For a long time, manufacturers have operated within the parameters of globalization as a necessary strategy for success in a worldwide marketplace.
What is the definition of globalization? According to the World Economic Forum, globalization can be defined in simple terms as “the process by which people and goods move easily across borders. Principally, it’s an economic concept – the integration of markets, trade, and investments with few barriers to slow the flow of products and services between nations.”
In manufacturing, globalization has long been a strategy. Because of this strategy, products produced in large factories in low-cost areas such as Asia have benefited consumers. Low costs for doing business have generated operational cost savings that have been transferred to end users. The volume of available products has also been a benefit to consumers.
Yet globalization may be moving past its prime in terms of effectiveness in the world of manufacturing. Labor pools are dwindling and costs of doing business continue to rise. There is a shift towards localization happening in manufacturing.
This shift provides economic opportunities for companies of all sizes and it’s changing how manufacturers are doing business. When you add automation into this shifting paradigm, it becomes even more effective.
What is localization?
In manufacturing, localization is having a network of smaller manufacturing facilities around the world rather than a few large production centers. Why is localization important in manufacturing? It allows manufacturers to be closer to where their customers are. With a localization strategy, large companies can still think globally but build locally. This is efficiently achieved through automation in the form of micro factories.
What is a microfactory?
Microfactories are smaller factories that utilize automation rather than human labor, saving money while increasing the quality of production and consistency of output.
Normally, smaller factories serving regional markets would seem at odds with the goals of large companies with production centers. Through automation in the form of microfactories, however, large companies can effectively achieve localization strategies. This opens the door to lower costs, more efficient operations, and greater scope of use for manufacturers. It gives large companies the best of both worlds.
Microfactories have another added benefit in the world marketplace. They even the playing field because they make manufacturing more accessible to businesses that can’t afford massive manufacturing overhead but still have products to produce.
Small businesses looking to better utilize automation can now utilize the scale of manufacturing for their products without the overhead costs that exist in a global strategy. With machine automation and localization, and the cost efficiencies that accompany them, manufacturing becomes accessible to just about anyone.
There are many cost benefits to automation as it affects localization. But there are other benefits for manufacturers as well. Proximity to customers means businesses can be more in tune with customer wants and needs. Marketing plans can be geared towards a specific regional audience and campaigns can be responsive to what customers respond to.
Globalization is losing the impact it once had in a world where consumer demand for authenticity and affinity is steadily increasing. Automation, as a bridge for manufacturers, increases the ability for companies of all sizes to embrace localization and succeed in a rapidly changing marketplace.