Words from Wallace: How Can You Compete Against Offshore Manufacturers?

WORDS FROM WALLACE

Competing Against Offshore Manufacturers

Hello out there. This is the first in a series of ideas and opinions from yours truly.

Let's get started by looking at three primary competitive variables - quality, price and delivery - and ask ourselves how well we in North Amercia can compete against offshore manufacturers:

Can we win on quality? I don't think so. Offshore producers' quality is as good as ours, or close enough that it doesn't make a difference.
Price/cost? We lose big time. The wage differential is so great that, for many products, it can't be overcome.
How about winning on delivery, on customer service? Yes, here we can compete and win.

Building products in North America for the North American market provides a unique opportunity: to beat the offshore competition on the competitive dimensions of customer service:

Shorter order fulfillment time, because the product is not coming from half a world away.
Fewer backorders, due to a shorter more stable supply chain.
Reduced risk of obseolescence, for the same reasons.

Now, combine the three factors above with the following, which result from the effective use of Postponement ( not finishing the product until the customer order is received and then doing it very rapidly):

Greater product variety: being able to give the customer more features and choices - quickly.
Reduced reaction time and higher flexibility, particularly important for introdcuing new products in turbulent markets, to meet changing customer demands, and to capitalize on new technology.
An even lower obsolescence risk because finished products are not put into inventory but shopped to customers.

Factors 1, 2, and 3 alone may not be sufficient to overcome the cost disadvantage we face. However, couple them with factors 4, 5 and 6 and you may have a compelling case to keep your manufacturing on-shore – or at least those processes that finish the product.

Let’s exploit the advantages geography gives us; let’s compete and win on customer service.

Thanks for listening. I’ll be back next month.

Tom Wallace

Tip from Tom: Bias is the worst kind of forecast error. Strive for zero bias. (This is one of the principles spelled out in Sales Forecasting: A New Approach. Download the 12 Principles of Sales Forecasting PDF - 12KB.)