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The Manufacturing Institute is the research and education arm of the National Association of Manufacturers, an industry trade group that advocates on behalf of members to enhance the competitiveness of manufacturers.It's getting to be sink or swim time for small and medium-size manufacturers (SMMs). Those that keep seeing globalization as a threat, constantly retrench and try to slash prices to compete are probably going to lose their place in the supply chain in coming years. "Traditional supply chains are morphing under the pressure of a globalizing economy. Manufacturers adhering to old supply chain rules are putting their businesses in jeopardy by not adapting to new rules," warns a new report by the Manufacturing Institute, the research arm of the National Association of Manufacturers.
But the report, Forging New Partnerships: How To Thrive in Today's Global Value Chain, is far from a dire warning. Rather, it is a guide to navigating and carving out a piece of the new and perhaps strange terrain of a global supply chain. The following summary is drawn from a chapter on how to keep innovation alive in every part of your business -- products, workforce, strategy, etc. But the whole report breaks down the various challenges of being part of a global supply and the opportunities those challenges provide. Pressured by global competition? Expand sales overseas. Constantly underbid? Overhaul your shop to a "lean" manufacturing model.
Above all else, small manufacturers need to use the advantage their size provides, the report says. They have the agility to react quickly to new market demands -- for military needs or green products, for example. Larger companies often prefer working with small suppliers because they are the ones coming up with new solutions and products and are willing to be flexible partners rather than simple suppliers.
By way of illustration, the report points to a company that made its name building lobster traps. Its plastic and metal traps eventually replaced traditional wooden traps and became the market standard. But the company ran into trouble when foreign producers began making similar traps more cheaply. In response, it expanded its market and now sells its plastic netting worldwide for dozens of uses. Once its sole product, lobster traps now account for only 30% of sales.
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