Global expansion has been undertaken by many companies over the past decade, whether it is simply to get a foothold in a new market or to take advantage of low cost labour in countries such as China or India. However there is an interesting new trend developing which I highlighted in a recent article over on automotiveworld.com. Increasing wage costs in China combined with the high value of the Japanese Yen is causing many companies to think about their investments in the Far East. In some cases western companies are relocating production back to their home country, this process is referred to as ‘near shoring’ or ‘reverse globalisation’.
Don’t get me wrong, many western companies will continue to invest in new plants in the Far East but this will probably be to manufacture products for those particular markets rather than for export. Manufacturing products in the Far East, for sale back in North America or Europe is likely to reduce slightly over the coming years and my article on automotiveworld.com highlighted some companies who were moving back to the U.S for example. Even as recent as last week, the manufacturer of the world’s cheapest PC, designed to help school children learn to program, announced they would be moving production of their PC from China back to a Sony plant in the UK.
So will the rate of globalisation begin to decline? May be, but we are starting to see globalisation coming from Far Eastern based companies who are looking to exploit new markets such as Brazil, India and Russia. So I believe we are in a new cycle of globalisation where countries such as China will take the lead in globalising their operations and we can expect to see many acquisitions in North America and Europe as Chinese companies look to expand their footprint around the world.
Even though I believe we will see Far Eastern companies globalise their operations over the coming years, you can guarantee that even this momentum will slow down at some point. So in summary, for a manufacturing operation to be profitable they must adopt a ‘manufacture/source anywhere’ type of policy so that they can take advantage of changing market conditions as and when required. If companies therefore setup production lines in multiple locations around the world, they will need to get access to their business information and connect with trading partners anywhere in the world.
This clearly builds a strong case to deploy a cloud based B2B infrastructure that can be both flexible and scalable to meet the changing requirements of a business. Irrespective of whether you are a Western or Far Eastern based company looking to build a manufacturing plant in a new location, a cloud based B2B integration platform can offer a number of significant benefits. In an earlier blog entry I highlighted how Gartner proposed that cloud based environments could offer a silver lining to many of today’s IT departments, you can read the blog HERE. So could cloud based B2B integration platforms provide the truly flexible business platform that so many companies are striving after?
In an earlier blog entry I discussed the infrastructure related issues of expanding into a new market, for example ensuring that the utilities and telecommunications infrastructures are suitable for supporting a business. However given that installing a hard wired telecommunications infrastructure is difficult in many emerging markets, many countries are looking to establish high speed mobile and wireless networks instead as they are quicker to setup. This new trend will drive increased adoption of mobile devices in these regions, encourage more users to take their devices into their work place and finally Corporate IT departments will be asked to connect these mobile users to enterprise systems. We have seen the BYOD (Bring Your Own Device) trend increase rapidly in western economies, I believe we will start to see an increase in BYOD in the emerging markets as well. This will also contribute to a need to deploy more cloud based platforms in these particular countries.
Cloud based B2B integration helps with international expansion projects by:
- Simplifying Connectivity: It doesn’t matter where trading partners are based, connectivity via the cloud provides ‘manufacture/source’ anywhere capabilities
- Improving Maintainability: Cloud based platforms allow new solutions or updates to be rolled out to a community of users from a centralised location, thus simplifying the management of B2B applications for users with relatively low or no IT skills
- Offering Regional Support: Whether supporting specific regional B2B standards or business processes, the cloud allows mediation between any document or communication standard. For example, quite often Chinese manufacturers are unaware of how to work with or deploy international B2B communication or document standards
- Centralising Contact Management: One of the big challenges faced by companies working in the emerging markets is ensuring that trading partner contact information is up to date and more importantly accurate. The cloud simplifies the management of contact information and helps to encourage more regular trading partner communications
- Increasing Security: Centralised authentication of all users allows role based environments to be established. This effectively presents only the information to the ‘cloud consumer’ that they need to do their day to day work.
- Improving Collaboration: Once you have all your trading partners connected to a cloud based platform it can significantly simplify how you work with long distance trading partners on a daily basis
- Distributing B2B Resources: The recent natural disasters in the Far East highlighted a major problem with companies hosting their business information through single data centres located in these regions. By connecting to a cloud platform, if supply chain disruption occurs then companies can continue working with their trading partner community by utilising alternative data centres located in other regions around the world.
- Ensuring Trading Partner Participation: One of the challenges of working with trading partners in the emerging markets is ensuring that they can trade electronically with you. Connecting trading partners to a cloud based B2B platform allows long distance trading partners to get access to a centrally hosted suite of feature rich SaaS applications. All they need is access to a web browser and connection to the internet and they are able to participate in exchanging B2B documents.
- Offering Local Language Support: Hosted applications can be delivered in local language thus further increasing participation levels from global trading partners. In addition, centralised helpdesk support can address business issues with ease and ensure that trading partners, no matter where they may be located, are supported 24×7.
- Improving Long Distance Shipment Visibility: Manufacturing or sourcing parts from remote locations requires increased levels of visibility across a supply chain. By connecting trading partners, 3PL providers and border control agencies to a single cloud B2B platform allows shipments to be tracked anywhere in the world. It also allows companies to monitor in transit inventory levels across multi-modal logistics providers.
I will provide more details on this subject area via a webinar that I will be hosting in two months time. I will update this blog over the next few weeks with details on how to register for this particular webinar. In the meantime if you are keen to learn more about the basics of cloud computing then you can find more information via an earlier blog entry HERE.