Globalization has bred stronger competition among businesses hoping to provide products or services to customers in countless time zones and geographical locations. A recent Bloomberg View article analyzed a new report by McKinsey Global Institute, which found people, businesses and the flow of goods are linked more strongly today than they ever have been in the past. The reverberations of globalization have transcended the borders of leading industrial nations and those with massive economic wealth, moving into newly developed or developing nations. The McKinsey study also found that the more open to international trade and cooperation that companies tend to be, the better off they are financially. In fact, this international mindset helps bring upwards of $450 billion global economic growth annually.
Cost and Value are Priorities When Outsourcing Manufacturing
The common assessment is that manufacturers look to outsourcing as a way to reduce costs as they increase their reach of the dollars spent in countries where labor and materials may be less expensive. However, the "11th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production" shows trends vary depending on the sector a business serves. The organizations responding to this study indicated that controlling costs is less important as a motivator to outsource processes. Instead, many biopharmaceutical manufacturers cite the need for working with the most qualified and industry-adept partner. Another key action taken by those in the biopharmaceutical industry is reducing the timeframe for process development.
IT Infrastructure Doesn't Measure Up
The true indication of the state of manufacturing in a globalized context is the fact that organizations aren't operating single warehouses and these facilities aren't located in their backyard. Without question, outsourcing has allowed manufacturers to reduce operating costs, but there's a catch-22. Lower products costs come at the expense of visibility into the supply chain and processes, emphasizing the need for warehouse management solutions. As important as the flow of goods across borders is to a business, the stream of data between facilities is equally critical. This scenario requires a strong information technology infrastructure and systems capable of providing transparency into operations that may be occurring on the other side of the world.
Why Traditional Management Strategies Don't Work
A recent RFgen white paper, "Solving the Remote Warehouse Dilemma with High Availability Distributed Solutions," specifically looks at this situation and highlights the common problems that companies can face. The traditional approach that manufacturers take in alleviating issues involving remote warehouse management is to integrate distinct systems in each facility. Accordingly, each local system must go through customized data synchronization routines or application integration tools to make sure data can move back and forth to the enterprise system. This tends to be a Band-Aid solution, fixing data flow issues in the short term but leaving manufacturers exposed to risks if any process fails.
At the same time, organizations are less prepared to respond to evolutions in their IT environment, which tend to occur rapidly. As a result, manufacturers must invest in staff whose sole objective is to monitor the flow of data and ensure everything is functioning properly. This is not a sustainable strategy in the long term. What happens in the event of a merger or acquisition? What can manufacturers do when they are forced to change outsourcing partners?
While globalization has led to an interconnected world, there are still significant obstacles that businesses need to overcome when it comes to streamlining operations in offsite facilities. Data is increasingly important to make certain manufacturing costs meet budgetary forecasts and organizations aren't hampered by unresponsive warehouse management tools. Manufacturers need the right resources to achieve visibility and keep data flowing.