You hear the words "It's a Services Economy" bandied about with abandon in newspapers, nd by experts in the media. With the recent downturn in the Global Economy, nd many countries realizing that Manufacturing is not something you can just ignore and adopt services alone and be any kind of economic power to contend with.
The Catch 22 is that for Manufacturing to become a core competency, a lot of battles in the Cost Structure have to be waged before they become viable. At least when Oil was $147 a barrel, it may have been too expensive to ship raw material to China, and ship finished goods back. There were several articles about how small Mid-western towns in the U.S saw a resurgence in manufacturing because the total costs of getting it done in China was not that good because of fuel prices.
WIth oil now flirting with $33 a barrel, what happens to this equation? This has changed in three months' time!
Services and Business Process Improvement can become a National Competency for any country that is willing to look at it deeply, especially those that already have a high rate of IT adoption in their companies. Countries like the U.S and U.K. are very mature adopters of Information Technology.
High rates of Information Technology combined with a Services and Business Process Improvement orientation can help make any of these countries become potent competitors to a country like Japan or China where Manufacturing seems to be the predominant national competency! The advantage here is to be able to prove it in your own country and sell the know-how, technology and the implementation insights.
Why is this? Sometime ago I wrote an article - Ten Key Technologies For Business Process Improvement. This article posited that there are ten key IT technologies that can take any business process and cut the time and effort needed for that by orders of magnitude. These are technologies like Workflow, Document Management, Service Oriented Architectures, etc that can make business processes flow much faster cutting down waste in effort, unncessary movement, unnecessary transportation of paper and other things involved in a business process! Making processes Efficient and Effective automatically takes the least amount of human effort, time and other resources.
Being able to combine technologies with a focus in eliminating waste in services and business processes can become a national competency, much as manufacturing is.
If anything, analysis of Corporate expenses as a percentage of revenues in different verticals would show that Operating Expenses and Business Process expenses constitute anywhere from 40% to 80% of Operating Expenses. The more service oriented a company is , the more the percentage is. For example, Fedex and UPS will have business processes that consume a large part of revenues and expenses, as opposed to say, Toyota, where the manufacturing cost is a bigger part of the picture.
Transforming business processes into leaner, meaner ones has so much potential to cut costs in services and that too it can only be done with clever use of technology, and by people who have experience in mature use of those, is a huge national competency that can be nurtured and leveraged.
In stead of whining about manufacturing leaving your country, you can build on your own current strengths and build something even more formidable!
If your country is the one that can show how you can process passport applications in 3 days, instead of weeks in most countries, or you can show how you can order something online, have it manufactured to your custom specifications, and have it all delivered in 3 days, you have a potent competitive weapon very few other countries can match.
There is a gold mine waiting to be tapped! Let's hope we get to it!
Innovation is the ability to see change as an opportunity - not a threat - Anonymous
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