration of the customer’s requirements into design processes.
  • Resolve the Customer Paradox: Despite the revolution of the early 1990s that led to a quality management focus in manufacturing organizations, customer satisfaction has declined. Technologies such as data warehousing (Database Management Systems), customer integrated data (THE “ORDER-TO-CASH” PROCESS: PART I, MARKETING AND SALES (M/S)), and electronic commerce (E-Business) are key to improving marketing and customer service functions.
  • Integrate the Global Supply Chain: Partnering with customers during the initial stages of product development and forging alliances with domestic and international partners can improve integration of the overall supply chain.
  • Align the Organization to Compete in the 21st Century: The successful organization must be nimble—capable of reacting quickly to unexpected changes in customer demands and market dynamics. Key to this organizational culture is a focus on investment in human resources management and information accessibility for employees.

Review Question

Explain the five major competitive challenges facing manufacturing companies in developed nations.

At the heart of each of these key success factors for manufacturing companies is a focus on information technology solutions. Information technology continues to become the primary vehicle for empowering employees, breaking down the organizational barriers to overall integration of production processes, and providing accessibility to key information needed to respond to changes in the marketplace in a timely manner. In the following section, we take a look at the rapidly growing market for software solutions for the issues discussed here.

Review Question

How has global competition affected the domestic manufacturing environment? How can technology help domestic companies compete?

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