Globalization requires increasing responsiveness
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There’s an interesting article by Pankaj Ghemawat at Harvard Business Review talking about globalization and the turbulence and uncertainty associated with it. I posted a comment at the site, but have included it below here as well.
*** My Comment ***
I agree that globalization is here to stay. Increasing globalization is the norm with the manufacturers I work with. You’ve identified some of the strategic imperatives of surviving in this world, there are also operational imperatives.
Manufacturers today are dealing with increasing volatility. This is driven by increasing global competition and demanding customers — all leading to volatile demand. The need to compete through innovation has placed pressure on product lifecycles, shortening them along the way. And, as you noted, globalization is a key to geographic reach and cost advantages, but comes with added complexity.
To win, more and more companies are trying to become increasingly customer, rather than internally, focused. They key is to do so in a way that balances customer requirements with company requirements for profitability. The first thing companies realize on the way to becoming more customer focused is the reality that you can’t plan the customer. This makes responsiveness a core requirement for companies to thrive in today’s globalized markets.
Of course, one of the biggest internal challenges companies face is the inability to see this. For years, everything has been about planning and execution. This model works great when you have an “inside out” mentality - a push model where you build things and push them out the door. But as soon as you move to an “outside in”, or pull, model, it’s not enough. You now need to empower people with the tools for risk tradeoff and response to manage the daily exceptions that are now at the hear of your ability to compete.
Manufacturing is in the final throes of a massive shift from a production-centric to customer-centric strategic business model. We have transformed from the “any color you want as long as it is black” model of four wall focused long production run efficiency to new a world of strategic supply chains, global outsourcing, time-to-market, mass customization and delight the customer. How fast you react and how well you act will increasingly define business success. Companies need to ask themselves what their strategic solution is for driving response? If your like most businesses, you have a cobbled together web of tactical, people-intensive solutions. The future will be won by those with the best strategic solution for Response Management – because you can’t plan the customer.
