strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: January 20, 2014
 / Spring 2014 / Issue 74

 
 

America’s Real Manufacturing Advantage

But some things were lost in the move to mass production, including the ability to shift production quickly to new goods, to incorporate new features, and to offer variety in product lines.

The next major cycle of manufacturing advancement, which is in its early stages now, greatly reduces the need to make this trade-off, thanks to the connection of increasingly powerful software with dramatic leaps in the performance of hardware.

The use of computer software in manufacturing is nothing new. The first numerically controlled machines date to the 1940s, when engineers adapted machine tools to accept commands via punched tape. These evolved over the next few decades to become sophisticated computer numerical control (CNC) machines, which perform a vast range of tasks such as milling, laser cutting, and welding. Computers were also adapted to product design, first in the 1960s, and then more extensively in the 1970s as computer-aided design hardware and software proliferated.

Since the early 2000s, however, automation and design software have begun to merge, and manufacturing software in general has become far more sophisticated. The result is an integration of the virtual and physical worlds. Before anything is constructed or set into physical operations, it can be simulated, modeled, and tested—inexpensively and rapidly. Virtual design, planning and development of products and the production process, and optimized control are having a powerful effect, especially in highly complex manufacturing systems such as auto assembly. This has led to three important benefits: further gains in efficiency, a step-change improvement in production innovation and speed-to-market, and a new ability to incorporate flexibility into mass production.

• More efficient production. To this day, manufacturers continue to lower costs and raise efficiency by improving processes and upgrading technologies and machinery. There are still significant productivity gains to be made in many sectors of manufacturing, especially in emerging economies. Coca-Cola Vietnam, for example, increased its production rate by 30 percent recently, when it replaced some of its legacy machinery with automated hardware and software. This enabled the company to meet demand that has grown by 35 percent per year since 2009.

More efficient machinery and controls also pay dividends in energy savings—boosting productivity while reducing manufacturers’ carbon footprints. An auto plant with a daily output of 1,000 vehicles can consume several hundred thousand megawatt-hours of electricity per year—as much as a medium-sized city. The electric motors used to drive conveyer systems, robots, and other machinery use two-thirds of this power, and optimized control systems can reduce their consumption by as much as 70 percent. Further efficiencies are within reach. Siemens, for example, has joined with Volkswagen and the Fraunhofer Institute for Machine Tools and Forming Technology to study ways to make robots more energy efficient. Simply optimizing the software that controls their movement patterns can save up to 24 percent in energy costs.

• Innovation and speed-to-market. The ability to model, visualize, and test in the world of virtual-to-real manufacturing is changing the nature of innovation. Research and development and operations can now become a single integrated process extending from design through product development and manufacturing to aftermarket service.

The ability to model, visualize, and test in the world of virtual-to-real manufacturing is changing the nature of innovation.

The Mars Curiosity rover, created by the National Aeronautics and Space Administration (NASA), which landed on Mars in August 2012, is a vivid example of how sophisticated software technology has become. The rover is the size of a small SUV and contains, among other things, a small nuclear power plant and two chemistry laboratories. Previous unmanned space missions, with smaller and less delicate payloads, were dropped onto the planet surface by parachute, with a rough landing cushioned by airbags. The Curiosity needed to be set down much more gently, as well as more accurately. Engineers designed an entry vehicle that would be slowed by parachute at first, then fly itself the rest of the way using thruster rockets, slow to a hover 60 feet above the planet, and finally lower the rover carefully to the surface.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

Resources

  1. Robert D. Atkinson and Stephen J. Ezell, Innovation Economics: The Race for Global Advantage (Yale University Press, 2012): Why the U.S. needs a coherent innovation policy to remain competitive, from two officers of the Information Technology and Innovation Forum.
  2. Peter Cappelli, Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It (Wharton Digital Press, 2012): The director of Wharton’s Center for Human Resources makes a case for changing the way talent is developed, recruited, and retained.
  3. Kaj Grichnik and Conrad Winkler, Make or Break: How Manufacturers Can Leap from Decline to Revitalization (McGraw-Hill, 2008): Former Booz & Company consultants show how top companies are reinventing themselves to compete in a new world.
  4. Andrew N. Liveris, Make It in America: The Case for Re-inventing the Economy (Wiley, 2011): The chairman and CEO of Dow Chemical makes the case for manufacturing in the United States.
  5. Gary P. Pisano and Willy C. Shih, Producing Prosperity: Why America Needs a Manufacturing Renaissance (Harvard Business Press, 2012): Two professors at Harvard Business School show why manufacturing really matters in an innovation-driven economy.
  6. Harold L. Sirkin, Justin Rose, and Michael Zinser, The US Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback (Knowledge@Wharton, 2012): Analysis and recommendations for U.S. manufacturing from the Boston Consulting Group.
  7. Vaclav Smil, Made in the USA: The Rise and Retreat of American Manufacturing (MIT Press, 2013): An authoritative history of U.S. manufacturing by a noted business historian and author.
  8. Gene Sperling, “The Case for a Manufacturing Renaissance,” speech delivered at the Brookings Institution, July 2013: The director of the National Economic Council discusses U.S. competitiveness in advanced manufacturing.
  9. For more thought leadership on this topic, see the s+b website at: strategy-business.com/operations_and_manufacturing.
 
Close