Simon Jacobson, research director for manufacturing with Gartner, discusses the key trends that are driving efforts by companies to reduce costs, boost product quality and gain greater visibility into the key processes among all supply-chain partners.

The globalization of supply chains is causing companies to take a fresh approach to their manufacturing strategies, says Jacobson. They are working to align capabilities with vendors based on common technologies, products and market clusters.

Leading organizations are also focusing on aligning metrics across their supply chains. And they are beginning to incorporate sustainability concerns into their decision-making processes. In addition to the traditional emphasis on maximizing the use of equipment, they are factoring in the usage of water and other resources.

Although some original equipment manufacturers are rethinking their reliance on China and other parts of Asia as sources of low-cost production, they are still committed to outsourcing. "Contract manufacturing remains a massive option for a lot of companies," says Jacobson. What's changing is the depth of their "make-versus-buy" analyses. They are beginning to collaborate more closely with vendors in areas such as customer demand and product creation. Their goal is to move beyond the old transactional  relationship, with its sole focus on price.

Manufacturers today are doing a better job of aligning production with demand, but they still have problems reconciling sales and customer forecasts. Getting an accurate number requires full visibility into a vendor's capabilities, constraints and costs. "That's still a massive challenge," Jacobson says. Earlier attempts to harmonize the operations of vendors and customers were stalled by the recession. Assuming that the economy begins once more to grow, companies will resume their efforts to boost agility and responsiveness through improved collaboration.

Companies are just beginning to understand the implications of incorporating sustainability into the equation. "For many," says Jacobson, "it's still a compliance drill." The big challenge lies in technology - or the lack of it. Most companies looking to track their carbon emissions today are doing so in a manual fashion, through the use of spreadsheets. They need to scrap outdated systems and embrace new capabilities for data collection and calculation. But the effort is well worth it. "From a manufacturing perspective," Jacobson says, "eco-sustainability brings a massive opportunity to rationalize and make the best use of assets."

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