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Tribune in Le Monde Economie - January 28-29, 2017, signed Xavier Dennery

The digital disruption as a response to relocations in service professions

The relocation of the production of consumer goods has deserted industrial France for 30 years; we have entered a second phase, which today affects services: banking, IT services companies, professional services, certification, laboratories.

Completely relocated consumer goods

The production of the most common consumer goods, such as textiles, clothing, toys, electrical and electronic products ... has been almost completely relocated (we no longer manufacture televisions in France), to countries with ever increasing costs. bottom: China, Vietnam, Cambodia, Ethiopia ...

Completely relocated consumer goods

In the service professions, the multiple interactions between the company and its customers on the one hand, and between the various departments of the company on the other hand, grow exponentially with the activity - by simple combinatorial effect - and this exponential weight weighs on administrative processes (assistance, ordering, planning, regulatory, etc.)

Failure to master these processes , whose salary costs are exploding, the manager is tempted to reduce them drastically and simplistically, and often - in fine - to relocate to the detriment of the customer and the quality of service. Fatality? No !

When Trump tweets for Ford!

When Trump tweets that Ford does not relocate to Mexico, it is also a sign that a very iconic consumer good has resisted: the automobile. In France, it is still 1.5 million vehicles produced, for 2.3 million purchased per year. Why is there still automobile production in France? This is because 30 years ago, manufacturers were able to meet the ultimate expectations of consumers by dividing production times and costs by a factor of 2 to 3 while improving quality.

Real-time control of the production process ...

The answer came from a very fine control of the production process: the control - in real time - of the flow of components driven by consumer demand (Toyota) has replaced the assembly-line production of components pushed from stock to the other (Ford). It is the consumer's choice (type of vehicle, color, options) which controls - in real time - my entire supply chain and quality at each stage.

… Thanks to a double technological breakthrough…

It is the simultaneous arrival of the microcomputer and CAPM (Computer Aided Production Management, ancestor of ERP), which made it possible to deploy this concept of "supply chain" which defines all the components from the finished product. elementary, all the quantities and stages necessary for the production of such vehicle model; and "pulls" them by adapting in real time to the vagaries and to a growing variety of choices for the customer.

... makes the gains from relocation ridiculous

In the end, despite a context of fierce competition and ever more demanding consumers, the division by a factor of 2 to 3 of production times - and therefore also of production costs with constant headcount - made it possible to keep most of the production. automobile in the West, with outsourced production intended for emerging local markets (China, Brazil, etc.).

The data supply chain and the digital revolution ...

When the automotive industry sells cars, the services industry sells information: data, reports, test results, certificates, solutions…; thus, the “data supply chain”, a data supply chain, can replace the physical automobile supply chain.

And it is the digital revolution on smartphones that makes it possible to leverage flows in the data supply chain: facilitated data entry by customers themselves, elimination of paper, elimination of servers in favor of the cloud, free micro-applications, in place of databases in a few hours, rental of agile “off-the-shelf” tools,….

... make the gains from relocation ridiculous

Thus, the data supply chain and the digital revolution make it possible to bring the right information, right the first time, to the right person at the right time; divide by a factor of 2 to 3 the delays, production costs and non-quality - ultimate expectations of consumers of services; and provide the answer to the exponential interaction costs that lead to offshoring.

Digital disruption for new business models

While this breakthrough makes it possible to massively gain market share, the digital breakthrough is above all the real-time interaction between the company and its customers, which allows the development of new business models, new sources of income for ultimately increasing employment instead of reducing it.

A collective ambition within reach

The good news is that it is possible, for example in a certification, inspection or laboratory testing profession,

  • to divide by a factor of 2 to 3 the deadlines for rendering results, and in doing so - with constant production numbers - cost prices;

  • improve the quality of services and the quality of life of employees;

  • not to outsource entire sections of administrative and sometimes operational processes.

In addition to this, you need to know more about it.

This requires a lot of intelligence that cannot be “relocated”, but also determination not to give in to the fads, according to which relocation would be synonymous with sound management.

Xavier DENNERY