To offset rising wages and other fixed costs, resulting from China’s economic success, many manufacturers have for some time been looking to “offshore” some or all of their operations. Clara Chan, President of the Hong Kong Young Industrialists Council for example, which represents 150 manufacturers, told the South China Morning Post that companies are increasingly looking to Malaysia, Vietnam and other Southeast Asia sites as a safe haven [1].

The results of surveys by AmCham China and AmCham Shanghai in September added detail to the changing manufacturing scene. AmCham found 30% of US companies in China are already moving or plan to move some or all production to Asian sites [2]. 

But moving production is a complex process with significant risk. It takes time to plan new plant locations, deal with government investment regulations, as well as acquire the necessary machinery, staff and management team in a new country.

Success in expanding operations in other countries or regions also depends on whether the enterprise’s IT infrastructure and staff are able to handle the challenges of far flung branch operations. This is especially true in the era of cloud when business applications and data are put onto the cloud and companies rely on their network to function and succeed.

Key requirements for building and managing a robust network to serve offices over great distances include agility and scalability so the IT team can adapt network operations on the fly to meet end-user demands and adopt new applications. For management, control and visibility are critical components for efficient operations across branch offices.

This is where SD-WAN can be a decisive factor, delivering a strengthened and agile network, that protects the company’s bottom-line by providing the control and visibility management requires.

  

Optimizing market access  

An efficient global supply chain is crucial for manufacturers to speed their time-to-market. But the complex and static nature of their WAN can make it both time-consuming and costly to manage. Traditional networks lack the agility to adapt to fast changing user needs and support the requirements of business operations across vast distances. It’s even more challenging if a manufacturer is trying to manage thousands of suppliers, factories, distributors and points of sale across multiple geographies with legacy networks. The beauty of SD-WAN is that it allows companies to make it easier and faster for enterprises to access their private networks in remote branch offices or locations where broadband is not available, and it would take a long time and a lot of resources to do so otherwise.

  

A bird’s eye view of operating performance

Manufacturers have been struggling to get full visibility of network and applications routing in real time. But that was impossible with their legacy networks, not to mention connecting and controlling new plant locations seamlessly. Those days are now gone. With SD-WAN, manufacturers can now get a bird’s-eye-view of all networks accessing their entire ICT ecosystem for the first time, controlling all connectivity and applications from a single platform. This allows manufacturers to optimize their network by routing specific applications over the most suitable network.

Previously, users had to spend a significant amount of time checking different systems manually to monitor WAN link conditions. But thanks to the improved visibility afforded by SD-WAN, packet loss, latency, bandwidth, alarms and more can now be monitored and accessed with just a few mouse clicks. User experience can also be improved with application acceleration by compressing the data being sent across the network. Through real-time monitoring, predictive analysis and automation, Gartner research estimates that the time required to implement changes to the network can be reduced by 50% to 80% [3]. That is a massive upgrade in terms of application performance and user experience.

Companies diversifying their manufacturing operations across Asia would be wise to take this opportunity to re-envision their network to meet the future needs of Smart Manufacturing, which enables all information about the manufacturing process, entire manufacturing supply chains, and complete product lifecycles, as and when needed, to increase operating efficiency and productivity.

According to IDC’s Next Generation WAN Advisor report, WAN Leaders see the WAN as a driver of competitive advantage which uses a high level of automation to optimize operations. Future proof networks are needed to not only manage growing traffic capacity requirements, but also to incorporate the many new technologies that will play a growing role in enterprise ICT in the near future such as Big Data Analytics, the IoT or Industrial IoT, robotics and AI.

Manufacturers shifting some or all of their operations from China to sites in Southeast Asia will find that by adopting SD-WAN they can benefit from enhanced agility, security and faster time-to-market to meet ever-changing market demands. Thanks to SD-WAN, smart manufacturing is no longer in the distant future. But to capture the ample opportunities that smart manufacturing can offer, it is imperative for manufacturers to evolve the networks that connect their branch operations, supply chains and manufacturing ecosystems.

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[1] Source: https://www.scmp.com/business/companies/article/2157331/hong-kongs-industrialists-are-moving-out-mainland-safer-haven           

[2] Source: https://www.amchamchina.org/policy-advocacy/impact-of-us-and-chinese-tariffs-on-american-companies-in-china

[3] Ted Corbett, Andrew Lerner, Mike Toussaint (2018, February 2018). SD-WAN Economics: Shift From Tactical to Strategic Thinking (ID:G00345824)