era of regionalization

Collaboration in the era of regionalization

12/14/2021 - by Michael Hartung

As discussed in my first post, regionalized manufacturing is creating new opportunities to enhance collaboration, accelerate innovation and improve sustainability. This post will elaborate on the pivot towards greater collaboration between manufacturers and their clients and conclude with considerations for choosing a manufacturing partner.

 

Collaborating for agility and resilience

The COVID-19 pandemic has raised the specter of a more disruptive world, and as we navigate this crisis together, a clear lesson is that no single entity is up to the task of solving complex challenges alone. While partnerships are nothing new, the pandemic and trade disruptions in the aftermath of the tariff disputes have taken the level of cooperation among businesses to new heights.

 

Today, the most effective partners will be those that have an enabling platform at the ready for their clients to plug into for accelerated results. As market leaders became dominant by investing in nimble infrastructure, speed and culture, they are driving the imperative to leverage similarly agile platforms. Yet these platforms are not built overnight: it has taken decades for large manufacturers like Flex to build their global scale and scope of capabilities. Through long-standing operations in many countries and regions, we developed in-market expertise across geographies and deep relationships with strategic vendors. It is this kind of breadth that enable our clients to undertake regionalization with agility and speed, and ultimately, build resilience through localized production hubs.

 

To illustrate this point, a client in the floor care space last year saw demand spikes in the face of tariff challenges and high COVID-19 infection rates that created worker shortages in southeast Asia. To alleviate this backlog, we were able to quickly add a production node in another country in the same region as the facilities, staff, processes and systems were already in place. By plugging this localization effort into our well-oiled, highly integrated global ecosystem, we quickly developed redundant supply chains to address our customer’s challenges.

 

All hands on deck to optimize product life cycles

The expertise required to manage product lifecycles has turned increasingly specialized and complex. In response, clients are tapping their manufacturers’ scope of capabilities which have evolved well beyond sourcing and production over the decades to include design, logistics, aftermarket support and end-of-life services, just to name a few. During the feasibility phase, for instance, we work closely with our clients to evaluate multiple supply chain strategies to land on the right sourcing decisions while being mindful of manufacturability and cost requirements. Likewise, balancing these dimensions with other considerations to ensure design integrity and supply chain continuity is also a deeply collaborative exercise involving our clients; for instance, product designs must map to many requirements including the technology roadmap of our strategic vendors. In a world where sustainability increasingly matters, the environmentally friendliness of the product inputs may change the engineering calculus, while designing for modularity to facilitate easy parts disassembly and transport for reuse or recycling could also weigh. In short, many factors must be considered to align supply chain performance with all the key points along the product lifecycle.

 

 

Flex collaborates with customers throughout the product lifecycle, delivering on cost, speed, reliability, and circularity requirements.

era of regionalization

 

Deep partnerships for the win

As our clients’ key collaborators and enablers, we take the long-term view and are highly invested to drive sustainable returns for them. How can we optimize cost structures by leveraging our well-established footprint in every major theatre of operation? What ancillary benefits can we mine from our clients’ investments in regionalization? Besides creating redundancy for business continuity, can we design greener supply chains so products don’t have to travel far to reach their final destinations? How can we improve service levels to end customers now that we are in close proximity to them? Can we enable a circular economy by being close to end customers and taking back products to refurbish and recycle?

 

Clearly, outsourcing manufacturing is not a simple procurement exercise. Instead, think of collaborations with your manufacturing partner as a strategic activity where you can extract synergies in the same way you would in a high-value transaction like a business acquisition or merger. To get the most out of your partner, be ready and willing to engage in transformational efforts as this will produce the most lasting results. For instance, we helped one of our customers unwind complex relationships, reconfigure their manufacturing footprint and ultimately enable a system that primes their responsiveness and agility. They saw the need to shift internal resources to focus on new product development and to uncover ways to drive cost savings and efficiencies. When the pandemic hit, they were well positioned to leverage Flex as we freed up their capital to solve short-term challenges and offered an infrastructure that enabled them to maneuver their challenges with agility.

 

The early wins our clients have seen in their regionalization efforts illuminate the payoffs of increasingly intertwined partnerships. These shared successes are possible because our clients increasingly view us as their strategic partner. My next post will discuss how manufacturers can partner with their clients to accelerate innovation cycles and bolster sustainability efforts.

 

Blog continues in sidebar: Considerations for choosing a manufacturing partner

 

 

 

This post is part of the blog series, Catalysts of change turn a new page for manufacturing.

Written by

Michael Hartung

President, Agility Solutions

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