American manufacturing is at a turning point — maybe turning, or perhaps just sitting on the precipice of change.
Manufacturers are connecting in unprecedented ways through both technology solutions and networking on a national and global stage. The result: an industry ripe with opportunity.
This series entitled “The Brotherhood of American Manufacturing” will analyze the transformation happening within the industry and explain what it means for stakeholders at every level.
The New Face of Manufacturing
In April 2015, brand engagement firm Sullivan conducted a survey of mid-to-senior level executives responsible for buying business products and services on behalf of their firms. The questions mainly addressed online B2B purchasing compared to B2C. In the survey, Sullivan found that:
- 88% of executives buy their business products online.
- 92% said they wished purchasing business products online was as easy as buying consumer goods online.
- 49% intended to buy one product, but instead bought a competing product because it was easier to find online.
Of the 12% of executives that did not purchase online:
- Half purchased offline because of company policy and purchasing contracts.
- One-third said they could not find enough information on the products they wished to purchase.
So what does this mean for manufacturers?
1. OEM distributors’ role is changing, and the supply chain is fattening (in a good way).
Since the recession, purchasers for manufacturing plants have found that distributors are carrying fewer parts. Forced into a corner, manufacturers must hold onto surplus parts themselves — and cover all the associated costs.
Out of necessity, manufacturers are reaching out to other online resources: aftermarkets, liquidators, and resale sites dedicated to surplus manufacturing inventory. Many of the parts listed on these sites, ironically, originate from other manufacturers trying to get rid of surplus inventory that accumulated because of the situation OEM distributors forced them into. These new avenues for finding critical parts have essentially “fattened” the supply chain, empowering the manufacturer with new purchasing options.
So out of necessity…
2. Manufacturers are connecting with one another, and trade associations are moving online.
With the entire industry feeling the effects of the OEM distributor stranglehold, manufacturers are increasing communication both within and outside the organization. Noncompeting plants are sending their engineers and purchasers as emissaries to better understand the advances in manufacturing technology and to share knowledge, instead of relying on distributor sales engineers.
Trade groups like the National Association of Manufacturers have invested in creating an online presence where they can share information and provide a place for similarly minded firms to network and connect. As of June 2015, the NAM has more than 34,000 followers on Twitter, over 2,000 LinkedIn followers, and 1,160 members in its private LinkedIn group. The manufacturing world is shrinking in the sense that fellow engineers, purchasers, and managers can easily connect and share knowledge throughout the industry.
Which leads to…
3. The B2B manufacturing market is becoming transparent thanks to online networks.
It’s simple economic theory: An asymmetric marketplace allows firms to artificially inflate prices while buyers are none the wiser. With knowledge flowing freely through fellow manufacturers, firms can make more informed decisions for their plants when deciding who to purchase certain products from. Manufacturers can speak about what technologies they do and do not implement and why. In a globalizing world, the manufacturing industry will continue to become a more cooperative and collaborative marketplace.
The Brotherhood of American Manufacturing is becoming a reality thanks to these forces. On a smaller scale, manufacturers are connecting with one another as the B2B world embraces the online marketplace. Hopefully, this trend of collaboration and shared knowledge can continue into the future and further drive home the idea of the Brotherhood of American Manufacturing.