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| Vecta on Buy Collaborate Do Decisions | ||||||||||
| Once upon a time life
was simple with simple choices. Even if something you needed was available from a supplier at a price you could afford, you tried to make one yourself; better yet, if you were skilful you bought one or two then tried to make more so you could supply your own customers. The industrial revolution made more products available more cheaply to anyone, anywhere, who needed them - so nothing much changed; keeping the factory, its workers and machines, busy was the priority; "make or buy" was the choice. |
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| But things have now
changed. Labour costs have been squeezed out of manufacturing by 24/7 automation or the "China Price" effect; global marketing has made it possible for one or two suppliers to meet the global demand for a product, exploiting complex supply chains. Risks have increased. Capital and development costs have increased. Political risks have also increased as the great technology monopolists have discovered. Developing and taking a global product to market alone is almost out of the question. Local manufacturers may be used for heavier products and have to be used when labour costs are significant; licensing, or options on licensing, may be the best option to generate maximum value in the shortest time; otherwise suppliers rely on wholesale and retail partners for distribution. The preferred choice is to buy if you can. If you cannot buy economically then consider a collaboration to reduce prices or costs, share risk, or reduce time to market and cash. Only if all else fails should you make or do it yourself; noone is lowest cost and best provider in all aspects of their value chain. Even "Make-Collaborate-Buy" has evolved to "Buy-Collaborate-Do". |
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| How do
you ensure that your
products use the best available product and process
technology so as to minimise costs while maximising
performance? How do you ensure that your technology and costly patents are exploited as widely as possible before they are rendered obsolete by newer technology? How do you ensure that time to market is minimised so that income begins as early as possible to begin generating a return on the sunk development costs? How do you ensure that you remain fresh and open to new ideas and so embrace disruptive technology that will become more valuable than your crown jewel? How do you ensure that your products appeal, and are available, to as wide a market as possible? User Experience is key. |
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| Collaboration is
increasingly the answer to these questions and, since
situations are usually different from product to product,
multiple - apparently conflicting - relationships are
becoming commonplace. "Make" has become the last resort unless you are, or expect to be, global or regional #1 or #2 and expect to retain that position for some time. Even then short-term collaboration may help you get there faster and distributed operations are inevitable. However finding and working with partners is not easy. |
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| What should you do yourself? Which form of collaboration - licensing, purchasing, consortium, JV, investment - is most appropriate in which situation? How should the success of the collaboration be measured? Which type of partner - academic, contract R&D, strategic supplier, customer, strategic investor, industrial partner - is most appropriate in which situation? What are the barriers to successful collaboration? How can those barriers be overcome? How long should the partnership last? |
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| We can help you decide if, how, where, and when to collaborate; how and with whom. | ||||||||||
| Collaboration is becoming increasingly necessary to maximise financial return as product development costs and risks escalate and costs of capital and/or labour are lower elsewhere. Choosing when and where to compete or collaborate with the right partners using the right forms of collaboration is the foundation. Knowing how to collaborate effectively with a partner in one area while competing intensely with the same partner in another is adding a new dimension to product development. Changing partners from one product generation to another is also necessary to minimise the threat from disruptive technology. | ||||||||||
Our Operations Experts Network is dedicated to exploring the key issues related to developments in business performance. This involves projecting the evolution of enterprise and plant level functionality, identifying strategic business needs and understanding revenue models and valuations. |
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Our extended network ensures we have the expertise to help you solve just about any business or technology problem. |
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| More info from: Frank.Morris@vecta5.com | ||||||||||
Vecta Consulting Limited, Mulberry House,
2 The Spinney, © 2001-2014 Vecta Consulting Limited |
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Vecta5 |
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