The secrets of success in industrial partnerships

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The future of manufacturing is going to be dominated by disruption; who will you be sharing your supply chain with?

We are witnessing profound shifts across all industries, marked by the emergence of new business models, the disruption of incumbents and the reshaping of production, consumption, transportation and delivery systems. Future supply chain relationships are going to be fluid. Businesses that are going to flourish will be, in themselves, agile, adaptable and flexible. Successful businesses will have systems that enable their people to produce extraordinary results, rather than relying on "superstar managers" to generate value from obsolete or broken structures.

Brave new world – and the courage to face it

A survey by UK bank NatWest, Trailblazing in the Fourth Industrial Revolution offered some interesting insights into the companies that seem to be shaping themselves best for the uncertain future. It identified three concerns facing manufacturing businesses in Industry 4.0:

  • Future-proofing the business – Only 22% of companies placed this high on the agenda
  • Structural resilience – 42% of companies don't feel their "ecosystem" is sufficiently resilient to plan for future disruptive opportunities and threats
  • Lack of innovation – while innovation is crucial for future financial performance, it is rarely sufficiently prioritized to be effectively deployed

If future supply chains are going to be fluid, then you need to know who you can rely on. Those three areas of shortfall help to highlight characteristics that enterprises need to identify in partners. NatWest calls them Trailblazers, the businesses that have a leadership mindset. They strive for the ideal, they don't just pay homage to it. They recognize that changing circumstances need different reactions, that old, rigid ways will not cut it any more. They will be open to collaboration, be innovative and will help create value by anticipating, addressing and managing disruptive forces.

Leaders embrace the new

Trailblazers are more prepared to use technologies and collaborative software that can be shared via the Internet, in order to work more closely with partners. Three quarters of respondents to NatWest's survey said that future collaboration with the supply chain will be either "much more" (30%) or "slightly more" important – but more than two-thirds of those with the Trailblazers mindset regard collaboration as "much more" important. That is a big difference. On average, just one-third of companies see close cooperation as important, but the new generation of leaders are much more likely to see it as vital.

Risk-informed decisions create value. Disrupted marketplaces offer opportunities. Businesses that are going to survive and prosper will be those with that Trailblazer mindset.

Strategic and task-focused alliances

An increasing number and proportion of alliances and collaborations will not be set in stone. In a disruptive environment, you work with appropriate partners in ways that suit the task at hand. There are already plenty of examples out there, and the number is growing.

For instance, Orange and Siemens recently announced that they had joined forces to drive the adoption of the Internet of Things (IoT) in the industrial sector by simplifying integration and promoting IoT innovation. In this collaboration, Siemens' expertise is factory automation equipment; Orange brings global cellular connectivity, consulting, system integration and application development skills.

In other markets, Siemens is involved with Mitsubishi Heavy Industries (MHI) in Primetals Technologies. Hitachi, a partner in a predecessor company to Primetals, established Mitsubishi Hitachi Power Systems, Ltd as a joint venture between itself and MHI to manufacture gas turbines, generators and power plants.

In the auto industry, the emergence of electric and hybrid power trains and gradual eclipse of internal combustion engines has given renewed impetus to collaborations between competitors and even between those you would never have thought of as natural bedfellows.

Unipart has developed several alliances, including: with Rolls-Royce in MetLase Ltd; and with Williams Engineering in Unibat for developing next-generation batteries. Unipart's past looks like a textbook example of the sort of behavior we are talking about – alliances that are established for tactical reasons to deal with tasks at hand or for longer-term strategic purposes.

The perfect partners

While relationships may change, one thing will remain constant: the need for security of supply. OEMs, customers and everyone along the value chain want to work with people who can deliver and who will be able to contribute innovative ideas in a world increasingly dominated by risk and disruption.

What are the characteristics to look out for in desirable partners? They will:

  • Have strategic development high on the agenda
  • Be genuinely open to innovation and prove it by investment in R&D
  • Invest in automation and new technology – not fanatically but flexibly, structured for continuous upgrade and improvement
  • Have multiple channels to market
  • Have the technology to enable vertical collaboration through the supply chain

Those are the characteristics to look for in potential partners. So you then have to ask yourself, if a potential partner looked at my business, would they see the characteristics that they would want to work with?

Ruari McCallion
Ruari McCallion

Ruari McCallion has been a freelance writer for over 20 years, specializing in manufacturing and other industries. He has written for a number of business, professional and specialist publications in the UK and overseas, including The Manufacturer, eureka!, PETplanet Insider and Automotive Manufacturing Solutions. He is deputy editor of the UK Manufacturing Review.