What is in this article?:
As the world has gotten flatter and supply chains have gotten longer, the need for companies to follow best practices in global supply chain management has intensified.
Expansion into New Markets
When Mike Dennison, president of the High Velocity Solutions business group at $29 billion electronics contract manufacturer Flextronics International (IW 1000/141), hears the word globalization, the first thing he thinks about is speed and execution. Usually it’s tied to what his customers need relative to globalization, which could mean launching a product globally on three different continents in a six-week timeframe. “From my perspective, globalization is about speed of getting customer demands and needs met on a global basis.”
Dennison cites the example of a company with a manufacturing facility in China that wanted to expand production into Brazil. “The first thing you have to understand is that manufacturing in China is massively different from manufacturing in Brazil, in a number of ways: in how we set up our factories, in how we work with the government, in how we get product into the factories and then out of the factories as finished goods and into the hands of the consumer. And in this particular case, we needed to build a factory, fill a factory and hire a labor force in about 120 days.”
"Globilization is about speed of getting customer demands and needs met on a global basis."
-Mike Dennison, president, Flextronics High Velocity Solutions
To achieve that kind of an undertaking, Flextronics began by tapping into the experiences and brainpower of its manufacturing experts who had already done something along those lines in China, and then moving them into Brazil, where they recruited the labor pool and developed the tests and technology requirements necessary to build the product. “At the same time,” Dennison continues, “you need your supply chain people involved because that product’s components are probably going to originate or even be kitted out of the central location in China, and then need to get into Brazil in a seamless fashion.”
Meanwhile, in terms of the financial supply chain, Flextronics worked with international tax experts to make sure the expansion into Brazil was accomplished in a way that was effective for the customer to ensure they derived the benefit of local manufacturing as opposed to simply importing the product from China. And on top of that, Flextronics had to develop a brand new channel solution to handle the fulfillment end in Brazil.
“It gets to be a very complicated endeavor which, frankly, is where we start to add real value because helping a company expand into a new market is not easy to do,” Dennison observes. “You’re not going to get Brazil right unless you have the background of knowing what you’re doing in China, in this particular case.”
Though Flextronics is traditionally considered a contract manufacturer, or a provider of electronics manufacturing services, Dennison points out that these days many of their customers, especially emerging companies not typically in the hardware business, rely on Flextronics more for design services and new product introduction support.
“There’s a whole new world of companies entering into the electronics market that need a vastly different capability than the likes of HP, Dell and Cisco Systems,” he notes. “The only thing this new customer base cares about is having a product that no one else has ever seen, heard of or even thought of, like the wearable technology products that Nike is doing. We see a lot more of that type of business now than customers asking us to build 5 million cellphones that look just like a competitor’s products.”