It’s not just the net that threatens traditional retailing
The Wall Street Journal’s business editor Dennis Bergman argued recently that ‘local’ retailers (and by implication ‘local’ manufacturers) are at risk from on-line sales direct from Chinese Manufacturer. Maybe so, but perhaps this is not the greatest long term (10-20 years) threat to ‘traditional’ (bricks and clicks) retailing and manufacturing. And if you are thinking about ‘the future of a whole industry’, is 10-20 years really all that ‘long term’?
As 3D simulation, robotics, deep learning algorithms, 3D printing and new materials evolve, there is no doubt that we will see a universal return to large scale localised manufacturing.
But it will not be as we know it.
It will be based, not on ‘production lines’, but around ‘infinitely flexible automated assembly cells’ that use robot hands to faultlessly fit any combination of parts together in any sequence based on pre-programmed simulations. It will not matter that the robots have never ‘seen’ the part before, the simulation will accurately guide them based on sensor feedback within the cell itself.
Instead of shipping products around the world, each local production facility will source the best global designs (based on price/performance) most suited for the service they provide to the local market.
And, instead of making more profit by making and selling more widgets (very wasteful), the local facility will support a true circular service economy by making theleast number of widgets required to deliver the service, with the lowest possible whole-of-life costs… with profits earned from the service fees paid by its customers.
We have just seen the first printed car body that is fully recyclable;
Granted the appearance is a bit unfinished, but new equipment is emerging that blends ‘subtractive’ manufacturing tools, that can shave excess material to create a smooth finish, all within the one process… so the problem of ‘finish’ will become a non-issue.
Imagine applying this technology to driverless cars assembled from the best off-the-shelf electrical and electronic components (including batteries) sourced from around the world and offered as part of a ‘transport service’. In this case, the facility needs to be geared to make the LEAST number of vehicles in the right mix (electric bicycles, electric motor bikes, small town cars, people movers, SUV’s, LCV’s etc) to ensure customers of the service can have delivered to them the vehicle they need within 2-5 mins of order – wherever they are in the city.
In such a scenario, the facility must be able to flexibly assemble, clean, maintain, refurbish and recycle all the different vehicles in the fleet. Customers won’t care about ‘flashy’ features, as long as the driverless vehicles are ‘fit for purpose’, sleek/comfortable and safe, clean and reliable. (When was the last time you cared about the features in a taxi?) All the fancy communication features can be enjoyed via the customers’ own devices.
Such integrated service will ensure high utilization of both the facility and the vehicles it produces (vs current situation where most cars sit idle for more than 90 per cent of the day). It will also be immune from import competition as the automated equipment will be sourced from the global market, so the best place to site the facility will be close to where the service is delivered. It will derive ‘economies of scale’, not from ‘long production runs of a limited range’, but by flexibly handling all tasks for a wide range of designs within a series of identical cells that avoid the need for ‘balancing the line’ as processes and volumes change.
You can think of the service as ‘personal point to point public transport’. It will be pollution free, and in time, congestion free – as automation virtually eliminates accidents and enables smooth traffic flow.
Of course some people will still want to own their own car, but it will be at great cost in terms of price and flexibility.
This business model can be applied to the provision of food and even clothing, as well as heating and cooling and many other needs.
The larger the manufacturing base, the more the same approach can also be applied to the assembly of components – drawing more and more activity to the local community, greatly reducing logistics costs and need for foreign currency (taking pressure off the deficit)… though it is likely chips and other high tech electronic components will remain the province of specialist global suppliers.
There is much more to this vision now being explored in Australia which is about to lose its whole traditional car manufacturing industry (Toyota, Ford and GM plants). I was previously Manufacturing Manager for Toyota’s Port Melbourne Plant in Australia. Anyone who is interested in exploring the ideas further can contact me mailto:[email protected]