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6 Trends Transforming Manufacturing: Part 2

ERP and trends transforming manufacturing

As we saw in part 1 of this series about the six biggest trends transforming manufacturing, U.S. manufacturing is being transformed by digital technologies, and cloud ERP has helped enable that ongoing digital transformation. In part 2, we’ll explore how globalization has combined with technology to shape the present and future of U.S. manufacturing. Once again, we’ll explain how abas ERP can help you gain the agility you need to be a thriving, global manufacturer.

Manufacturing Trend #4: Globalized Manufacturing

Improved technology and streamlined global logistics/supply chains have untethered U.S. manufacturing from the limitations of geography. If you can find customers or suppliers down the block in Indianapolis, there’s no reason you can’t find customers or suppliers in India or anywhere else around the globe. Moving information and products from one place to another has never been easier, faster, or cheaper than it is today.

If you have competitive advantage, it’s now easy for customers to find you and work with you.

The emergence of international logistics networks means that U.S. manufacturers can now efficiently deliver or source raw materials and finished products to and from anywhere around the world. This trend has vastly increased the reach and economic opportunities of U.S. manufacturers (and international competitors too). If you have competitive advantage, it’s now easy for customers to find you and work with you.

 Trends transforming manufacturing are facilitated by ERP software

Among other things, globalized logistics has meant that U.S. manufacturers in labor-intensive industries such as apparel can now have most of their production facilities abroad. Factories are frequently located in other countries for reasons related to tax, labor costs, or politics, rather than proximity to raw materials or markets, as was once the case. In an age of digital technology and global logistics, geography is no longer a limitation for U.S. manufacturing.

How is cloud ERP helping? U.S. manufacturers that have a global reach – whether they produce, procure or sell abroad – require a more advanced ERP system that can easily manage multi-site functionality, which abas ERP enables. Cloud ERP is a huge advantage for global companies because it makes the syncing of data so much easier.  As a previous abas USA post explains it, “Cloud ERP solutions provide real-time data availability over a widely dispersed network. No matter how many locations you have, users can all access the same system running in the cloud from their web browser or mobile device. And with Cloud ERP, multi-location deployment is easier too. You can deploy your application in multiple regions around the world with just a few clicks.”

Manufacturing Trend #5: More Strategic Partnerships, Globally

Manufacturing is complicated, from sourcing parts, to production, distribution and much more. In order to be optimally efficient on a global scale, U.S. manufacturers have increasingly looked to partner and ally internationally. In some cases, global partners produce components for the U.S. manufacturer’s production process. In others cases, an international partner may make the product while the U.S. partner manages distribution, design, and other important functions. Some global partners might even offer distribution. The possible business relationships enabled globally by technology and logistics are massive.

U.S. manufacturing firms are leveraging  global strategic partnerships in order to do what they do better

Relationships between manufacturers and their suppliers can also take the form of alliances, which may require strong integration of information systems and regular production consultations. Many large U.S. manufacturers now hold "strategic stakes" in smaller companies, some of them abroad, that are developing new products or markets, enabling U.S. manufacturers to essentially farm out their R&D efforts. No matter the form and focus of these global strategic partnerships (they can be quite complex), U.S. manufacturing firms are leveraging these relationships in order to do what they do better while expanding their global reach and revenues.

International partnerships in manufacturing are facilitated by ERP software

How does abas ERP help? It's a means to integrate key business processes into one system for better management and more efficient operations no matter where you do business, or with whom. A U.S. manufacturer with global reach and relationships simply can’t work without a good ERP system to manage and coordinate operations efficiently at multiple global locations. Needless to say, each geographic location will have different requirements and local needs for compliance, and many other strategic concerns. abas ERP can support all this complexity while allowing a tighter connection not just within a U.S. manufacturer with global locations but also between U.S. manufacturers and their strategic partners within global supply networks. Having the agility and capacity for global integration of data, internally and with your strategic partners/allies, is essential for any global outreach.

Manufacturing Trend #6: Reshoring U.S. Manufacturing Jobs

Jobs that once flowed out of the U.S. are now flowing back in. Rising wages in the developing world and some of the compliance-related complications of global supply chains have caused some U.S. manufacturers to consider bringing back jobs that had previously been outsourced. One eye-opening data point will illustrate this reshoring trend: In 2016, US manufacturing jobs created by reshoring and foreign direct investment surpassed the number of jobs that were offshored, according to the Reshoring Initiative. More jobs are coming in than going out.

Between 2004 and 2016, China's manufacturing cost advantage over the US fell from 14% to about 1%

Many of the reshored jobs are coming back from China, where wages and compliance complexities are increasing rapidly, making that Asian giant less competitive on labor costs, according to Trade and Industry Development. Between 2004 and 2016, China's manufacturing cost advantage over the US fell from 14% to about 1%, according to the Boston Consulting Group.

Of course, the manufacturing jobs that left the U.S. in the 1990s are not the same manufacturing jobs being reshored today. As part 1 of this 2-part manufacturing trend series made clear, U.S. manufacturers are far more digital today, more custom, more modern, and more connected to the global economy than ever.

U.S. manufacturers inhabit a business landscape of change and uncertainty. Because of that, today’s U.S. manufacturer needs a modern ERP system to provide them with the business agility they need to succeed. A modern ERP system works and integrates efficiently with IoT, robotics, mobile apps, business process management, global logistics, and international strategic partners. All of that gets enabled by abas ERP.

What’s clearest from the 6 manufacturing trends we’ve covered is that U.S. manufacturers can’t succeed without a digital platform that supports agility. Whether it’s globalization or technology, U.S. manufacturers need to be ready to take advantage of the emerging trends of today and tomorrow. Thriving in manufacturing today takes being proactive rather than reactive, standing on the front foot, not the back foot. Cloud ERP enables just that kind of necessary agility.

Want to know more about how abas ERP can help you get ahead of the trends transforming manufacturing? Schedule a time to talk to one of our demo experts by reaching out to [email protected] or find out more by downloading our white paper on "Selecting an ERP System in 7 Easy Steps" to learn more.

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