by Michael Lombardi, Consultant – Thought Provoking Consulting Ltd.
Like so many other people, I have spent the past year glued to my smartphone and I have seen two distinct yet seemingly opposing trends: the world continues to get smaller and more connected while there is an increasing sense of newfound nationalism.
So, how do these trends impact the global market?
YouGov and The Economist recently completed a study and a follow-up report which looked at how people perceive globalization and whether their country should import or produce more. They found favorable opinions of globalization are shrinking in western countries with an increased desire to produce internally and import less. We have seen this with cases like Brexit and the failure of the Trans-Pacific Partnership.
Aside from having an impact on the political climate, it also poses some interesting opportunities and challenges for retailers. On the one hand, they can no longer ignore the opportunity to expand into new markets like never before:
- Online shopping allows companies to sell in many new countries
- Sophisticated global transportation infrastructure makes global shipping easier
- Targeted ads online create brand recognition globally
Retailers today must learn to balance this growth with the aforementioned movement towards nationalism. While in the last few decades we have seen companies producing a great majority of their products in the far east to sell globally, there is a growing need for a closer model to respond to customer demands as well as respond to a shift towards more protectionist regulations. This change is reshaping the entire supply chain and spreading the responsibility across many countries/regions. Some of the ways they are meeting these needs include:
- Design offices in many countries
- Multiple regional manufacturing of the same product
- Local sourcing of materials for production
- National line planning & pricing strategies
While spreading out the supply chain allows for more effective response to local needs, it also adds additional layers of complexity which bring with them the need for much more efficient data management. For example, a shirt that was previously produced in one country, with fabric sourced from one textile mill to be sold in one country is difficult enough to manage. Imagine now the same shirt being manufactured in 3 different factories, sourced from mills on different continents, sold in 20 countries each with different colors, quantities and pricing models. This new model is completely impossible without a comprehensive PLM infrastructure.
The paper “Lessons from the Field: How to Leverage PLM Experiences and Advancements” explores the lessons learned in past PLM implementations and how critical it is for managing today’s intricate supply chains. In its examination of what is needed and what has changed in selecting and implementing PLM solutions, it highlights how transparency across organizations can be accomplished when operations are globally dispersed. Furthermore, it touches on how PLM provides the flexibility and agility to respond to the growing complexity of line planning and materials and finished good sourcing.
While it may appear at times that the world is pulling further apart, instead the new climate presents a chance to come together in a unified global network. New opportunities for diversification in the supply chain present companies with exciting challenges of how to set themselves apart. This journey would not be possible without a major investment in technology such as PLM software.
As I return to browsing, I leave you with this question to think about: how does your product development supply chain stand up in today’s political climate?