Considerations for choosing a manufacturing partner
Amid a shift towards regionalization to drive business continuity, it has also spawned new opportunities. As you explore choosing a manufacturing partner, here are some criteria to consider:
Market expertise. Like real estate, location is everything when it comes to regionalization. Align with a partner that has a successful in-region track record and can advise on the complexities of doing business in your target market, including:
- What are the business risks arising from the country’s political climate and policies?
- How is the labor market structured and is there sufficient local talent to support your operations and future plans?
- Will your business be embraced and supported by the local community?
- Are there cultural norms that would not be the right fit with how you operate?
Support of a global supply base. Without ties to an established global procurement network, a regional supply base lacks the maturity to drive reliable sourcing solutions. Yet businesses often unknowingly add to the complexity of their supply chains when they partner with regional players. While this may resolve short-term bottlenecks, it creates long-term limitations that could hinder future expansions. Ideally, your manufacturing partner operates regional nodes that function as part of a well-integrated global infrastructure with mature partnerships, systems and processes already in place. This will ensure that supplies and capacities can be seamlessly shifted across geographies to meet the dynamic demands of the marketplace.
End-to-end manufacturing services. Manufacturing partners that can offer an integrated service portfolio with design, production, fulfillment, and aftermarket capabilities in major global markets will be key to successful regionalization. Critically, after-sales requirements such as planning and procuring service parts and supporting repairs while holding replacement components must also be duplicated in-region to optimize customer service. By tasking one partner with supporting their product’s entire lifecycle, you can expect a more integrated and simplified supply network that builds differentiated, competitive advantages.
Strong financial standing. Ensure your partner has the capacity and financial strength to invest in the resources to develop your regionalized manufacturing node. A strong balance sheet along with sufficiently available capital is necessary to invest in capital-intensive resources. For instance, we’re bolstering resources outside of Asia to deliver strong mechanical expertise globally as part of our regionalization solutions. This includes developing mechanical sourcing strategies and elevating our mechanical assembly of sheet metal parts (think server racks and enclosures) so that product can go directly to market. Underscoring the rising complexities in designing, building, shipping, and supporting products, these considerations are just the tip of the iceberg in managing product life cycles as well as the necessary investments to support regionalization.
This companion content is part of the blog series, Catalysts of change turn a new page for manufacturing.