The manufacturing sector has been one sector which has implemented cost reduction, supply chain optimization, value chains, flexible assembly lines, Kaizen and more mantras to stay profitable and ensure their products are affordable and durable.
Unlike other sectors manufacturing has to deal with people and large investment costs, so planning is usually for decades rather than months, they also have to weather economical down turns and stay afloat during bad times.
Manufacturing is an Industry where labor is mostly blue collared, skilled and difficult to replace but there is another more valuable element and that is capital. Money is always dear to manufacturing companies irrespective of their size, many manufacturing companies have financial arms which are more profitable than their manufacturing parent, but the manufacturing parent depends on their finance companies to get their products off their warehouses and have to sustain excellent relationship with their bankers.
In this scenario, manufacturing’s next mantra for profitability will be B2B eCommerce exchanges for price discovery, reliable supply chain and cost effectiveness and financial funding. The new age B2B eCommerce sites will be aggregators of sellers and buyers, with quality assurance firms, banks and other financial portals, insurance, logistics, transportation and other services needed by the industry.
In 2000, Oracle had built a solution for a consortium of US automobile companies to sell their cars. These were early days and today you can buy and configure your car online with cost effective technology along with the finance needed to fund your purchase.
We will see this same disruption brought about in the manufacturing buyer seller relationship and in a very specific Indian context, Diwali gifts will no longer be needed to make sure deals do not get choked. The various manufacturing associations should take the lead in building these B2B commerce sites to bring about standardization, price optimization and efficient supply chain practices to make manufacturing sexy and relevant in this decade.
Unless we quickly build these electronic portals we will see more manufacturing business shut down and converted into malls and residential apartments, displacing skills and know-how which are valuable assets for the economy.
If only Detroit had these B2B eCommerce tools, it would not be a ghost town today, this applies to many cities in the world, unless we bring in intervention with electronic technology solutions manufacturing may never recover and a key competitive advantage of a nation would be lost forever.
Go ahead and launch a 100 B2B commerce for various industrial segments for India , see the volumes and profitability improve and the GDP of the country improve and the well being of the citizen increase multi-fold.
Unless nations get their manufacturing Mojo back they are doomed, they need to work on building innovative electronic markets today to bring about the change for growth and prosperity needed for the nation.
– The author , L S Subramanian, is CEO of NISE. LS (as he is called) is also a respected thought leader known for his innovation in information technology for business. He is the architect of the OTC Exchange of India, India’s first online trading national stock exchange and has advised NCDEX, Power Exchange, CRISIL, Exchange Next and other companies in trading solutions and processes.