internal memo
DEPT
by F. Barry Lawrence, Ph.D., V. Jorge Leon, Ph. D. & Esther Rodriguez Silva, Ph. D.
A
MANUFACTURING
RENAISSANCE?
Controlling the Nexus of
the Product/Design Supply
Chain
8
Texas CEO Magazine
Manufacturing has gone through significant changes in the past 30 years. The
Just in Time (JIT) and Total Quality Management (TQM) movements led to standardization and documentation of processes (ISO
9000). The result was high quality manufacturing that could be replicated in low cost
production zones like China. Ultimately,
logistics costs came to dominate labor and
we’ve seen a manufacturing return to the US
enabled by more extensive use of automation.
If something is easily replicated, it is by
definition a commodity. Commodities are
subject to price wars, which indicate that
the consumer does not see much value in
the product or process. Recent events have
demonstrated that manufacturing processes
are being devalued in the supply chain.
Manufacturers must now focus on design
Discuss. Learn. Lead.
and supporting their brand to capture value.
The other value adding place in the supply
chain is distribution.
This environment leads to supply chain
conflicts. Manufacturers will seek to gain
control of distribution to protect their brand
and facilitate new product introductions.
Distributors will pursue services instead of
products as commoditization takes over and,
in some cases, will turn to private labeling.
Manufacturers will become more and more
dependent on powerful distributors like
Amazon and Grainger.
Fortunately, things are never that simple. Manufacturers don’t want to be caught
in a commodity game, distributors don’t
want to lose their supplier relationships, and
consumers want differentiation.
Differentiation versus Commoditization
In Dongguan,