Why US manufacturers must adopt a global-first mindset
Generating an estimated $7.7 trillion worth of sales in 2017, the global B2B ecommerce market dwarfs both the global retail ecommerce market and the US domestic B2B market.
The former was valued at $2.3 trillion in 2017, and the latter at $0.9 trillion. This, paired with recent research showing that 55% of consumers prefer to buy direct from a manufacturer, means the opportunity for US manufacturers to operate internationally has never been greater.
Despite this, in the last few years the US has experienced a downturn in its share of the global ecommerce market. 22% in 2015 fell to an estimated 18.3% in 2018 – with further losses still to come. This evidence suggests that the rate at which US manufacturers are ‘going global’ is slowing, while firms in China and Europe are picking up the pace.
There are many reasons for this decline, including the success of the US domestic market, which is the world’s largest. Manufacturers can experience a high level of success in this space without having to face the challenges of going global. And of course this makes the prospect of international expansion less appealing to US firms than it is to their European and Asian counterparts.
So with this in mind, why should US manufacturers go global if they can be successful without doing so?
The problem is that by focusing solely on their own domestic market, US manufacturers risk being overtaken by overseas rivals who, as a result of being genuinely global, have access to international logistics and possess huge buying power. When these foreign firms turn their attention to the US, they can dominate the competition and establish themselves as major players in the market because they already have the experience of doing so overseas.
US manufacturers should look to the tech sector as a prime example. While still successful domestically, American tech companies such as Amazon, Google, Microsoft and Facebook have all grasped the internet’s potential to eliminate obstacles to global trade and have devoted copious resources towards solving localization issues.
This is not to say that manufacturers must devote as many resources as these tech giants in order to experience global success. But with countless bespoke options tailored for manufacturers of all sizes, going global is no longer only an option for the larger companies.
Smaller companies can enter the international market by taking advantage of the global ecommerce eco-system which offers a range of plug-and-play services such as translation, global payments, logistics and taxation calculations. By doing this, these companies can keep their costs low while still having the same capabilities as much larger organizations.
PIM (product information management) systems are extremely valuable for manufacturers as they explore global expansion. Acting as live information hubs and enabling companies to manage and store all the data they need to be able to sell and market their products, a PIM system provides insight into the likes of customer preferences and consumer trends. This allows manufacturers to gather data and spot new opportunities in the market, as well as tailor and personalize campaigns to what they know will appeal to their new target audience.
The range of languages spoken in the Americas, including French, Spanish and Portuguese, provides further opportunities for manufacturers looking to go global. Companies can refine their translation capabilities as well as their cultural adaptability without having to consider additional challenges. For example, global logistics associated with operating in EMEA countries. By exploring expansion into neighboring nations, manufacturers can take a staged approach towards going global, ensuring they’re able to walk before they attempt to run.
Manufacturers should, however, be aware of some of the pitfalls to avoid when going global.
Failing to display sensitivity towards the cultural norms of a new territory is among the most common issues. Even massive organizations such as Disney, who famously lifted a ban on alcohol at Disneyland Paris after low attendance numbers, suffered as a result of failing to adapt to new surroundings.
If US manufacturers are to be successful, they must take into account the culture of the country they’re entering. Research from Worldpay found that the preferred payment method in nations such as Germany and Poland is bank transfer, whereas in nations such as Spain and Thailand it’s eWallets. If manufacturers fail to consider such factors, customers will go elsewhere, with most preferring to deal with sellers offering options they’re used to.
Manufacturers must also maximize their customer experience, which is especially true of those moving from printed catalogues to a constantly updated ecommerce platform. This doesn’t necessarily mean going to great expense. By being strategic in areas such as localization and translating only certain parts of their website, companies can still offer a great customer experience to overseas consumers without spending thousands.
While the risks involved in going global may be high for US manufacturers, so too are the rewards. If these firms embrace a global mindset, they can tap into a B2B market many times larger than the US domestic market. Barriers to trade on a global basis are falling. And with this trend set to continue, the argument for US manufacturers to go global only grows stronger by the day.
By Christian Arno, Founder and President of Lingo24
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.