What doesn't kill us makes us stronger
It seems like all I read about is the threat of globalization. People and companies are worried about losing jobs and opportunities. China and India are the bad guys and we the victims. Wrong! Global competition is not a bad thing; it is competition. It is a game we can win and must win if this nation is going to keep its edge.
It seems like all I read about is the threat of globalization. People and companies are worried about losing jobs and opportunities. China and India are the bad guys and we the victims. Wrong! Global competition is not a bad thing; it is competition. It is a game we can win and must win if this nation is going to keep its edge. I don't know who said it but I agree with it, "What does not kill us makes us stronger." That is the attitude America must take if we are to stay on top.
Companies need to have a strategy for winning, and stay away from the tactical approach of 'how not to lose.' The issues that we need to focus on are low cost production, product performance, ease of communication and the expenses associated with research and development.
Low cost production is the biggest advantage of China, India and other third world nations. We need to improve this first; America needs to drive out waste in all aspects of production and product development and streamline efforts to improve productivity. We need to leverage new manufacturing technologies and strategies to combat cheap labor tactics.
With superior manufacturing technologies and strategies implemented, we can center on improving product performance. Consumers want and need products that are durable, reliable, and delight them. Consumers require value and that intrinsic worth is the edge needed to keep them buying our products. With better manufacturing processes, we can make a profit. Unfortunately, this is not a secret; China and India will keep pace. Their asset is they have so many people to keep busy, with labor requiring no capital investment. We have the advantage technology and America must proactively pursue it.
Product performance relates directly to the materials used. Let's face it all companies are out to make a profit. So where are the opportunities to make a profit? There is labor and material, and if labor is at it cheapest like in China, materials are the next item up for review. Some offshore companies substitute materials to improve margin. This is not intended to be harmful but it can create long-term negative affects on a company's image. America's advantage is great process controls on materials and national standards—in other countries standards are not applied uniformly.
A major obstacle to going offshore is communications. Clear, timely and concise communication is critical to product success. I will be honest, sometimes I have trouble understanding the person beside me and they speak English. Couple that with distance and time lag and you have communication challenges. If we are to compete globally, and we have to, we need to communicate more quickly, clearly, and directly. The disadvantage of going offshore is the time lag between communication events. Another drawback is the lack of understanding when communication is ambiguous. Culture plays a role here as well. Some cultures demanded you save face and in doing so people will not say "no" or "I don't understand." We take their response as fact and proceed only to regret it later.
The point I am trying to make here is that, in business you take risks and depending upon your business model, core competencies and market needs, outsourcing is not always the 'silver bullet.' American companies must leverage their strengths and exploit offshore weaknesses. There are many factors to consider when going offshore. What has not been touched on are the intangible issues such as company moral, image, and community/customer perceptions. Therefore, make a list and weigh the possible outcomes when deciding on manufacturing or designing in house or offshore. We can win this game if we compete with the right attitude and leverage our strengths.
Mikel Janitz, Advanced Engineering, MGM Labs and R&D Manager, MotorGuide Marine, Tulsa, OK