With today’s supply chain challenges, companies must be more strategic in managing supplier and distributor relationships. Complications can often arise, and companies must be prepared to respond promptly and efficiently. 

We all know what an OEM is – Original Equipment Manufacturer. And we know they are usually the 400-pound gorilla in the room. There are OEMs such as Boeing, Lockheed Martin and Northrop Grumman who are Department of Defense contractors, producing fighter jets and other defense equipment. Then there’s GM, FORD, Honda and all the other automotive manufacturers who are OEMs in their industry. These are just two markets, but it runs the gamut, from home appliance such as Panasonic and Whirlpool, to lawn mowers like Toro and Troy-Bilt.

Beliefs and behaviors are constantly changing due to economic and social developments in today’s world. Factoring the pandemic, labor challenges and rising inflation, companies spend and evaluate projects differently. You must optimize the supply chain to meet the changing needs of current and future markets.

The manufacturing arena is facing many challenges. Some of these include demand and supply inconsistency, extended response times and quality communication between partners. In normal circumstances, you can miss out on important conversations when not communicating about procurement and supply issues. But now, more than ever, you not only must make yourself available, but you also must make yourself virtually present.

As We Covered in Part 1 of this Series: What we now refer to as customer experience (CX) enables the collective result of every interaction a business has with its customers to be seamless, such as the interactions between and manufacturer (OEM) and distributor.  Because in most cases the manufacturer’s customer is the distributor, data sharing is imperative to their mutual success.  Leveraging a CX platform allows for the development and implementation of points of contact, or “touchpoints”.   A CX platform monitors those touchpoints for their individual performance in order to constantly improve them, measuring the weight of importance of each, creating, and continuously adjusting the relevant hierarchy of communications.

With the demands of today’s just-in-time expectations and global markets the manufacturer—distributor relationship is wholly interdependent.  Without manufacturers, distributors would have nothing to sell - without distributors, manufacturers would struggle getting their products to customers.  The relationship between producer and wholesaler/distributor has existed since the agricultural revolution when farmers provided produce and blacksmiths made hardware.  They sold their products at the town grocer and agricultural implements & mechanics’ tools shops (today’s hardware stores) who then sold those products to consumers.

Historically when we think of supply chains, we envision routine and predictable procedures that bring product from point A to point B. It’s a perfect and dependable cycle that never ends. Until now. The impact of COVID-19 on supply chains caused unprecedented shutdowns resulting in a break in logistics and supply chain management, such as creating bottlenecks in global supplies.

Distributed Manufacturing Gives Control to the Parent Organization & Helps Local Economies 

Localized manufacturers with their own designers, manufacturing engineers and labor force create an interconnected ecosystem that encourages development and growth of the local economy. This ultimately provides for Democratization of Technology  by becoming more accessible to the local economy and its supply chain. New technologies and improved user experiences empower organizations to more readily access and use technological advancements in products and services.

A Distributed Manufacturing Model: Flexibility, Higher Quality & More Cost Effective

Implementing distributed manufacturing allows a company to take advantage of local resources and become leaner and more adept in product development for the particular region’s needs and get product to market much faster.

Conventional Manufacturing & Distribution

For example, consider XYZ Company located in Pittsburgh, Pennsylvania who makes valves used primarily in the oil & gas market and conducts conventional manufacturing and distribution methods. They employ leading engineers in the design and development of fluid handling products. They perform final assembly of their products at the Pittsburgh headquarters, yet utilize subcontractors for parts and components located in the Asia. These subcontractors employ cheap labor to produce the valve components designed by engineers in Pittsburgh. The components are produced and then shipped to America where they are inspected and any out-of-spec product is rejected and returned. Without the control of localized manufacturing of all necessary components, the Pittsburgh valve manufacturer can incur more costs and slower lead times. This cuts into their mar

Advantages of Distributed Manufacturing

Historically manufacturers own and operate a dedicated factory and develop or leverage existing supply chains to meet the needs of their customers. Consider a manufacturer located in Cincinnati, Ohio. They are in an ideal location for logistical distribution throughout the Midwestern and perhaps Southern United States. They have dozens of their own dedicated distributors and operate through other independent distributors. Traditionally this model has helped them to be a strong player in a large geographic footprint, yet they find it difficult to be competitive in the Northeast or Western U.S., and prohibited from being competitive internationally.