Global businesses must adapt to local markets in order to find success. Hardware businesses are no different, and need to take advantage of technologies available to leverage the benefits of glocality for their business.
“The world is getting smaller,” is a common expression nowadays.
Technology has enabled us to literally move from point A to B with immense speed. It has similarly accelerated innovation and industry evolution at a similar rate. Technology allows businesses today to expand quickly and maintain constant contact via telecommunications and the digital revolution. This is globalization.
Despite all of this, the world still remains a highly complex place with tight borders and long distances between places. This means businesses must still think locally when implementing their global strategies. In other words, businesses must embrace glocality and have a solid understanding of what it means to do good business in today’s glocalized world.
At KREATIZE, we believe glocality is one of the 10 most important issues affecting the manufacturing industry today. See our full list of issues to consider for 2021.
What is glocality?
Glocalization is a combination of the words “globalization” and “localization.” It is used to describe a service or product that is made and distributed globally, but adjusted to better accommodate the customer in a local market. For manufacturing, it is when global hardware companies produce locally to better meet demand.
“Glocality describes the fact that business operate globally, but need to adapt to local requirements,” said Simon Tüchelmann, CEO & Co-Founder of KREATIZE GmbH in the above interview on glocality. “In the context of manufacturing, this might mean to produce products locally, in order to adapt to security requirements or tariffs”
Why is glocality important now?
Glocality is an important topic of discussion within the manufacturing industry for several reasons, but primarily due to: high tariffs, carbon footprint concerns, global events, and time-to-market.
Tariffs have been increasing in many parts of the world. This is the result of global trade wars between important players such as the US, China and the EU. Political decisions have a direct impact on the cost of producing goods and the price of importing them from one place to another.
“The increase in tariffs on imported goods is forcing companies to produce in local markets,” said Tüchelmann.
By having local production sites companies can manufacture locally and circumvent tariffs on imported goods, allowing them to remain competitive from a price standpoint.
“The location of production becomes more important because of all these national movements,” said Martin Ohneberg, CEO of HENN, a tier 1 automotive supplier in his talk at our Launchpad Austria event. “For small and medium companies like HENN it is really important to have manufacturing sites in other countries.”
HENN currently has operations in China and is exploring the idea of manufacturing in the US, according to Ohneberg.
A desire to decrease our carbon footprint has also pushed the topic of glocality to center stage. In fact, according to a study by the Reuters Institute, “69% of respondents believed that climate change was a very or extremely serious problem.” This shared concern is impacting business decisions and shaping consumer demands as well as legislation. Working with local production sites helps companies lower their CO2 footprint, as transportation costs for goods and materials decrease.
“The higher importance of CO2 footprint is pushing people and companies to produce locally,” said Tüchelmann.
Global events with a drastic impact on supply chains are also influencing hardware companies to shift their production and expand across borders. Such events affect the global supply chain, making a more resilient and decentralized approach to manufacturing essential.
“The past 1.5 years during the Corona pandemic and the Suez canal crisis show us that logistics costs and disruptions can heavily impact the global supply chain,” said Tüchelmann. “Companies have had to think about different ways of producing, such as with local production.”
Time-to-market is yet another increasingly important reason why glocality needs to be top of mind for hardware businesses.
“Something I think is very important is the time-to-market for your specific product,” said Tüchelmann. “By producing at a local level you can adapt the production of any given product very quickly in order to keep up with demand.”
How can cloud manufacturing help hardware companies deal with glocality?
To develop an effective glocal supply network by traditional means is a costly endeavour. It could require setting up assembly lines and hiring several people to man various operations, source new partners, and ensure quality. In other words, it’s a very cumbersome process that is both expensive and time consuming.
“Cloud manufacturing provides access to global machining capacities and helps you reduce the time and cost to build a very high quality supply network in local markets,” said Tuchelmann. “You will still need to build your assembly production and set up your logistics, but cloud manufacturing offers a plug and play solution to accessing a top notch supply network.”
How can I access a cloud manufacturing network?
At KREATIZE we offer one of the most comprehensive cloud manufacturing networks in the world. We have extensive experience helping companies incorporate our network into their business strategy and can work with you on custom part procurement in a very lean and expedient fashion.
“One thing that is really important to understand is that cloud manufacturing does not require any investment,” emphasized Tuchelmann. “You basically get the advantage of a global network of manufacturing capacities without any dollar or euro investment. This is very attractive and can be implemented in 2 weeks.”
Bottom line: an easy and inexpensive way to make glocality work to your advantage is through the effective use of cloud manufacturing.
Start now by creating your account for KREATIZE Manufacturing Services or by making an appointment with one of our cloud manufacturing specialists today.
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