Over the past six months, suppliers and final manufacturers have been interviewed about strategy, positioning and what choices they have made for a successful direction of the business. And sharp choices are necessary!
So are things that bad? Certainly not, the sector has had a wonderful period over the past five years, with 4% growth in 2017 as a nice highlight. Growth has also been forecast in 2018 and 2019 but it slows slightly to 2% in 2019.
If you then look at the growth of the Dutch high-tech industry since 2000, you see that this sector has actually grown twice as fast (49%) as the entire economy (25%). What is striking here is that Dutch suppliers only benefited to a limited extent. Indeed, during this period, end-manufacturers' sourcing from domestic suppliers grew by 74% while foreign suppliers saw volume to the Netherlands grow by as much as 154%, partly due to lower labour costs.
Is this trend reversible? Yes indeed, this can visibly change in the coming years through a serious acceleration in the deployment of new technology on the one hand and stronger focus on specific knowledge on the other. These two drivers are ultimately much more important than low labour costs.
Technology: digitisation & robotisation
Deployment of new technology is particularly in digitalisation and robotisation. Digitalisation and robotisation are developing at lightning speed, and entrepreneurs can reap the benefits of this already in the short term. For instance, suppliers can further increase their labour productivity. Related to this is a major challenge in the growing demand for customer-specific products, namely the cost-efficient production of small series.
This also fulfils the customer's desire for more flexibility. In addition, it provides scope for offering more customised services, aspects that contribute to better relationships and higher turnover of Dutch suppliers
Investment in knowledge and cooperation
With the deployment of this new technology and greater complexity of manufacturing components, the specific knowledge of suppliers is ever increasing. Knowledge that does not necessarily have to be present at the end manufacturer. By bringing in more and more expertise and advice on the manufacturability of products (product design and material properties), the position as key-supplier is becoming increasingly important. A next step in this growth curve is to develop these products or modules at our own risk, a desire that is increasingly being expressed by several large end manufacturers. This does require a very close cooperation and long-term relationship in which openness and trust are crucial!
Based on research and interviews with entrepreneurs, ING's economic agency and sector management have elaborated on the opportunities for a stronger positioning of industrial suppliers and linked them to four clear strategies that provide direction for making the right decision.
When, as an industrial supplier, you want to position yourself more strongly towards the 'right -most fit- customers' in growing end markets, a clear vision based on the identified opportunities is crucial. With a resulting clear strategy, strong focus and clear added value, you 'choose' the customers that best fit the added value you offer as a company. Customers will actually experience this added value and a long-term relationship and joint development are on the horizon! The importance of sharp choices and focus!
Want to know more? Find the summary and report 'Supplying the high-tech industry' here.
