Managing a company's development and manufacturing partners is an increasingly complex job that is changing the very nature of what it means to be in business.
As globalization has become the norm, traditional businesses are shedding both development and manufacturing roles and focusing more on managing international partner networks of development partners, suppliers, manufacturers and distributors.
Companies that once were vertically integrated throughout their supply and manufacturing systems are outsourcing work to partners in such places as southeast Asia, China and Eastern Europe. Increasingly, these partners are moving toward providing design and development skills, as well as manufacturing expertise. One result has been to drive costs out of the system, which, in turn, has opened up the ability of smaller companies to compete with smaller up-front investments.
With these changes, the pace of competition has heated up even as customer expectations over product features and updates have sped up. Businesses have responded with ever more focus on efficiency and effectiveness in supply chain and partnership management. This has included dramatic changes in how products are developed through speedy, agile development models and technology such as rapid prototyping.
This trend has not been without challenges:
A global system is more at risk from political and economic shifts and even from such threats as natural disasters.
Relying on partners raises the specter of losing control of intellectual property and even training your own future competitors.
The speed of product development can make obsolete existing suppliers, necessitating the need to find and qualify new ones.
Tracking thousands – even hundreds of thousands – of suppliers and parts is a complex task that can be further complicated by mergers, acquisitions and growth.
Tough new challenges face businesses, challenges related to managing the many partners and suppliers in a global network. The technical knowledge to adequately specify needs and qualify suppliers may not exist in procurement staffs. Likewise, technical staffs may not have the needed training in such areas as people management, negotiation, leadership and strategic planning. Problems arise in dealing with suppliers in different time zones, from different cultures, with different native languages and their own sets of expectations. People at multiple levels within your company must develop strong "soft skills" as well as technical and process skills in dealing with these partners.
Technology can help, but is not a panacea. Web-based communication tools give companies and partners options for communicating. Email or real-time chat can be combined with video conferences for visualizing product needs, for instance. That, in turn, can support (while helping limit the need for) face-to-face meetings, which remain an important part of managing and working with partners. Supplier and partner management IT systems can also help if planned and implemented correctly; but they can exacerbate the problems and even possibly damage the business if brought in haphazardly.
In the end, successful companies focus their efforts on two or three core competencies, while avoiding the "tyranny of core competency." That is, they avoid the tendency to hang on to, or focus on, a competency that may no longer be important or relevant. They also adopt technological tools and apply people skills to the complex task of managing their supply chain and network of design and manufacturing partners. The goal is to create an efficient system that can adapt to changes in real time efficiently and effectively.