When Note AB was seeking manufacturing alliances in foreign markets, there were a number of characteristics it was looking for in a partnership. None of them had to do with the size of the company — these characteristics occur in businesses both large and small.
Some of the criteria in a successful alliance include:
· Geographic desirability: Where are the markets that you — or your customers–want to penetrate?
· Self-sufficiency: Alliances have to benefit all participants. If a potential partner is having trouble making it on its own, find out why.
· Low level of bureaucracy: Too many layers of management often slow the decision-making processes down.
· Top-down commitment: Make sure the owner, founder or chief executive of the business buys in to the alliance 100 percent. If possible, this person should represent their company in an alliance.
· Willingness to share: Alliance partners may have to access information on your vendors, your inventory and other information. You should expect the same from them.
The primary motivation for the ems-ALLIANCE was expanding manufacturing options for its customers, but there are a number of other benefits.
By pooling their purchasing agreements, members are able to secure higher volume discounts from vendors. They were able to reduce their total number of vendors by picking the “best in class” in common component categories. Expertise was exchanged: one member was strong in surface-mount technology; another had experience in environmentally friendly manufacturing processes.
An unforeseen benefit, members said, is the visibility into the real costs of offshore manufacturing — “offshore” being a relative term. In some cases, it made sense to transfer production from the U.S. to China or from Europe to the U.S. In other cases, it was not. Customers are able to make these decisions based on real data.