Mar 1, 2013

"Made in ..." campaign not realistic in global economy

I wrote a while ago (Manufacturing Trend Watch on Manufacturing Pulse) about too much focus on "Made in the USA" in products and supply chains. 

My friend Dan McDonnell is VP of Operational Excellence at a global manufacturer of large industrial equipment and similar products. Dan tells us how this company's supply chain strategy reflects the global nature of markets today. 

We are trying to practice a realistic and winning strategy to business growth.

First it recognizes that the biggest growth opportunities in the world over the next decade are not in mature markets but rather in emerging markets. To not try to participate in those markets is a huge opportunity miss. We are living in a global economy, the winners will be the organizations who are the best global traders and operators.

Second, it recognizes that the idea of time and speed is critical and so we have an in-region-for-region strategy. If we have a big market in the US, we prefer to make product in the US for that market and to build a local/regional supply chain around it. If we have a big market opportunity in China we prefer to manufacture in China with a local/regional supply chain around that base.

Third, it recognizes that there needs to be an optimal level of good “buy” or outsource decisions. We are not tending to total vertical integration but high levels of integration. Through this we are recognizing that there are non-core materials, components and assemblies we willingly want to reach out to a strong external supply chain to provide.

Fourth, we do not believe in a uni-dimensional supply chain strategy that is either all local or all low cost region based. Rather, we seek the right mix of local, regional, and global supply around our manufacturing hubs. We want predominately local and regional strategies while recognizing that, depending on commodity and supplier capability and reach, some items are better sourced globally from extremely competitive regions. For example, for some small, light, standard, items with very high labor content, even with the best technologies and processes in the region, there might be low cost regions of supply that are the best competitive choices even with the longer time component of supply and its inherent issues.

In the end common sense, business smarts, and not evangelism should rule the day always.

Dan, thanks for contributing to the debate with some real-world thinking.

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