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Manufacturing: Factories of the Future

January 01, 2007 — CIO — When a new idea about manufacturing arises, a new crowd of players jumps into the game and manufacturing’s technology rules change dramatically. In the first third of the 20th century, the philosophy of continuous flow and assembly line technology gave American industry an edge over the European industrial powers. In the last third of the 20th century, U.S. manufacturers got caught off guard by the rise of "lean manufacturing" and the war on waste.

Perhaps the next time one of these turning points appears, the U.S. manufacturing sector will leapfrog its competitors and make up ground lost over the past few decades. That next turning point may the emerging trend of adaptive manufacturing, manufacturing that morphs on the fly as companies respond to chaotic economic changes.

Consider this scenario: Sooner or later, the central banks of Asia—China, Japan, Hong Kong and Korea—will make the value of the U.S. dollar fall because they stop buying the currency or, worse, start selling.

This shift would be bad news for U.S. industries associated with imports, but export businesses—making or managing physical goods, not services—would fare better. They’d need new, 21st-century manufacturing infrastructure, dominated by information processes and information management issues. A U.S. manufacturing revival would be managed by CIOs.

Already, today, manufacturing is becoming more about moving bits than atoms. Companies seeking greater manufacturing efficiency and greater competitive opportunity have much to gain from emerging technologies in adaptive manufacturing such as 3-D printing and sensor networks.

What’s Behind Adaptive Manufacturing?

Several factors are driving interest in adaptive manufacturing and the rising importance of information management in manufacturing, as outlined by Eric Beinhocker in his recent book, The Origin of Wealth. One is an ongoing, if quiet, revolution in the way economists think about markets and economies. For most of the past century, markets were viewed as quasi-mechanical processes that ground their way to equilibrium, defined as the point at which supply and demand balance. Today, an increasing number of economists see markets as essentially chaotic: complex, nonlinear and as unpredictable as the weather.

Under the old theory, the job of managers was to tune the mission of the company to the equilibrium points. That was called defining a sustainable competitive advantage. The new theory abolishes that responsibility, since it is the essence of a chaotic economy that competitive advantages can vanish almost overnight.

The new idea: As a tool in business, managers should use natural selection—a law of nature that enables species to grow and progress in a landscape as chaotic as any economy. That means defining a portfolio of experiments appropriate to the available competencies of the organization, running these against the market, shifting resources according to outcomes, then exposing a new set of experiments to the market and so on.

 

 

 

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