By 2025 the McKinsey Global Institute (MGI) predicts that annual consumption in emerging markets will generate $30 trillion, a huge opportunity for manufacturers around the globe.
In fact, PTC’s CEO and president Jim Heppelmann stated in his keynote address at PTC Live Global, “viable businesses need to think globally… it’s not an option not to anymore.”
Global manufacturing no longer simply means making goods in low-cost-labor countries, today it also means selling those good to emerging markets, which more often than not requires regionalization of products.
In order to capitalize on global opportunity, it is important that manufacturers have a successful global product development (GPD) environment in place, no matter what the company’s size.
Developing a successful global product development environment is an evolutionary process which looks something like this:
- A company starts GPD by shipping goods around the world to reach different markets. It faces a number of challenges here including the cost of shipping, importation and exportation costs, compliance issues, and product relevancy for different regions.
- A company then begins reducing the cost of reaching an international audience by building factories across the world. This helps reduce the shipping costs, taxes and tariffs associated with international production.
- Once a company is able to bring down costs it can hire local talent that understands the new cultures and markets to help the company build a more successful and relevant product for the region it is in.
- Once the GPD process is deemed a success, the company is able to repeat the process more in new markets, effectively designing and building anywhere.
Once a company successfully reaches the last stages of the global product development evolution it is imperative that the engineers are able to work efficiently together – even if distributed throughout the globe.
Manufacturers should be able to collaborate and share information with partners and suppliers, and be able to securely manage product data and ensure IP protection.
John Deere, who presented at PTC Live Global, is a great example of a company that has successfully progressed through this global development evolution.
In 2009, John Deere planned to manufacture one of its most popular wheel loaders in different parts of Asia, specifically China. It built new factories and hired new engineers to own this project. Requirements demanded that the order be a frugal product to meet the market needs in Asia.
Experienced engineers in North America provided the engineering basics and foundation for the product, but John Deere gave instruction to engineers in Asia to develop these bare-bone plans further so it could meet the necessary requirements.
The result is a wheel loader that costs half as much as the North American version, and although it may have fewer features, it has excellent quality and John Deere is proud of the effort and result. This new wheel loader hit the market at the beginning of 2013.