What is the key to success in times of internationalisation? The WBA Aachener Werkzeugbau Akademie defined process steps that have to be taken in order to gain market intelligence and thus compete on a global market.
The internationalisation of production has led to an increasingly competitive business situation for European tooling companies. This can be traced back to two main causes. On the one side, non-European competitors from low-wage countries have entered the European market with low-priced tools and dies. These competitors profit from factor costs far below the European average and are able to offer quality standards comparable to their European counterparts by now.
On the other side, growing economies all around the world have developed large selling markets, leading to an increased scattering of the tool and die industries’ customer base. Local competitors from these markets have advantages over European tooling companies because they are able to service customer needs on much shorter notice. The internationalisation of production therefore puts the European tool and die industry under pressure to offer low prices and short reaction times, while retaining the high quality standard it is known for.
Global sourcing vs. local for local
In order to cope with these challenges, two strategies have proven to be successful solutions for European tooling companies: global sourcing and local for local.
Global sourcing describes the purchasing of strategically irrelevant parts from international suppliers. Thereby, tooling companies in Europe are able to profit from low production costs and are also able to focus on strategically differentiating parts. Despite obvious cost-saving benefits, global sourcing also offers potential to increase flexibility as peaks in demand can be dealt with without holding standby capacities internally.
The “local for local” concept describes the establishment of sites in immediate proximity to customers in selling markets. Local competitors benefit from shorter communication and delivery routes from the production site, enabling them to serve customers rapidly and reliably. “Local for local” thus seeks to maintain this by developing production sites as close as possible to the series production or by building up strategic partnerships with local tooling companies. This allows for close collaboration between tooling companies and their customers as well as short reaction times to fulfill customer demands.
The successful application of global sourcing and local for local strategies requires detailed knowledge regarding the structure and characteristics of the respective markets. Reliable information about existing tooling competencies, employee qualification, available local suppliers or infrastructure in specific markets is crucial. However, many tooling companies have difficulties in selecting relevant markets and potential suppliers, mainly because of insufficient information search and location study. In addition, contract placing is frequently unsuccessful due to imprecise supplier analysis. Lastly, international suppliers in many cases do not fulfill quality standards and other requirements, threatening the success of global sourcing and local for local strategies. The reason for these difficulties can be found in insufficient market intelligence, which has become one of the key success factors for European tooling companies to overcome today’s challenges and remain competitive.
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