Winning Manufacturing Strategies

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What happened to the Good Old Manufacturing? - Part 1

Guest Post by Varun Chhibber, Associate Consultant, MFG-ADT Online, Infosys


Recently there has been a lot of hue and cry over the outsourcing and the job losses that followed. Major companies have been accused of exporting jobs to Asian countries such as China when there has been an ever increasing need of job creation in their native countries. To this companies argue that they are creating a lot of jobs indirectly by creating opportunities and if the jobs are not moved to save efficiencies, eventually it will lead to further job losses!

What used to happen?

In earlier times major companies used to employ lakhs of employees. All the manufacturing used to be at one place and this provided huge employment opportunities to workers which led to the rise of a new prosperous middle class. This has changed over the years and today the manufacturing supply chains are spread across the whole globe.

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Rationale for Outsourcing



Business value

But a part of this trend has been changing with the advent of ecommerce, more and more companies are going the online way bypassing the traditional channels (retailers, wholesalers etc.). Directly approaching customers saves a lot of cost and due to this reason some manufacturers are shifting their focus from manufacturing overseas.

By manufacturing in say USA, what a manufacturer gains? :

·         Made in USA Tag has its premium and perceived quality is higher (valued by customers)

·         Reaction to the new trends could be swifter if manufacturing is done locally (quite applicable to apparel manufacturing).

·         Quality issues can be solved well in time avoiding heartburns later due delay in delivery to the customer, rejection of the consignment or going to the market with sub quality products.

This is where we come into picture and we can help our partners by providing them with online solutions in the domain of ecommerce which will help them go directly to their customers. This doesn't have to be the only way going forward (different channels can be employed simultaneously), but it could be one of the ways for future.

What do you think?



It has been rightly pointed out by Varun that the manufacturing companies especially in the Hi-Tech industry are shifting from the traditional Supply Chain to directly approaching the End Users via internet.
Dell can be good example of such approach.In order for Dell to achieve $7.8 billion from sales in the late 90's, Dell had to skip over the traditional channels of using retail or value-added resellers (VARs) to sell directly to the consumers or the “Direct Model”. By taking this approach Dell cut on the standard supply chain cycle and started delivering goods directly from the manufacturer to the customer. They created partnerships with several suppliers such as Sony, Intel, and others to deliver goods effectively at the time of the order to Dell's plant where the assembly took place. The delivery and shipment were outsourced through a dedicated service that also insured delivering the monitors directly from the supplier at the same time.
In 1996, Dell capitalized on the growing number of customers who are using the Internet and launched its online store at The online venture then proved to be the most appropriate sales channel that matched the supply chain direct model implemented by Dell.

Very apt example Jitendra.Dell has been one of the pioneers in its feild and has many a times changed the game with its innovations.All this shows how IT can be used to increase the efficiency & productivity of the organizations exponentially!
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