Global Supply Chain: Manufacturing Risks, Rewards

chain.bmpAll manufacturers are part of a supply chain. The latest publication of The Manufacturing Institute and RSM McGladrey looks into this important component of today’s interconnected business relationships.

Many small and medium manufacturers build product for larger manufacturers who, in turn, sell to a final customer. Looking at the supply chain from the large company perspective, its many suppliers provide essential products without which they can’t complete finished products. Small, medium and large manufacturers are all together and the more successful the communication within a supply chain, the better it performs.

But manufacturing supply chains are changing with the advent of a global marketplace. Large U.S. companies can find suppliers around the world. Similarly, smaller companies can follow their large customers as they set up operations to supply burgeoning markets such as China and India and they can diversify their own business by becoming to European and Asian companies. A decade ago these kind of opportunities were rarer.

Forging New Partnerships: How to Thrive in Today’s Global Value Chain is a new report designed for executives who run small and medium manufacturing firms (SMMs). This is the first of several blog entries that will discuss this new report and its implications for the future competitiveness of manufacturers, both large and small.

Globalization and greater competition in the supply chain are actually morphing the traditional system into a value chain. What’s the difference between these two? As our report notes:

The old supply chain connected assembled and/or transformed components into a final product and sold it to the end consumer. It was a vertically organized structure with mainly components flowing through the supply chain while product design, pricing and service were dictated and managed by the final producer. Primary responsibility for innovation and value creation resided with the Original Equipment Manufacturer. (OEM)

Today, manufacturers are part of a new value chain that is a more complex matrix of interdependent corporate relationships and the workforce that makes them succeed. Innovation and value are created at all levels of the chain and in collaboration with external partners. In the new value chain, SMMs are more than just “build-to-print” suppliers. They are integral partners that help create the new technologies, products, services and business models that are vital for success, here and abroad.

In the days ahead, we’ll loook at the four chief elements of this value chain: innovation, exporting and global sales opportunities, workforce and financing.

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