Changing manufacturing landscape

Right shoring, mass-personalisation and structural flexibility are driving change in the manufacturing landscape.

In the post war era as countries have continued to industrialise we have seen the manufacturing landscape change. A shift from smaller more distributed factories, closer to the point of consumption to a smaller number of large factories (often based in China and other low labour cost countries) driven by economies of scale. This has led to a shift from distributed – localised manufacture to centralised – global manufacture. Working with a FTSE 100 Consumer Packaged Goods company in 2004, I witnessed the change of their factory footprint from network of over 150 factories that had a 1-1 relationship with the markets they served to a more regional structure with only 50 factories. Further factory footprint reduction was not possible due to trade and tariff barriers, without which perhaps they would have considered a handful of global factories.

As the video you have just watched has explained we are now beginning to see this trend to globalisation begin to reverse. For the pendulum to swing back the other way. Care needs to be taken, to find the right balance. To ensure that we have a future fit manufacturing landscape that has the right supply chain assets (factories and warehouse) in the right place to serve their customer. That manufacturing is not off-shored or re-shored but right-shored.

I should also have taken more care (particularly given my Scottish heritage) in the pronunciation of Hawick in the video. It is great to see that the global cashmere supply chain for Chanel is based in Hawick, but unforgivable that I didn’t pronounce it as ‘Hoy-ik’. My apologies!

More localised production makes sense when greater responsiveness is required, often as a result of a high degree of customisation or short lead times. We also need to be more dynamic in the way that we configure our supply chains, so that they can flex and respond to events (positive and negative) to maintain supply.

Talking point

• How have you seen the manufacturing landscape changing?
• What products do you think benefit from being manufacturer closer to customers?
• Can you think of any examples where being more ‘structurally flexible’ has given a company competitive advantage?

If you are interested in hearing more from me on the changing manufacturing landscape, please watch my full presentation to the WMG Supply Chains in Practice event on YouTube: Changing manufacturing landscape (15:03)