Government Needs to Encourage “Vision to Invest Wisely”?
I was really encouraged by the Strategy+Business article on why manufacturers in developed countries are still successful. These manufacturers are bucking the trend towards outsourcing to non-developed countries:
But there is also the counterexample of leading manufacturing companies, farsighted enough to view their factories, supply chains, logistics and procurement programs, inventory cycles, and labor management as strategic assets. These include Tetra Pak (the packaging giant), Novartis, Lego, Procter & Gamble, Boeing, Toyota, and a significant number of others, large and small. Perhaps the most striking characteristic of such companies is their persistence as attentive innovators of operations. They treat manufacturing experimentation as a source of knowledge for improvement, and their solutions interact in a virtuous circle that reinforces its own impact. For example, to overcome shortages of silver, the solar cell industry has been working to advance its products in a way that relies on more abundantly available materials. These breakthroughs require entirely new designs in process technology. But if they can succeed, then they will not just reduce energy costs but make plant siting more flexible — factories will be freed from having to be near dwindling raw materials — and that in turn could enable supply chain innovations that make it far more possible to manage labor force shifts.
The focus on innovation and setting up a culture that fosters it seems to be a key strategy. Then the authors ruined a good article by suggesting that governments get involved in “encouraging development of more companies” like this. Big mistake! More on this in my next post.
Is your company one of the few manufacturers that has succeeded without outsourcing production to relatively undeveloped countries? I’m particularly interested in companies that tried outsourcing and then brought it back into the US (or Japan or Europe) and why you went through that cycle? What was the original rationale, and what did you discover after attempting outsourcing?
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