When companies shouldn't outsource manufacturing

An excerpt from an article in Industry Week, by Jeff Wallingford, vice president, Supply Chain Strategy, Riverwood Solutions.

* * * *

The trend to outsource manufacturing has been going strong for two decades. Recently, it has been popular to speculate on whether this trend has gone too far... There are still many cases where a company may benefit by choosing in-house manufacturing over outsourcing - but only when these cases truly apply:

• a company's manufacturing process is the source of its competitive advantage
• a firm does something in a unique way and does not want competitors to know how to do it
• a competitive market for the specific manufacturing service does not exist
• there is no opportunity for the service provider to leverage their fixed capital, common overhead, specific purchasing power, or expertise
• to capture a limited and critical resource or channel
• it is too costly to outsource the manufacturing process because of the additional costs driven by outsourcing

Click here to read the full article.

Manufacturers Need to Focus on Focus

This article is from Industry Week and follows a previous Thought Catalyst post on the importance of Measuring What Manufacturers Measure.

Both articles are about focusing on what is creating the most value for your customers, such as:

• Which customers are most likely to provide the strongest, most sustainable profit stream?
• Which market segments offer much more-or less-potential than others?
• What products/services/features are the entry point for customers with the highest potential, and which offerings are ultimately dead ends?

..etc

The author mentions a company that was bending over backwards in added services to its largest client. In doing so, it was in fact making a loss on the contract and would be more profitable without them. He says manufacturers commonly make the mistake of investing time and resources in low return initiatives.

Therefore invest time in focusing on core strengths and the overarching $64 million question: what can you do better than your competitors?

Click here to read the full article.

What Does the Next Generation Need to Know and Do in Manufacturing and Design?

Following is the address from Lawrence D Burns at The National Academy of Manufacturing's 2011 Design and Manufacturing Forum. It addresses some of the lessons to be learned about manufacturing by the next generation, such as:

Lesson 1:  Manufacturing is an Integrated System
Lesson 2: Manufacturers Must be Driven by Customer Experiences
Lesson 3: Manufactures Must Grow Better “Beans” in Addition to Counting Them
Lesson 4: Manufacturing Innovation Is Still Quite Young
Lesson 5: Engineers with Integrative Minds Will be the Leaders

Click here to read the full article.

Reinventing Manufacturing - Germany’s Fulfilling Future

An article from Pierfrancesco Manenti posted on Manufacturing Executive details how Germany (The China of Europe) emerged from recession more robust thanks to progressive manufacturing policies such as increased labour flexibility and an overall focus on manufacturing as a base for competitive advantage. Significantly, as operations efficiency and customer fulfillment increasingly dominate the German manufacturing agenda, sourcing from lower-cost countries is ranked as less important.


Click here to read the full article.