IfM research suggests there are opportunities for manufacturers who already compete through innovation, quality, reliability, flexibility and or price to gain further competitive advantage through a systematic review of their supply network.

Off-shoring by UK firms can be profitable, although off-shoring motivations, and relative attractiveness of regions, vary considerably. All elements of the value-chain are being considered for outsourcing. Location decisions are driven by: Technology access (a factor in favour of India for the professional services sector); Market access (China and India); as well as cost saving (Eastern Europe, China and India).

A broader supply network perspective is required when analysing supply capability as product supply chain network configurations are very different and can inherently provide opportunities for competitive advantage. For example, even if the final product is not labour cost sensitive, the supply network might be. In consumer electronics (e.g. Nokia and Philips) global networks are typically based on a limited number of integrated supply sites, providing co-location supplier opportunities, with operations based in China contributing many elements of the value chain. In more process based industries the OEM and its supply network are more fragmented requiring both a regional as well as global perspective (e.g. Unilever, GSK).

After sales services are becoming an increasingly dominant revenue generator for several UK engineering firms including Rolls Royce, and others in the aerospace sector. Through such networks, centres of leading edge capability in production and supply are emerging.

International supply networks are expected to perform in terms of both ‘efficiency’ and ‘responsiveness’. They provide rapid and broad access to knowledge and services. For example, rapid replenishment is a benefit of the part-vertical integration focus of European textile manufacturers such as Zara and Benneton. In such short product life or time dependent markets, upstream material supply or supplier selection is largely based on speed and flexibility - not cost. Virtual networks now exist, making it possible to be in manufacturing without owning a factory!