Just What is ‘Core Competency,’ Anyway?

I want to call attention to this long overdue piece by Forbes’ columnist Steve Denning.

Under the tantalizing headline, “Why Amazon Can’t Make a Kindle in the USA,” Denning makes the case that management, not manufacturing, is to blame, for its rather thoughtless, follow-the-herd mentality (my words, not his).

Case in point: Dell, which little by little gave more and more of its PC manufacturing and  design to Asustek, until the day came when Asustek had developed all the in-house expertise it needed to become an OEM. It no longer needed Dell. And while one could say Dell (whom I am using as a proxy here, as this scenario applies to scores of Western businesses) would have been eaten up by competition sooner or later anyway, the fact is one of its major suppliers — Foxconn — practically prints money, while Dell and fellow PC outsourcer HP look for ways to escape that low-margin business.

For nearly two decades, the EMS industry has sold the OEMs on the idea that they should outsource their lower-margin activities, while simultaneously refuting any suggestion that by doing so OEMs were setting themselves up to be replaced by their own suppliers. “We’re not in the business of ____,” was the EMS refrain. Well, they weren’t until they were. And then it was too late for OEMs to do anything about it.

Unlike populists like Lou Dobbs who shout that the loss of manufacturing must have a political solution, yet fail to consider the intricacies of what they propose, Denning takes a more nuanced approach. (I’ll add my two cents: If Wall Street could manage your business, why aren’t they?)

It’s worth your time to read.

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About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow