Google, the 15th largest company in the world (by market cap as of today) has been steadily getting itself into the consumer hardware business. Often-times the move seemed a bit experimental, with products and operating systems being semi-complete or lackluster. But there’s nothing wrong for a company the size of Google to quickly test out and iterate on business strategy and products like a startup does. Why? because it improves their success rate and gets them to where they are today: a consumer electronics company that designs AND builds its products in the USA.
(You can get details on the product elsewhere, because here at Proqur, we’re more excited about what this strategy could mean to the entire US manufacturing procurement sector.)
Ok, let’s not get ahead of ourselves, it’s just one product so far: the Nexus Q wireless media player. But it’s a HUGE leap in manufacturing procurement strategy! Here’s why:
How does “Made in the USA” help companies?
We previously blogged about all the problems with outsourcing, and how it’s no longer the clearest path to take for US firms. If companies like Google start to shift manufacturing back to the USA, they will have greater control over 4 key areas: IP protection, product quality, shipping costs, and procurement efficiency.
The first 3 are self-explanatory: you control who comes in touch with vital technology information, so you control IP better. Product quality improves when you can take a trip to the manufacturing shop any time and be actively involved with your suppliers. Shipping costs? They disappear. You’re building something for the largest consumer market in the world, right in their backyard.
How does it help manufacturing procurement?
When it comes to procurement, we can only imagine the magnitude of problems that large manufacturers go through to make their products using overseas suppliers. Just from our experiences at small/mid-size manufacturing firms that work with US-only suppliers, we can tell you that getting everyone involved with procurement on the same page is a HUGE pain. The lack of efficient communication hits a team’s productivity, slows down progress by missing deadlines, hurts a company’s morale/reputation/revenues, and hurts future business opportunities.
So how do we solve that? We first centralize all the procurement information – no more emails, phone calls, and random online forms to place orders. All the procurement related information should be in one single location, accessible by every person involved in manufacturing a product. This way engineers, managers, purchasing specialists, and suppliers, are all looking at the latest information.
We then start tracking performance of every single order to see how often deadlines are missed. We also start tracking the root cause of each manufacturing delay and problem to see if it was caused by the buyer side or the supplier side. Bringing this data together, we can quickly see performance issues and anticipate potential problems as we place orders. This gives us better risk management on the next “hot” order.
By bringing procurement efficiency and analytics together into an easy-to-use platform, we empower companies to reduce the amount of time their employees spend on procurement, we give them actionable data to improve their procurement process, and we give them the tools they need to make their next procurement order a success. Deploying this type of system is a lot easier and cost effective when everyone involved in procurement is operating within the same procurement policies and government regulations, within the same country. Let’s not even go into the number of jobs that can be generated by moving manufacturing locally.
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