Companies can stretch their capabilities by connecting globally. Not limiting transactions to one area means that firms can seek out the most eager buyers for their products or enlist the best factory talent in the world. These decisions can help a company enhance margins and boost long-term strength immensely.
There are perils, however. Gaining efficiency through new connections is only effective if communication with those new partners is unencumbered and instantaneous.
Motives for expansion
The new State of Manufacturing report issued by the World Economic Forum and Deloitte found that talent is one of the things driving the global spread of companies. While unemployment remains high in undeveloped nations, manufacturers require a skilled labor force, leading them to seek out factories in nations with highly-trained employees.
In a companion to the report, Ricardo Hausman and Cesar Hidalgo stated that less-developed countries would soon have a chance to step up their own contributions to the manufacturing process. They stated that middle income countries will soon reach a position capable of creating more types of products.
Ability to grow
The two researchers stated that the entire phenomenon of globalization has been enabled by improved communication technology. B2B integration technology has grown steadily more powerful in recent years, as new forms of secure file transfer have replaced FTP and traditional email systems, shortening the time between innovation at corporate headquarters and the production of a new product, no matter where in the world the factory is located.
Each location of a company can fulfill its function with less workers than ever, the researchers stated, as high-speed communication and transaction technology allows each division to remain committed to its own function, wasting no human resources on positions already filled elsewhere in the organization.
Connecting the enterprise
Global network liability is, on some level, unavoidable. A company with a factory thousands of miles away needs to be deeply aware of the status of that resource and its workers. According to expert Sundar Kamakshisundaram, sharing his expertise with Supply Chain Digital, high-speed automated processes linking international partners is one way to reduce risk and liability.
He stated that visibility rises when the communication between trading partners can be accomplished without direct intervention. Advanced B2B integration systems mean that benchmarking and reporting on status can be accomplished across borders, providing the maximum lead time on any potential problems. Technology enabled the globalization of the supply chain and further implementations can improve it.