Competition getting fiercer in subcontracting networks
The will to solve a partner’s problems, the ability to develop digital solutions and the skill to communicate are critical factors for subcontractors.
In many fields, subcontractors account for as much as 70 per cent of end products. This is why subcontractors play a vital part in the success of major corporations.
This means that companies also place higher and higher expectations for subcontractors. What worked well in the past does not guarantee success in new networks. It is no longer enough that companies describe their machine range or product portfolio. Subcontractors need to demonstrate that they are able to solve the problems of specific clients or networks.
Too many subcontractors settle with describing that they manufacture components in accordance with the customer’s wishes. Certainly, high-quality groundwork continues to be a precondition for success, but something else is also needed.
Subcontractors become even more attractive if they are able to offer, for example, shorter delivery times, storage services on behalf of clients, new types of components or support for design processes. Such network players are proactive developers, not merely passive providers.
Digitalisation opens up new doors
Digitalisation is more clearly a part of the solution portfolio of network members. Even though the Industrial Internet has not yet produced many ground-breaking innovations, it will cause dramatic changes in different industries in the near future.
These changes will also extend to subcontracting chains. For example, the Industrie 4.0 programme in Germany aims to extensively automate production chains. There is a significant risk that those not familiar with digitalisation will fall quickly behind. It is even more difficult to imagine that they could join networks as new members.
Therefore, subcontractors need to make sure that they can take part in highly digitalised production networks.
Other significant digital opportunities are presented if subcontractors are able to provide their clients with additional information using digital solutions. This may mean, for example, that subcontractors can monitor any wear in their components via a remote connection and that they can react to any replacement needs before there are any interruptions in their client’s production process.
Communicate all benefits clearly
Not even good solutions produce good results if a subcontractor is not able to communicate the benefits they produce in an interesting way. There is no guarantee of success, even if the subcontractor has operated in the field for 75 years. Key factors include the benefits clients and networks can expect to receive from their partner. Efficiency, cost-savings, durability or better services.
Being able to communicate these is so important that all messages require thorough planning. Communication is not sorcery. It is important to consider messages and regular channels, such as newsletters, blogs and media relations. What is more, these messages need to be communicated to every employee – not only so that they are able to explain them to their customers – every message is also a promise, for which everyone needs to work hard.
New solutions, digital innovations and attractive messages offer tools of success for every subcontractor. Similarly, they also determine the success of the entire Finnish subcontracting network.
The author is the CEO of a communications company specialising in complicated financial and technological themes. The author has worked as a financial editor and he is a communications professional. He has also been a member of the ICT 2015 team which discussed digitalisation in Finland.