Second Episode: From mass production to smart production.

Additive manufacturing is not yet good enough to make a car or an iPhone, but it is already being used to make specialist parts for cars and customized covers for iPhones. Additive manufacturing is only one of a number of innovative production equipment leading to the factory of the future. Conventional production equipment is becoming smarter and more flexible too.

For example, Volkswagen is implementing a new production strategy called MBQ. By standardizing the parameters of certain components they hope to be able to produce all its models on the same production line (Again economies of scale).

Factories are becoming vastly more efficient. Nissan’s British factory in Sunderland, opened in 1986 is now one of the most productive in Europe. In 1999 it built 271,157 cars with 4,594 people (59 cars per capita). Last year it made 480,485 cars with just 5,462 people (88 cars per capita).

As the number of people directly employed in making things declines, the cost of labor as a proportion of the total cost of production will diminish too. This will encourage makers to move some of the work back to rich countries, not least because new manufacturing techniques make it cheaper and faster to respond to changing local tastes.

The materials are changing as well. Carbon-fibre composites, for instance, are replacing steel and aluminum. Sometimes it will not be machines doing the making, but micro-organisms that have been genetically engineered for the task. Software are going smarter. And the effects will not be confined to large manufacturers, much of what is coming will empower small and medium-sized firms and individual entrepreneurs. Launching novel products will become easier and cheaper. Communities offering 3D printing and other shared production services are already forming online.

The consequences of all these changes amount to a third industrial revolution, as The Economist wrote in April 2012. The first began in Britain in the late 18^th century with mechanization of textile productions. The second  began in America in the early 20^th century with the assembly line and the era of mass production.

As manufacturing goes digital, a third great change is now gathering pace. It will allow things to be made economically in much smaller numbers, more flexibly and with a much lower input of labor. The first two industrial revolutions made people richer and more urban. The third?

Source: The Economist, Special Report on Manufacturing and Innovation, A third industrial revolution, April 21^st 2012.

Pilot: Additive Manufacturing & economies of scale

Today I was going through The Economist's special report on manufacturing and innovation (published in April 21st 2012) and I decided to start a set of posts to explore some interesting insights about what The Economist called a third industrial revolution. (Please note the "a" instead of "the", we will see if there will be a change about it in the next few years) 

Additive Manufacturing is the process of producing parts by successive melting of layers of material rather than removing material, as is the case with conventional machining. Hence, choosing an AM technology for production provides great benefits for the entire production value chain. The geometrical freedom allows you to engineer/design your part as you envision it, without manufacturing constraints. This can be translated to extreme light-weight designs, reduced part counts or improved bone ingrowth for a medical implant. It is also a fast production route from CAD to physical part with a very high material utilization and without the need to keep expensive castings or forgings on stock.

What could it mean?

Try today to go to a factory and ask to make you a single hammer to your own design. The producer would have to design and produce a mould, cast the head, machine it to a suitable finish, turn a wooden handle and then assemble the parts. You will be presented with a bill for thousands of dollars!

Thus, it would be efficient only if you produce a certain amount of items, as the well-known concept of economy of scale says.

What is a technology breakthrough? It is any significant or sudden advance, development, achievement, or increase, as in scientific knowledge or diplomacy, that removes a barrier to progress (i.e. the jet engine was a major breakthrough in air transport or internet was a major breakthrough for communication). When this happens usually a market structure changes as production changes.

Thanks to 3D printers and other additive manufacturing tools, economies of scale matter much less. In fact, its software can be endlessly tweaked and it can make just about anything. The cost of setting up the machine is the same whether it makes one think or as many things as can fit inside the machine. As a normal printer, it will keep going at about the same cost for each item (Obviously you would take into account the fixed cost and amortization of the machinery – so economies of scale still matters but much less).

From HBR: See the Big Picture Before Making a Decision

Here is a good decision-making advice from today HBR's Management Tip.

Successful strategic thinkers always have perspective. They consider the potential impact of their actions on those beyond their team or unit. Next time you need to make a big decision, here are three ways to make sure your thinking isn't too narrow:

• Explore the outcomes. With every idea, ask yourself, "If we implement this idea, how will other units and stakeholders be affected? What might be the long-term ramifications?"
• Expand your range of alternatives. Gather ideas and concerns from everyone who has an interest in the decision or who will be affected by the outcome.
• Consider the customer. Look at the decision through your customers' eyes. What will they think and which alternative will they prefer? If you're not sure, think about asking them.

Are Italians knowing Car Sharing? (finally after almost 10 years of activity)

A recent TV report from the Italian television (SuperQuark of July 26th 2012 - Rai1) showed me that finally Italy is knowing what car sharing is. 

I have known Car Sharing since 2007, when I wrote my bachelor thesis on it. Since that time Car Sharing has been always in my research interest, and I am now writing a paper about it.

Here is the abstract!

Car sharing, an innovative mobility service complementary to the local public transport, helps, through the sharing of a fleet of cars among users, to reduce individual and social costs of private transport, at the same time avoiding the rigidity of traditional public transport as well.

My paper on car sharing intends to explain the nature and development of car sharing through three key directions: i) the critical analysis of literature, through which it was possible to identify how car sharing is still not very extensive; ii) the overview of the Italian context; and iii) the analysis of car sharing service in detail, through a case study of the experience in the city of Genoa.

The purpose of this paper is to contribute to the few existing studies on car sharing in an effort to increase academic and managerial attention on this sustainable mobility service.