December 7, 2007

Modern manufacturing

OK, OK, I’m part of the problem. Like G.W. Bush I have an MBA in my back pocket, so I can streamline manufacturing processes, organise effective marketing, think strategically and tie my own shoelaces. Which brings me to modern low-cost manufacturing, famously Toyota and “lean”-style. Yes folks, MBAs are taught how to organise production lines, strip things down to the basics and to cut out waste. Duplication – bad. Re-doing stuff – bad. Too many steps, especially redundant ones – bad. Why? Because waste, duplication and redundant steps in manufacturing all cost money. If you can cut them down, or even completely out, you end up with a cheaper product. And a cheaper product can either gain you more marketshare or more profit – or both. And for the consumer a cheaper product must be a better product, surely.

Well, no. If you are an old-timer like me you will remember ‘the good old days’ when you could pull something apart and fix it. You will remember being able to buy even the tiniest spare parts at reasonable prices and to take them home and to fix things, so they lasted longer. Now whilst the manufacturer makes some money out of spare parts it also costs them a lot in warehousing and distribution. To get parts to little shops near you and me takes up a lot of time, money and effort. It’s actually very costly. And you know what MBAs love to do, right? Yep, remove costs. Gradually we have moved from a world of repairable manufactured goods with ample supplies of spares to a world of ever-more-modular manufacturing. Yes, you can still “fix” things, it’s just that you can’t simply fix the broken bit – you have to replace the entire module.

Now these modules exist because it’s cheaper to make and stock one large bit than a larger number of much smaller components. Fitting such individual components costs money and time for each manufacturing step, so doing away with the “bits” removes lots of steps and makes it cheaper to assemble and to stock. It saves the manufacturer everywhere. You are happy because manufactured stuff is cheaper.

But there are hidden costs, aren’t there? Repairing a manufactured good is now either impossible – it’s just not designed to be taken apart again – or much more expensive as large modules are involved. So you either pay through the nose and replace the module, hack at it with a saw, or give up and buy a whole new “thing”. And as new “things” are so cheap we don’t mind so much. And as new consumers are born they are born into a world of consumerism, waste and excess and don’t realise that there once was ‘another reality’. And as we get into the swing of just buying another thing to replace the old thing we bring down the cost of “things” generally. It’s called mass consumption.

But it gets worse. By ramping up this overall consumption of “things” we are burning more oil, digging up more raw materials and generally just throwing more and more stuff out. OK, OK, it sounds bleak. Well maybe it is.

And the saddest part – we are taught to do this in our graduate business schools. It’s modern manufacturing folks.

Filed under Business, Global Warming by Rob.

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December 18, 2007

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