Global networks are key to manufacturing success, study says

The study, by the University of Edinburgh Business School and business consultancy Capgemini, suggests the credit crunch – which has put manufacturers under pressure, encouraging many to sub-contract work to international partners – has dramatically changed the way companies do business and made links with global firms far more important than before. The researchers say there has been 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 by adopting systems to absorb ideas and innovations from customers, suppliers, collaborators and competitors. There has also been a shift from manufacturing to manufacturing-management, where production is sub-contracted at any location globally. The researchers say companies are developing closer relationships with fewer suppliers, who are closely monitored, giving all parties competitive advantage. Using information technology to manage the value network is also crucial. Dr Simon Harris, head of strategy and international business at the University of Edinburgh's Business School, said: "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." "To compete in this global competitive manufacturing environment, firms need to demonstrate value. They have to make tough decisions about their core competencies and ensure they have managerial and IT talent and processes to form, manage and exploit relationships." The full text of The global networked value circle: a new model for best-in-class can be accessed at http://www.business-school.ed.ac.uk/about/news-and-press-office/white-papers