Looking at recent history, there are plenty of evident
changes where lessons can be learned, and insights into what the
differentiating factors may be to either avoid a similar fate, or benefit from
the rolling trends
and changes
occurring.
Manufacturing has continued to migrate and become
outsourced, off-shored, over the past 25 years
From textiles, to heavy manufacturing and high tech /
electronics, the exodus is moving higher and higher in the value chain.
East and South Asia offer superior labor arbitrage
unrivalled on local western markets when global free trade facilitates the
transfer of manufactured goods and eliminates trade barriers.
In the pursuit of faster, better, cheaper (and redundant
manufacturing capacity where import tariffs still apply) it's a race to the
bottom on cost, when outputs and tooling (quality) are standardized
The latest example from a Nordic perspective is the telecom
industry where practically all manufacturing is shut down (Nokia,
Ericsson)
regardless if it is handsets or network equipment.
Design, intellectual property and service (consumer,
Customer) relationship resides with local market - together with higher steps
in the value chain. "Designed
in Palo Alto, CA - Made in China", is the new black.
The IT and service industry is the current big wave
leveraging commoditized outputs and economies of scale. Callcenters,
Customer services facilities, IT Services are under immense price pressure -
HCL, Tata/TCS, Tech Mahindra .. the list of huge resource pools of standardized
competencies is growing and becoming more complex and sophisticated by the
hour. The argument that it's only applicable for non-creative work is
disappearing as rapidly as the budgets allocated to local suppliers.
What countermeasures are available to local players on the
market - what can you offer, what do you need to be and do to become
indispensable, essential, to your Customers value creation and offering to
their Customers?
To summarize –
1. Package and bundle
competencies
2. Offer domain and industry
expertise
3. Offer fixed price solutions –
minimizing risk
4. Strive for partnership rather
than vendor-supplier status
5. Offer Excellent Service
1. Packaging and service bundling of multi-discipline
competencies
Like any manufacturing operation will prove, the more
complex the output - the better the margin, as more value is packaged and
provided to the Customer. Lumber in a stack and nails in a box yield
little margin, but prefab housing is good business. It's the combination
of basic skills, tooling, complex skills and experience that raises the yield
in the value chain.
2. Domain and industry offering
Regardless of your industry and business, that is typically
what you know best. If you can get a Customer who's in the same business,
you can guide them past all the paths they shouldn't be going down, based on
your own experience.
The problem is that the players in your industry and business
are most likely competition, rather than potential Customers – but most
Customers are looking for something in addition to the bread and butter content
of the core offering you provide together with the competition in your
field. Differentiating and leveraging the core offering with domain and
industry specific offerings, providing solutions and value rather than just the
nuts and bolts for DIY (the assembled table and a takeaway order for dinner
rather than the flat pack assembly and directions to the grocery store)
3. Fixed price models
Coupled with taking out risk from the equation for the
Customer, and thus offering fixed price for a delimited outcome – suppliers
start to become enablers and business partners rather than just vendors.
4. Partnerships - ..
.. with the Customers - becoming part of their operation,
winning and losing together, sharing risks and rewards. Proactively
engage and collaborate with their strategic business initiatives... with frontline players who can complement your offerings with domain and industry specific expertise.
Mixing these factors, interfaces and values provided to the
Customer – you become indispensable, a critical key component and success
factor – to your Customer.
This makes your business incomparable to standardized,
commoditized offerings, measured and priced in $/unit (Gb, hour, FTE ..) -
making the wave of outsourcing, offshoring and detrimental price-race to the
bottom irrelevant.
5. Offer Excellent Service
Realize, accept and act on the fact that the offering, the
value, the services and the Customer relationships are only as good as
yesterdays’ delivery, and that your competition is constantly looking to get an
edge over what we already offer - so should you!
Piece of cake, right – you’re already doing this, or
planning to do it? Perhaps not, but more importantly – there has never
been a more advantageous time to endeavor to do it, than now!
The opportunities and capabilities to collaborate closely,
share information on Customer behavior, real-time forecasts, etc are
unprecedented given the information technology tooling and platforms available.
The Digital
Customer Experience, is yet another step towards building that close-knit,
indispensable position in relation to your Customer,
and obtaining information crucial to creating partnerships with co-suppliers of
expertise and complementary value. Take a step forward to create
and capture value in the
Digital Dimension!
By Fredric Travaglia, Business Development Consultant @ Enfo
http://www.reuters.com/article/us-sweden-ericsson-idUSKCN11S0G9
https://www.engadget.com/2012/01/22/why-apples-products-are-designed-in-california-but-assembled/
http://www.winbeta.org/news/microsoft-spend-15-billion-building-data-centers-year
http://datacenterfrontier.com/cloud-wars-intensify-google-adds-more-data-centers/
http://www.datacenterknowledge.com/archives/2015/02/23/apple-spend-2b-two-massive-european-data-centers/
http://www.seattletimes.com/business/technology/amazon-microsoft-invest-billions-as-computing-shifts-to-cloud/
http://www.thedigitaldimension.com/Posts/Video-Logs/2016/Innovation/Create-and-capture-value-in-the-digital-dimension
http://www.thedigitaldimension.com/
