As we move into 2017, the Australian Government is placing much faith into its Advanced Manufacturing Growth Centre (AMGC) which points to the success of a number of globally focused Australian advanced manufacturers. AMGC claims that “these companies employ a large number of scientists and collaborate heavily with universities and the CSIRO”, citing perhaps the “best-known example of Cochlear, which designs, produces and supplies implants for the hearing-impaired in more than 100 countries.” AMGC refers to “other companies such as Cablex, Marand Precision Engineering and Sutton Tools which may not be household names, yet each of these ‘quiet champions’ has established indelible places in global supply chains by contributing high-value tools and parts that other manufacturers convert into finished goods.”
That said, it needs to be recognised that prior to 2000, manufacturing was largely about the production of goods. Today, the boundary between manufacturing and services is disappearing – manufacturing is now the full cycle of activities from research and development, through design, production, logistics and services to end of life management.
In today’s globally competitive environment, manufacturers need to be committed innovators, global supply chain managers and service providers who are engaged not only in production but in research, design and service provision, even entrepreneurs. In other words, manufacturers are engaged in activities that develop, produce and deliver both goods and services to customers. When a company claims to be a manufacturer, and in the case of larger firms, an ‘original equipment manufacturer’ (OEM), it is more than likely that the manufacturer is assembling a whole range of products made by other companies.
In the case of aerospace, automotive and defence OEMs, there is a supply chain relationship which extends through first, second and even third tier suppliers. It is this system that allows OEMs to leverage competition between various suppliers at each level in the system.
Some manufacturers (the former Australian owned HPM comes to mind in this regard) prefer to be totally vertically integrated. These firms more often than not and where they have the expertise, are disposed to make the machines that do the manufacturing and assembly of the various componentry. Although vertical integration is becoming less common as companies now tend to specialise at some point in the overall global system. Moreover, many of the truly advanced manufacturing economies are characterised by firms that specialise in making (increasingly) robotic manufacturing machinery....