Creating Value in Manufacturing

I wrote some time ago that we have to go to JIT (Just in Time), and towards local manufacturing, avoiding long inventory and build shorter delivery and supply chains. This will create value and here is a way to do so. First, do not always think of economies of scale, especially when you want local manufacture. Think of ways of making small quantities which can be sold economically to the local geography, maybe up to 1000km away and not 10,000 KMs! This can work on exports also, with the last mile done in the host country. Also, when one thinks of cans, bottles, toothpaste tubes, we are also shipping air…and perhaps we can do some final manufacture on site. For example, instead of shipping tooth paste tubes, ship rolls of sheet to the toothpaste tube manufacturer. Or, make bottles on the site of the bottling plant. Some of this is being done but more is needed. There could be special machines which are designed to be flexible such as in manufacture of furniture. Machines can be programmed to make a table, and next a chair and so on, rather than long runs of chairs, long runs of tables etc. This allows making furniture on demand, and not large-scale manufacturing which causes inventory build-up. I remember in a study for SAIL, we found that manufacturing decided the runs, their lengths, the sequences, and the timing. This was to maximise manufacturing efficiency. Consequently, sales could not give exact dates of supply to the customer if the material was not in inventory. Customer projects were held up or delayed because sales could not give the customer a delivery date. Sales lamented that manufacturing would let them know when the runs started and not well in advance. Such steel items can sometimes be made in smaller scales in mini mills. Peter Diamandis quotes Christian Brecher, director of Germany’s Fraunhofer Institute for Production Technology, who said the “internet of production,” or industrial internet, is not as easy as the consumer internet because production is much more complex. He noted that Europe, Japan and some other parts of Asia have a lot of knowledge about manufacturing, with which “we can create customer value.” He said once data is merged with cutting-edge production technologies such as robotics, it will bring about a revolution in the manufacturing sector. Production knowledge exists but needs to be channelized, and soon there will be a knowledge explosion. Peter Diamandis gives examples of 3D printing which is about to turn the entire retail industry on its head. The 3D printing market is already over $15 billion and growing fast. Did you know that 3D printing can be used for clothes? 3 accountants wanted not normal clothes but something exciting to wear. Together, they formed a company called the Ministry of Supply, a clothing company intent on borrowing space suit technology from NASA for a line of dress shirts. They designed the “Apollo” dress shirt, which uses NASA’s “phase change materials” to control body heat and reduce perspiration and odour. It also adapts to the wearer’s shape, and stays tucked in and wrinkle-free all day. Their company, Ministry of Supply now makes high-performance smart clothing for both sexes, including a new line of intelligent jackets that respond to voice commands and learns to automatically heat to your desired temperature, says Diamandis. And recently, they extended their high-tech approach to manufacturing. So now in less than 2 hours you can get customised dresses using a 4000-needle special machine with a dozen different yarns, the printer can create any combination of materials and colours desired, with zero waste. Thanks to the smartphone, 3D-printed clothing can now be ordered from the ease of your living room. Since fashion designer Danit Peleg’s 2015 introduction of the first line of 3D-printed clothing available via the web, many designers are now offering 3D-printed clothes. Even sports shoe manufacturers are using this technology. Now retailers are following this and you can order drones, spectacles, jewellery, and the like to their customers, and these customised items are delivered to the home. But fashion is only part of the story, as 3D printing is now showing up all over retail. AI integration is making the design and manufacture seamless, easier, faster and more available. Can you imagine the end of traditional manufacturing, the end of traditional supply chains, the end of a large inventoried spare part market, more customised and user designed products with little or no waste? And imagine a future with value creation, vehicles with fewer emissions, reusable packaging. Use your creative thinking to design the future and be successful. Remember for value creation you need the 6A’s

• Awareness
• Ability
• Anticipation
• Agility
• Ambidextrousness and
• Attitude

Happy Thanksgiving.

Best,

Gautam Mahajan, President, Customer Value Foundation Founder Editor, Journal of Creating Value jcv.sagepub.com New Delhi 110065 +91 98100 60368 mahajan@customervaluefoundation.com www.customervaluefoundation.com Twitter @ValueCreationJ Blogs: https://customervaluefoundation.wordpress.com/ Author of Value Creation, Total Customer Value Management, Customer ValueInvestment, How Creating Customer Value Makes you a Great Executive, The ValueImperative, Value Dominant Logic Come to the Third Global Conference on Creating Value, June 2-3, 2020 in Paris France Join the Creating Value Alliance at creatingvalue.co

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