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Global networks key for manufacturers

Firms must embrace a global approach to capitalise on signs of an economic recovery, according to a University study.

Illustration showing chains around world, representing global manufacturing links

The credit crunch has put manufacturers under pressure, encouraging many to sub-contract work to international partners - dramatically changing the way companies do business.

As a result, links with global firms are now far more important than before, says the study by researchers at the Business School and Capgemini, a business consultancy.

Changing gears

The researchers say we are witnessing a shift in manufacturing from ‘doing’ to ‘resourcing’, with a stronger focus on relationships with other companies.

Top manufacturers will adopt a ‘value circle’ approach, in which they continually interact with a global network of suppliers and customers to develop new products.

Although leading companies still carry out research and manufacturing in their areas of expertise, they are shifting to the new model.

The companies are doing this by adopting systems to absorb ideas and innovations from customers, suppliers, collaborators and competitors, according to the study.

Close relationships

The researchers also say there has been a shift from manufacturing to manufacturing-management, where production is sub-contracted at any location globally.

In addition, companies are developing closer relationships with fewer suppliers, who are closely monitored, giving all parties competitive advantage.

Using information technology to manage these relationships is also increasingly crucial, the study says.

Manufacturing’s traditional business model is rooted in a time before the globalisation of the industry that we see today. Manufacturing firms are now creating partnerships that result in individual companies doing only what they do best.

Simon HarrisHead of Strategy and International Business, Business School