Next - Shoring
The key developments affecting supply chains in manufacturing’s latest migration. Emerging Markets Manufacturing is also adapting to accommodate emerging markets in places like Africa, Brazil, China and India. These territories have become appealing for both the trade opportunities they present and, as a result of growing economies, because their burgeoning middle class is adopting consumerism on a mass scale. As the euro’s value weakens and they consider the business potential in fast-growing markets elsewhere, the UK in particular are focusing on the far east having poured an additional £7.5 million into the UK Trade and Investment’s activities in China earlier in the year. Emerging markets provide new options for import and export but they also relay demand from a different consumer model – one with major regional, ethnic, cultural and income diversity. Businesses are exploring moving operations closer and several manufacturers, already based in these areas, are producing goods that specifically cater to needs of their nationals.
In recent decades there have been major global shifts in energy costs, wages and purchasing power. Manufacturing has adapted to upheavals in the supply chain across several countries and territories around the world. In the past, UK production has been offshored in favour of cheaper labour and manufacturing processes, then re-shored under the guidance of quality and improved lead times. Now, the industry is considering an altogether more innovative approach to connecting with buyers and suppliers, one that utilises technology rather than geographical location – Next-shoring.
Customisation
Innovation
Mass customisation has been a goal in production for a long time. Effective implementation in the manufacturing process would provoke an evolution in how businesses meet the needs, requirements or choices of their customers and would make individualised goods and services a feasible possibility in assembly-lines in almost every sector. Up until now personalisation on this scale has been a pipedream, but now leveraging new innovations in manufacturing has made high volumes of custom products at a low cost, a reality in factories. ‘Advanced Manufacturing’ responds to ever-changing consumer habits, utilising advances made in automation technologies such as Industry 4.0 and machine-to-machine, to help businesses make rapid changes to product design and meet their personalised specifications. The potential impact of Advanced Manufacturing in industry is phenomenal. Businesses in Europe, for example, would benefit from an increased competitive position and with the ability to cater for differentiated products, they could improve customer satisfaction and brand loyalty. In addition, new manufacturing systems like 3D printing, make personalising orders a quick and inexpensive process from any factory, regardless of location.
Previously, manufacturers have struggled to keep up with new trends in industry, otherwise consumed with ever-changing developments and motivating sales in the supply chain. Innovations, however, are presenting new ideas to help manufacturing enterprises compete on a global scale. Technology is improving the way that businesses communicate, distribute and adapt to changing markets, enabling them to work closely with suppliers, procurers and their own employees all
Communication Means for communicating with individuals in the supply chain are constantly evolving, making manufacturing less restrained by location. Designers and engineers are embracing collaboration aided by online tools, where they can share complex blueprints, prototype models and structural analysis via file transfer platforms, video and simpler networks such as Skype. Having this immediate access to advice from other professionals, colleagues and leaders in the industry, means that decisions are made and problems resolved sooner. Manufacturing businesses are able to review work in multiple ways, helping to eliminate issues in the assembly line and allowing for a stronger connection to any remote operations based in regions where production and demand is beneficial to them.
Location Manufacturers have always sought to locate themselves close to the supply and demand for their products. This has resulted in mass off-shoring, as businesses looked for inexpensive places with the cheap labour, raw materials and extensive markets that they need to function successfully. In recent years, wages among other costs have risen and many businesses chose to return, instead focusing on improving lead times and quality. Next-Shoring, however, isn’t tied to geographical circumstances. Rather, it goes beyond physical location, to establish centres rooted in technology and communication.
Distribution Companies may understand their clients’ businesses on a surface level, but for those with limited time and re-sources dedicated to researching their marketplace, important details regarding how they function and why - as well as the regional circumstance that affect this – are being overlooked. Consequently, companies are failing to genuinely connect and engage with their clients. Many of these necessities lie in local knowledge and already some business are moving closer to their end customer, to gain this insight and improve distribution times. Ra-ther than operating a few main distribution centres, these businesses are opting for smaller hubs closer to met-ropolitan areas ensuring swift delivery to those consumers. Being closer to their customers, means that they’ll also benefit from understanding the same geographical factors as them.
Online Tools Organisations are helping to provide manufacturers with the information that they need to support decisions around where to base their operations. Online portals offer access to vital industry information including reports, data and corresponding news and events to assist businesses in discovering global opportunities. It is through these platforms, that manufacturers are better able to assess current circumstances in any given region, aided with a comprehensive overview of activity around the world. They have proved useful as an introduction for companies looking to expand into new international markets. Online marketplaces are another tool that can help manufacturers in their location strategies, particularly when identifying the value of individual cities and counties in a country. In partnership with the US Department of Commerce, the University of Lausanne has developed a software tool to help manufacturers compare potential locations around the globe. The ‘Cost Differential Frontier’ correlates information about labour, distribution costs, trade financing, regulations, security and politics.
How businesses decide on an operation centre will be different for each one but Next-Shoring offers a range of new possibilities to consider. This decision is no longer down to just factors like labour costs or distribution access. Rather, the changes that Next-Shoring introduces are designed to help manufacturers move away from a permanent point on the map, to think about where they can best take advantage of innovations in connectivity, communication, technology and growing opportunities in the online space.
T: 0845 600 7177 E: enquiries@applegate.co.uk W: http://www.applegate.co.uk Published by Applegate Marketplace Ltd - located at Riverside Road, Pottington Industrial Estate, Banrstaple, Devon, EX31 1LS, United Kingdom - is registered in England and Wales with company number 03990680 © Applegate Marketplace Ltd 2015
Next - Shoring Emerging Markets
The key developments affecting supply chains in manufacturing’s latest migration.
Customisation
Innovation
Communication
Location
Online Tools
Distribution