One of the toughest and unwavering challenges facing small and medium-sized Australian manufacturing enterprises today is dealing with the question: “How do we compete with the big boys, the giants, of our industry?”
But this is not a new concern. It is a simple truism in any business that success inevitably comes at the expense of your competitors’ failures — and failures can all too often be absolute, i.e. … terminal … for the small/medium-scale company when locking horns with the big dogs. What’s more, this is a reality of the business world that is never going away. Sure, you may be a well-established plant with a loyal following now — plenty of orders lined up, your rates and rents all up to date — but what if someone were to mount a serious challenge on your product?
What if one of those dogs decided that they wanted to take a big bite out of that pie you’ve nibbling away at too comfortably for too long? They already have the money, the resources, the access, the know-how … all they really need is the time and the will to get your product on any one of their umpteen production lines, and boom! All of a sudden there’s near-identical article next to yours on the shelves. Just as good. For half the price. You’ll soon be reminded that the only true loyalty the consumer fosters is to the folding stuff.
Collaborate, co-ordinate, co-operate
It can be too easy to become stuck at a steady and reliable yet stagnant rate of production. It may feel comfortable enough, but the truth of the matter is, if a business isn’t growing then it’s showing the first signs of failing, and those dogs can sniff out a failure even before the bank manager.
Small manufacturing enterprises tend to focus on a single core competency, which, frankly, will either make or break them. If they hold a patent over something that simply can’t be copied, then the chances are they’re home and dry. So — is this you?
If not — and for most, it won’t be — then you seriously need to consider moving into the inter-operable world of “collaborative manufacturing”.
What is ‘collaborative manufacturing’?
Collaborative manufacturing is a relatively new business model, whereby completely independent manufacturing enterprises establish close and inter-operable relationships with one another, to exploit — in the good way — the other’s capabilities, proficiencies and resources to advance and progress the overall performance of both (or more) businesses. By doing so, by joining forces with another plant in the same boat as yourself, a small or medium enterprise has immediately doubled in size: it has double the resources, double the network and double the clout to fend off the big dogs — and perhaps even stop each other from sinking.
What are the benefits?
Increase of market share: Collaborating with other plants in other regions can gain you access to markets previously out of your reach.
Lower production costs: By outsourcing to one another you can play to each other’s strengths. What costs you, say, $100 to produce may only cost your collaborative partner $75 (and vice versa), and so you make a saving — a saving that you can then pass on to your customer and improve business relations all round.
Speed up improvements: The time it takes for R&D processes can be significantly reduced when all collaborative partners quickly conglomerate their respective multi-disciplinary knowledge bases and hone them into one final design.
What are the difficulties?
As I’m sure you can imagine, managing collaborative manufacturing is rather complex. Businesses need to inter-relate with the utmost professionalism. Agreements need to be arranged and kept, and contracts drawn up. Allocating resources needs to be controlled, and the data and knowledge bank needs to be supervised carefully for the benefit of effectiveness to occur.
These are serious challenges for any manufacturer looking to reach out. But they are not insurmountable, and there is already a wealth of literature offering guidance. To get you started, get yourself a copy of H. W. Lin’s et al Proceedings of the 35th International MATADOR Conference, 2007, and turn to chapter 9, page 157, for all sorts of advice and guidance on the decision-making processes involved in taking on such an endeavour.
Where do I sign?
Lots of manufacturers are already getting involved with long-term collaborative business projects, with quite a few success stories emerging. The Advanced Manufacturing CRC is a fantastic source and database to which you should definitely sign yourself up. And it’s probably the best place to start your search, as the CRC also has the means to contribute to your project, and allocate funding to start-up collaborations with solid business plans.
You never know, it could be the start of a beautiful and lasting relationship.