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Manufacturers should adopt a well-rounded view of globalization as a proactive strategy that enables them to exploit new markets and gain new customers, rather than simply as a response to low-cost manufacturing. Globalization requires the manufacturer to diversify more than just its plant locations; it demands diversification of the supplier base, the company culture, its customer base and every other aspect of its operations.
Challenges to globalization can be considerable, including significantly increased complexity of the supply chain; the need to adapt to local cultures, customs and business practices; the requirements of new customers in new markets; and balanced manufacturing within their organization in best-cost countries. The normal challenges of a domestic market - like driving lean, customer satisfaction, shorter time to market and enabling the supply chain - become more complex in a global company.
The ultimate goal of globalization is to consistently and profitably grow the business. Despite the challenges, the results can be highly rewarding, with more flexibility among manufacturing locations, suppliers and delivery options; much higher customer satisfaction; and the ability to surge ahead of competitors instead of simply keeping up with them.
Business and technology solutions are essential to overcoming the barriers and reaping the benefits of globalization. Supported by supply chain planning and execution, customer management, lean manufacturing, quality management, and ERP solutions that automate and control the company's processes, globalization can transform the manufacturer's business. The company gains a true, world view of its marketplace. With capabilities to forecast demand, plan production and strategically manufacture and ship products from the most cost-effective locations, the manufacturer can become a dominant player in a global environment.
By employing technology to surmount the challenges of globalization, manufacturers can expand their businesses profitably to incorporate new markets, new levels of innovation and new revenue streams.
A Fully Rounded View of the Globe
When manufacturers approach globalization, often they set sail on a course based on the concept of a "flat earth." They are being pulled into transcontinental transactions to find the low-cost manufacturing and/or raw-material sourcing they need to stay in business. Competition is on their heels and, reluctantly, they stick a toe in the surf and struggle through.
This is a strategy that's certain to gain flat, minimal results. Companies going global just to keep up will do precisely that - just keep up. They have gained little or no strategic advantage over their competitors nor added value for their customers. Perhaps they have reduced their costs, but often the savings they seek on materials and parts are drowned in the complexities and expenses of establishing a link to overseas resources.
The world-class businesses that truly succeed are those that adopt a more well-rounded view of global opportunities - an understanding that globalization presents the opportunity to develop new markets and a new approach to the way they do business. In this "round-earth" strategy, sailing out to previously unexplored geographies eventually brings you back a wealth of new customers, profits, competitive advantages and customer value.
A manufacturer might view globalization as "the four corners of the earth" - a four-section grid of options for expanding globally, with each producing a different result.
In the lower left are those companies that are reacting to market forces in a manner that addresses immediate tactical concerns but limits their longer term opportunities. They generally are responding to a shrinking market, the demands of global customers or pressure to cut costs. Similarly, those in the lower right quadrant are companies that actually are outsourcing work to foreign shores, a proactive step but still one that usually only enables them to maintain their competitive position and not really gain ground on more globally aggressive manufacturers. Businesses that only pursue these goals relating to reducing costs are those which are most likely to fall off the edge of the earth and fail to survive or thrive long term.
Still reactive, but poised for some measure of growth, are those businesses categorized in the upper left that open their own overseas production facilities or participate in joint ventures with foreign local firms. The company would generally add capacity to primarily serve its existing customers with better price and quality products.
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