Global Manufacturing Challenges

Manufacturing environment has changed significantly due the advent of Globalization in the last 20 years. Traditional manufacturers served the local market and had their manufacturing facilities and the supplier network within the local region. Previously, the manufacturing challenge was to manage the regional demand, where the consumption pattern was well understood. A majority of the international market was closed to foreign companies in order to promote local industries. In India, the flagship car, the 1950’s model - Ambassador, was the major brand on the roads till the 1980’s when the market was opened to other brands. The downside of such a market was that the local consumer did not have a choice and it also killed innovation due to the lack in competition. The "one style/color fits all" mentality behind the mass assembly line is no longer an accepted approach for large-scale production. Instead, "mass customization" is now not only required but a goal for many manufacturers. Customers require a higher quality product with more functions, and usually at a lower price. The product lifecycle was much longer as the original typewriter existed for 30 years as compared to today where a computer phases out within a year. Globalization has created a new market and opened up access to new consumers who are eager to shorten the learning pattern and jump to the latest technology in a heartbeat. Nowadays, you can buy an I-Pod or a laptop at any part of the world, with the same quality standard as found in the developed world.

Manufacturers today operate in a highly complex, distributed and fragmented environment. On one hand, globalization has created tremendous opportunities to develop new products, serve new customers, and pursue new markets. On the other hand, competitive stakes are getting higher then ever. The new manufacturers has unprecedented pressure to cut operating costs, deliver on time, optimize use of the available assets, and adhere to regulatory and compliance edicts while at the same time focus on marketing efforts to grow the top-line revenues.

The new global manufacturer has several manufacturing facilities, several contract outsourcing facilities, several sales channels and global consumers. The challenge is how to coordinate the activities across multiple plants at the enterprise level into a cohesive business and produce thousands of product variations, in ever shortening lead times and high delivery compliance. The global dispersed supply chain and manufacturing operation required synchronization across several time zones. Several years of continuous improvement have made these chains effective and lean, but globalization has ratcheted up the challenge a few levels. The lead times and delivery requirements have not changed, in fact become more competitive, in spite of the global network of facilities.

To meet the faster, better, cheaper mantra of today's economy, manufacturers need to look for new ideas, designs and methods, examining every aspect of production. As supply chains become leaner, the pressure on manufacturer to respond quickly, profitable, and efficiently has only increased.