Asia-Pacific Manufacturers to Shift to Low Cost Manufacturing Centres

In 2013, Asia-Pacific manufacturers will focus on entry into new markets, shift to new low cost manufacturing centres, and invest in connected operations for greater process efficiency, IDC Manufacturing Insights predicts.


The slowing of global trade following the financial crisis in 2009 and the looming Eurozone debt crisis have resulted in the cut back of western consumption demand.


With China replacing United States as Brazil and India’s largest trading partners in recent years, it signifies the beginning of a shift towards an emerging market strategy among Asia-Pacific manufacturers in the region to address the continued decline in western demand.


"2013 is going to be similar to 2012 with the economic volatility and uncertainty continuing. We expect manufacturing companies within the region to look for opportunities for either lower cost manufacturing or new markets in other emerging economies, whether in Asia, Africa, or Latin America," says Dr. Christopher Holmes, Head – International, IDC Manufacturing Insights.


With an increasing focus on manufacturing in low cost countries, companies will increasingly need to manage manufacturing located away from headquarter functions.


In countries where there are high labor costs, such as Japan, manufacturing organisations will move towards having "command and control" centers in their headquarters, running their global operations from the HQ, even though the manufacturing plants will be geographically dispersed.


Enabling this is the improvement in bandwidth, coupled with analytic technologies, and video feeds, allowing organizations to have a direct view into their operations.


"From a technology perspective, the shift to supporting multiple plants/operations in different parts of the world is going to require the organisation to think about how they make decisions, and what information they need to make those decisions. Getting the information from different parts of the world in a format that will allow for fast, effective decision making will be key for 2013," says Holmes.


IDC expects the deployment of the connected operations model to expand beyond the factory with growing adoption of geo-location enabled smartphones and tablets among onsite and offsite workers.

IDC is also seeing an increased adoption of Machine to Machine (M2M) technologies on the shop floor for remote sensing and monitoring of shop floor process and equipment to create a connected operations environment within the factory.


“We also expect companies to focus on specific business processes as they look to improve efficiencies, and differentiate by expanding their technology footprint beyond the ERP system," notes Holmes.


Holmes adds that business analytics will be the new technology of choice amongst manufacturers as they seek to gain insights into their processes, with mobility, cloud and social business all starting to see attention, as companies look to technology to drive the next level of process efficiency. 

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