Tuesday, February 26, 2013
The tree technologies of Apocalypse: Manufacturing revolution of the digital age
In what would probably be remembered as one of the greatest forecasting mistakes of the 21st century, Robert J Gordon affirmed that the innovation indebted to the Information Technologies (IT) revolution had withered away without any significant real life application in any close future (Gordon 2012). However, far from a deceased phenomenon, IT is feeding a new manufacturing revolution that may actually reinvent the economy and change the notion of competition, supply chain management and markets.
The new boom in manufacturing that allows entrepreneurs to compete with global firms, is fueled by three different types of technology, all with a common origin in the IT revolution. The first one is new production technologies such as 3-D printing that make it possible for individuals to manufacture their products or their prototypes at a fraction of the cost of the traditional manufacturing process (Economist 2012). The second is the availability of cloud SCM systems that make managing a global supply chain similarly cheaper (Dredge 2011). Finally, the explosion of crowdsourcing and social manufacturing are redefining the concept of R&D expenditure and design, with customers taking, literally, control of the products they consume (Anderson 2010).
These newly empowered entrepreneurs run their small manufacturing firms in a way that barely resembles the traditional notion of an industrial firm. Their headquarters are not in industrial parks full of heavy machinery but in fancy Manhattan apartments full of computers and other hi tech hardware (Anderson 2010). The new industrial world is a mixture of generic manufacturing facilities in countries like China and technology startup offices of Silicon Valley.
But not only daring and innovative entrepreneurs have taken advantage of this new mode of production. The Pentagon is devoting a large sum of resources to crowdsourcing manufacture (Lohr 2012), while Asus and Intel are also part of this new tendency (Guardian 2008). In a hyper-competitive world, where traditional factories are no longer required and complex and rigid organizational structures may actually hamper innovation, large companies will need to embrace this new reality to at least a minimum extent (Singleton 2012).
The benefits of the new technological revolution are not only limited to empowering entrepreneurs, providing more customer-controlled consumption and increasing competition and innovation. The revolution may actually create the wealth and growth of productivity so fancied by economists like Robert J Gordon. According to a rough estimate, this type of technology and business model could generate a $130 billion dollar growth for the economy in the next decade (Castro, Atkinson & Ezell 2010).
For many young professionals who have seen their professional aspirations distorted by the current configuration of the economy, this change may provide alternatives for their creativity. For other companies who react pretty bad to change, it could mean the beginning of the end. Never before have salvation and damnation looked so similar for the manufacturing industry.
Anderson, Chris (2010), “In the Next Industrial Revolution, Atoms are the New Bits” Wired Magazine, January 25.
Castro, Daniel; Atkinson, Robert; Ezell, Stepehen (2010), Embracing the Self-Service Economy, The Information Technology & Innovation Foundation, April 2010.
Dredge, Matt (2011), “Is the cloud the answer to supply chain woes?”, Business Computer World, September 2, available at: http://www.businesscomputingworld.co.uk/is-the-cloud-the-answer-to-supply-chain-woes/
Gordon, Robert J. (2012), “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds”, Working Paper 18,315, National Bureau of Economic Research.
Lohr, Steve (2012), “Pentagon Pushes Crowdsourced Manufacturing”, The New York Times, April 5, available at: http://bits.blogs.nytimes.com/2012/04/05/pentagon-pushes-crowdsourced-manufacturing/
The Guardian (2008), “Intel and Asus try crowdsourcing PCs”, October 30th, available at: http://www.guardian.co.uk/technology/blog/2008/oct/30/wepc-intel-asus
The Economist (2012), “Back to Making Stuff”, Special Report: Manufacturing and Innovation, April 21.