Next-Shoring: New Frontier For Manufacturing? - InformationWeek

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IT Leadership // Enterprise Agility
Commentary
9/3/2014
12:06 PM
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Next-Shoring: New Frontier For Manufacturing?

The speed of manufacturing is accelerating, requiring a combo of nearshoring and unified communications.

The manufacturing industry is changing how it operates. In many ways, it's not unlike changes we've seen before.

Manufacturers have always focused on being close to suppliers and customers. To accomplish this, and to produce enough inexpensive products to meet global demand, companies have moved around the world to reach larger markets and obtain more raw materials and affordable labor.

US manufacturers have traveled offshore to China and India and near-shore to Canada and Mexico. When energy and costs shifted, they would re-shore.

[How cloud is competing head-to-head with outsourcing, and other developments. Read 4 IT Outsourcing Trends To Watch.]

The change we're seeing now is yet another way to bring supply and demand closer. It's called next-shoring, a concept named in 2014 by a team of McKinsey analysts. Next-shoring focuses on the physical proximity to emerging markets, innovation, talent, and customers.

But here's the key difference between next-shoring and industry changes of the past: Next-shoring transcends geography. Manufacturers aren't moving operations to other countries; they’re reinventing their entire ecosystems. Through the use of technology, manufacturers can be close to innovation centers or their customers without moving their main operations.

At the heart of this reinvention is collaboration technology, which, through audio, video, and content sharing tools from vendors including Cisco and Polycom are breaking down geographic borders to let creativity, research, development, and customer interaction happen from anywhere. (Full disclosure: I'm employed with Polycom.) Shaun Mundy, group IT director at engineering consulting firm Buro Happold says video collaboration has become central to how the firm works. Every day, engineers make crucial decisions sooner by sharing complex designs, models, and structural analyses over video, and by conducting design reviews in real-time.

These tools are dissolving borders of communication that often exist from great distances, allowing for stronger communication with remote operations where regional demand is strong. The manufacturing industry will see some of these same advantages from offshoring operations as well.

The new world of manufacturing
Next-shoring offers a way to stay competitive in the new manufacturing market. Today's manufacturing economy is driven by perpetual innovation. Established business practices become yesterday's news overnight as new consumer appetites and technologies emerge. R&D happens at breakneck speeds and time-to-market is quick.

The speed of the development and sales cycles leave manufacturers no time to react to trends. Rather, companies need to make sure they have the tools to stay on the cutting edge, sensing trends before they hit, working closely with partners and employees to analyze, brainstorm, prototype, test, and go to market.

Also critical to the new manufacturing landscape are emerging markets. In the coming years, they will offer double-digit growth opportunities, a customer

John Paul Williams is Director of Enterprise Solutions at Polycom. His background in leading global innovations in manufacturing, quality, and engineering spans the fields of telecommunications, process controls, military avionics, and consumer goods. View Full Bio
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Brian.Dean
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Brian.Dean,
User Rank: Ninja
9/4/2014 | 2:57:00 AM
Re: new frontier
Agreed, 3D printing is a technology that can change the shape of manufacturing and logistics, etc. Next-Shoring has the potential to change the shape of global economics. For instance, if designs can be sold then a firm will not take an extra step to manufacture the product and the consumer would locally print it out. Large producers already operate on a similar model due to their scale. Chip manufactures have split into architecture designers and fabricators.  
Ariella
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Ariella,
User Rank: Author
9/3/2014 | 1:35:46 PM
new frontier
"Rather, companies need to make sure they have the tools to stay on the cutting edge, sensing trends before they hit, working closely with partners and employees to analyze, brainstorm, prototype, test, and go to market."

3D printing can be a huge benefit there, allowing rapid prototyping and testing to get products to market faster. 
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