Global networks are key to manufacturing success.

Manufacturers must embrace a more collaborative global approach if they are to capitalise on recent signs of economic recovery, according to a new study.

The study, by the University of Edinburgh Business School and business consultancy Capgemini, suggests the credit crunch – which has put manufacturers under pressure, encouraging many to sub-contract work to international partners – has dramatically changed the way companies do business and made links with global firms far more important than before.

The researchers say there has been a shift in manufacturing from 'doing' to 'resourcing', with a stronger focus on relationships with other companies. Top manufacturers will adopt a 'value circle' approach, in which they continually interact with a global network of suppliers and customers to develop new products.

Although leading companies still carry out research and manufacturing in their areas of expertise, they are shifting to the new model by adopting systems to absorb ideas and innovations from customers, suppliers, collaborators and competitors.

There has also been a shift from manufacturing to manufacturing-management, where production is sub-contracted at any location globally.

The researchers say companies are developing closer relationships with fewer suppliers, who are closely monitored, giving all parties competitive advantage. Using information technology to manage the value network is also crucial.

- Ken Hurst

The Global Networked Value Circle: a new model for best in class manufacturing (PDF - 26 Sept 2009)