Five Process Steps to Keep Up with
Global Competition
What is the key to success in times of internationalisation? The WBA
Aachener Werkzeugbau Akademie defined process steps that have to be taken in
order to gain market intelligence and thus compete on a global market.
The internationalisation of production has led to an increasingly
competitive business situation for European tooling companies. This can be
traced back to two main causes. On the one side, non-European competitors from
low-wage countries have entered the European market with low-priced tools and
dies. These competitors profit from factor costs far below the European average
and are able to offer quality standards comparable to their European
counterparts by now.
On the other side, growing economies all around the world have
developed large selling markets, leading to an increased scattering of the tool
and die industries’ customer base. Local competitors from these markets have advantages
over European tooling companies because they are able to service customer needs
on much shorter notice. The internationalisation of production therefore puts
the European tool and die industry under pressure to offer low prices and short
reaction times, while retaining the high quality standard it is known for.
Global sourcing vs. local for local
Tool and mould-makers
need to have a firm grip on foreign markets to be able to make business
there.
In order to cope with these challenges, two strategies have proven
to be successful solutions for European tooling companies: global sourcing and local for local.
Global sourcing describes the purchasing of strategically
irrelevant parts from international suppliers. Thereby, tooling companies in Europe
are able to profit from low
production costs and are also able to focus on strategically differentiating parts. Despite obvious
cost-saving benefits, global sourcing also offers potential to increase
flexibility as peaks in demand can be dealt with without holding standby
capacities internally.
The “local for local” concept describes the establishment of sites
in immediate proximity to customers in selling markets. Local competitors
benefit from shorter communication and delivery routes from the production
site, enabling them to serve customers rapidly and reliably. “Local for local”
thus seeks to maintain this by developing production sites as close as possible
to the series production or by building up strategic partnerships with local
tooling companies. This allows for close
collaboration between tooling companies and their customersas well
as short reaction times to
fulfill customer demands.
The successful application of global sourcing and local for local
strategies requires detailed knowledge regarding the structure and
characteristics of the respective markets. Reliable information about existing
tooling competencies, employee qualification, available local suppliers or
infrastructure in specific markets is crucial. However, many tooling companies
have difficulties in selecting relevant markets and potential suppliers, mainly
because of insufficient information search and location study. In addition,
contract placing is frequently unsuccessful due to imprecise supplier analysis.
Lastly, international suppliers in many cases do not fulfill quality standards
and other requirements, threatening the success of global sourcing and local
for local strategies. The reason for these difficulties can be found in
insufficient market intelligence, which has become one of the key success
factors for European tooling companies to overcome today’s challenges and
remain competitive.
·
5 process steps for gaining
market intelligence
In order to gain market intelligence and apply knowledge regarding
market participants and available products, tooling companies need to follow a
five-step process developed and proven at the WBA Aachener Werkzeugbau
Akademie.
The process steps have to be conducted consistently and thoroughly
to guarantee successful decision-making in global sourcing and local site
development.
The process steps identified by WBA are:
·
1. requirements definition
·
2. data collection
·
3. data analysis
·
4. on-site audits
·
5. data application and storage
The process of gaining market intelligence starts with the definition of requirements. These
always have to be selected individually according to the specific goal of the
analysis. In case of a sourcing decision, product requirements such as
dimensions, surface quality or tolerances are required. An analysis regarding
the development of a local site, on the contrary, requires information about
workforce education, local supplier base and infrastructure. The selected
requirements also have to be rated according to the degree of importance in
order to allow for a successful and practical evaluation later in the process.
After the first process step is completed, the information search
can be started. Data collection incorporates
the identification and description of information regarding potential markets
and their characteristics in accordance with the previously defined
requirements. This includes the search for potential suppliers or locations in
a first step, as well as the gathering of assessable information relating to
the identified alternatives in a second step.
Tooling companies can access data through a large variety of
different sources. In general, databases, scientific studies, trade
associations and expert opinions have proven to be reliable sources of
information.
In the subsequent step, the collected data has to be analysed by comparing the defined
requirements with the characteristics of the identified suppliers or locations.
The output of this process step is an individual evaluation of each identified
supplier or location, which reflects the degree of fulfillment regarding the
defined requirements and highlights the most suitable alternatives. However,
before the final selection of an alternative, the evaluation results have to be
thoroughly verified in order to ensure correctness and reliability.
This is guaranteed by on-site
audits conducted by a team of experts. Simultaneously, these visits
provide additional information to complement hitherto purely data-based
evaluation with real-life impressions.
After this process step is concluded, tooling companies have
gained market intelligence for specific markets and are able to make successful
decisions regarding new suppliers or the development of local sites.
Long-term usability und sustainability of the newly developed
market intelligence has to be ensured in the concluding process step.
Therefore, the acquired data has to be stored safely and intuitively, intelligent analysis tools need to
be implemented and the data needs to be verified as well as updated frequently
in order to take full advantage of the acquired market intelligence.
Working closely with customers and partners, the WBA Aachener
Werkzeugbau Akademie GmbH has been able to establish detailed knowledge of the
international tool and die market. This knowledge has been published in several
studies. These contain general information about the relevant international
tool and die markets (World of Tooling) and developments in the sector as well
as detailed information about specific markets (Tooling in China, Tooling in
Germany, Tooling in South Africa, Tooling in Turkey).
PROCESS WORLDWIDE
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