Pre-outsourcing and Pre-transfer of globalization of low-technology production operations
to China, the most ubiquitous and most effective mode of parts suppliers
was the small non-captive manufacturer, irrespective of the industry
whether clothes, metal parts, or what-have-you. Then, of course, that
was because the production process used low technology, and
any entrepreneur, determined to enter a specific market, could set up one
such small business. The business was simple: Secure a contract for
batch production of a part from the vertical integration chain and
supply the parts, and then repeat, usually quarterly. Being low down in
the products integration chains, the margins were thin and the repeats
were infrequent so these companies had to have many contracts per
financial year, support repeatability and reproducibility, and most of
all be timely. Also, these companies in this business usually hired
usually no more than 25 employees, to support the operations.
Generally the operations were financially stressful as the contracts
were moved around quite often from one company to another, as the buyers
sought lower cost manufacturers. The initial investment to meet each
contract was high and because the contracts moved frequently, these
companies often did not recover the initial investment. So to hedge the
expenses, the pricing structure had high initial price and then sharp
discounts in the follow up re-supplies to the buyers. Nonetheless, the
upfront loading of the setup cost motivated the buyer companies to
consider moving the supply-contracts abroad and invariably the setting
up of low technology companies in China that collectively formed the
Supply Chains to the West. This then had been the context of businesses
operations until the affliction of the corona-virus, SARS-CoV-2, on the
World economy that resulted in the crashing disruption of the Supply
Chains.
Of course, the pandemic will run its course, and
the economy will restart, however, the main problem at the restart of
the economy post-pandemic is all about the availability of Supply Chains
from which companies buy raw materials; and from the appearance of the
circumstances, not many Supply Chains will be available. So, several
small companies will have to be restarted to recreate new regional
Supply Chains for the industries that would emerge, and these companies
will invariably operate with philosophy similar to the German
Mittelstand for lack of insurance company, and consequentially control
larger portions of the economy as well as localize much of the financial
base to Main Street.
Opportunities therefore exist for investor in
general, and venture capitalists in particular, to invest in well-proven
technology ventures that have very good odds of surviving, and can
recreate the Regional Supply Chains all over again. Granted the
low-technologies of past non-captive manufacturers are well-proven, yet
it might not be as advantageous to turn back the clock to use those
proven but obsolete technologies. It would make sense to use newer
modern technologies that have also been proven. The implementation of
these newer technologies, of course, is where the matter of
survival of the venture still gets called into pre-investment assessment. Such
assessment is tantamount to performing Viability Analytics of the
venture.
Yet even such assessment should not be a deterrent to an initial
commitment to invest in such ventures as variability analysis embodied
in viability analytics software, Corporations Viability Analyze, for
analyzing the venture could enable evolving a venture construct that
attains viability technologically, commercially and financially.
Corporation Viability Analyze, the EnhKnow Technology Brokerage
software, embodies Production Analytics component that enables designing
viability into ventures by way of production systems and venture
organization design variability analysis. Explicitly designing viability
into ventures, supported on ensuring the production technology being in
continual expansion as explained at Digital Process Production Factory
for assessing the viability of venture, proffers a testament of the
commitment of the firm to safe-guarding the capital of investors. |
