Scaling a startup or growing a business within the secondary industry (consisting of processing, manufacturing, and construction companies) is not merely about more customers and traction; it is also about being able to fulfil efficiently on a global scale. There lays the hidden challenge of growth: making the right things in the right places. Manufacturing footprint design answers that challenge by evaluating the supply chain, production, assembly, and distribution to achieve global competitiveness cost-effectively.
In addition, it helps analyze—and improve—how the company’s locations will work together, how well they support the growth strategy, and how adaptable they are to changing markets and customer requirements.
The decisions businesses should make about their footprint cut across their entire value chain.
To scale optimally
Cost efficiency is often the primary motive for reconfiguring a manufacturing network. Still, customer service is at least as important to consider, as well as other strategic factors, including access to resources, innovation capability, agility and risk.
Understand what to make and what to outsource
Tempting as it is to think about outsourcing and offshoring simultaneously, you have to separate decisions about ‘what to make’ from considerations of ‘where to make’.
So we divide processes into core (strategically essential functions that give you a competitive advantage) and non-core (transactional, little value-adding procedures). Once it is clear which products and processes comprise the core competence of the business, you can decide to outsource the non-core processes. Then you can start thinking about the location (on or off), considering your supply chain and the major markets.
Understand the interrelation of the parts of the whole
There are a few variables to consider when deciding on global infrastructure.
Firstly the plants, what would their role be? Will they produce or assemble? Which product lines?
The second step is to specify how they will interact and blend. You must coordinate the activities of the plants to meet customer demands most efficiently. Also, define how plants interrelate with each other and with R & D and other key functions.
The third stage in designing the network is to determine the manufacturing footprint. At this point, the question concerns the choice of region for manufacturing to meet the requirements of each market.
For example, is the answer one large facility in China or separate plants on every continent?
Other factors to be considered include the amount of raised capital, legal implications, HR issues, internal communications and investor relations.
Transferring products to new sites, plant closures, and plant migrations are likely to become regular features of a manufacturing business.
It is essential to put in place a measurement system that reflects the operation and transformation of the network. Measuring what is going on at the plant level is a relatively well-established discipline. However, genuinely network-level metrics are much less mature.
Finally (but not less important) is the carbon footprint. You have to reduce and offset your emissions. Here, crucial aspects to consider are the regulations and trade agreements.
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