Manufacturing

Whats more exclusive then 6 hand made Ferraris?

Posted on by Marco

The only way to manufacture a more exclusive product then six handmade Ferrari’s is by making the purchase of each car invitation only.

 

In the past week of class we learned about the different manufacturing processes used to make products.  Between process focus, repetitive focus, product focus and mass customization we learned the pros and cons of each set up. What we are looking at here is a highly specialized and customizable version of process focus manufacturing. Ferrari, as we all know, likes to operate in a process focus environment targeting most affluent consumers on the market. Ferrari is tied to high price high quality products, just like the Rolex example in class.  All of us assume a Ferrari is among the highest quality product on the market, even when placed side by side with many of its supercar counterparts.

 

Ferrari, with the six new Sergio cars, took product focus to the extreme. They traded in on their name to entice potential customers to pay upwards of a million dollars for the new line cars.  Instead of worrying about forecasting or any type of market research, Ferrari built a car with the intention they would sell effortlessly.  The result in an invitation-only model has clearly paid off for Ferrari, as all six Sergio’s have already been sold. While the identities of the new owners are kept confidential, we are told the invitations were given to previous loyal Ferrari owners.

 

With this heavy process focus comes the ability for massive customization options.  Along with the usual online customizations that can be implemented into manufacturing, such as colors and finishes, the team went above and beyond to meet consumer satisfactions. After the purchase of a new Sergio, a life size clay model of the car is created so buyers know exactly what they are getting.

 

I personally think this is a great way to manufacture a car for optimal appeal.  The ultra-rich pride themselves on the exclusivity of the items they own. Ferrari took a shortcut to creating a uniquely exclusive product with a one of a kind manufacturing and sales model.  Being this highly process focused I cannot see anyone who bought this car having even the slightest bit of buyers remorse.  I also think that creating a clay model of the car to aid the customer’s options in the customization process is ingenious.  Many times when customizing a product online some parts do not come out exactly as intended.  Unfortunately color and sizing mishaps can happen due to computer monitor resolutions or bugs with rendering software.  Ferrari found an exact way to replicate the final product allowing so that every little customer specific nuance is included in their one of a kind Sergio.

What do think of having this low of a production run?
How to do you think the clay models influenced sale?
Ferrari Sergio

http://www.cnbc.com/id/102123753#.

The Dark Side of Globalization

Posted on by emily30111f14

jansport

One of the repeated topics we talk about in class is globalization and how it helps companies in a variety of different aspects of their business, such as improved products and operations, as well as reducing costs. However, what if globalization impacted a company negatively? That is exactly what happened to JanSport Apparel. JanSport previously supplied Cornell University with all of its branded school attire. Everything was going well, until a group of students, led by the group United Students Against Sweatshops, boycotted the apparel company and demanded that the university cut ties with the clothing company over its factory safety, or lack thereof. VF Corp., which owns JanSport, did not sign the “Accord on Fire and Building Safety in Bandladesh, [which is] a set of standards for improving factory safety in the country.” Of course, VF claims that their factories are safe and has instead joined the Alliance for Bangladesh Worker Safety.

The Alliance has a smaller population than the Accord, only 26 American and Canadian companies as opposed to 150 companies, but they do not necessarily have the same standards. Factory workers in the Accord, for example, “[have] a broader role in factory reviews.” According to the Alliance, though, “[it] has a Board Labor Committee that advises on the group’s efforts, [and] to imply that workers are not at the heart of our initiative is a direct contradiction of the facts.” The Alliance is also a smaller operation than the Accord because the Alliance inspected only 600 of its members’ companies, as opposed to the 1,100 factories inspected by the Accord.

Cornell University is not VF’s only concern. Prior to Cornell terminating their contract with VF, fourteen other universities, including schools with huge populations such as Arizona State, Penn State, and Syracuse have already terminated their contracts with VF due to the incidents that occurred in late 2012 to early 2013. During that time, a garment factory collapsed and killed over 1,100 workers, and another fire killed 112 workers. The incidents put Bangladesh factories on the international news and created an international movement in order to protect the country’s factory workers. Bangladesh factories supply some of the world’s largest clothing companies and is the “second-largest garment exporter in the world.”

This relates directly back to our class discussion. We always talk about the positive impacts of globalization, and there are certainly ways to globalize in an efficient, safe manner. However, with globalization come certain risks. International companies do not have control of their factories anymore. Instead, they are relying on managers in foreign countries to make sure their goods are being made and the manufacturing process is being executed in a safe, reliable manner. Some of these managers, though, do not always make the best decisions regarding their employees, but instead base their decisions on the bottom line and their productivity.

Would you consider boycotting a clothing company if you heard they were treating their factory workers poorly, or another incident in a factory occurred? What should American companies that export their labor do to ensure that their factories are safe and their employees are taken care of? How do you think these incidents would be handled in the U.S.?

Sources:

http://www.businessweek.com/articles/2014-10-20/students-push-cornell-to-end-vf-corp-deals-over-labor-practices

http://www.businessweek.com/articles/2014-07-28/a-year-after-deadly-bangladesh-factory-disaster-how-much-has-changed

http://www.bloomberg.com/news/2013-04-14/wal-mart-sears-refuse-compensation-for-factory-victims.html

 

Death of American Industry

Posted on by seanv598

This article is interesting in many ways.  It highlights the shift that is taking place that is slowly taking shape around the world with China and their “industrial revolution.”  The steel industry has long been an American dominated industry because its superior manufacturing processes.  China has been making serious in roads to compete locally.  The article talks about the implications of opening the proverbial “can of worms” of using Chinese steel to build United States infrastructure.  It speaks of the price differential between Chinese and US steel, and it talks about the future of the steel industry.  The United States steel industry could have an uphill battle for future construction and bridge work if the steel used in the bridge projects in New York and San Francisco prove out to be high quality.

The common thought within the United States manufacturing and building sector was (and still is) that Chinese steel was inferior and could not be trusted.  The American Recovery and Reinvestment Act was supposed to help out industries like construction and the steel industries by putting limitations on where you can buy material and employing people.  The problem with this restriction, is there has been so much consolidation in the steel industry that many items are not made by ANY American producer.  In some cases, even if there is the American alternative, the price can be much higher and the project manager needs to reassess its job priorities.  The article talks about the situation where a company was able to find material in the United States that was almost double the price of the imported steel.

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The steel industry and the manufacturing world run in tandem.  Manufacturing has been sputtering in the United States and the steel industry is dependent on people buying cars, appliances, and building infrastructure.  The manufacturing sector has defected overseas to places like China and India because of cheap labor. The majority of the construction industry has stayed within the United States because of the superiority of the American made steel products.  Companies like Nucor have had a stranglehold on the construction industry because of the high quality, yet economically made steel that they were able to produce. The danger, as the article talks about, is the threat on the construction industry which has started to shift towards Chinese steel.  I think that if President Obama extends tariffs, it will have a temporary positive effect on the industry by putting China and the US on equal footing in terms of pricing, but what is the long term game?

While I agree that it is important for China and the United States to be on an equal playing field, I think that the bigger problem is the need for more planning within the industry to become a feasible and efficient producer of steel and employer of American jobs.  Assessing our risks of bringing in more capacity to the industry vs. not being a significant player will be something to watch for.  How does the industry help bring manufacturing jobs back into this country without a plan towards the future?

 

Main Article:

http://online.wsj.com/article/SB10001424127887324049504578545431938331880.html

Supporting Articles:

http://www.nbcnews.com/business/jobless-claims-rise-manufacturing-growth-slows-6C10387815

http://www.silive.com/news/index.ssf/2013/06/staten_island_lawmakers_charge.html

 

Can We Afford to Raise Wages to 29 Cents per Hour!?

Posted on by spr1313pnolan

After several major accidents in textile factories in Bangladesh over the past couple months, in which hundreds of workers died, Walmart sent a warning of its new “Zero Tolerance” policy to suppliers. At least two of these factories had what Walmart called “unauthorized” contracts with its suppliers. Walmart has reacted by informing its suppliers that it will no longer tolerate unsafe working conditions or unethical practices in the factories that make goods destined for Walmart stores. In a letter sent to suppliers outlining the company’s new policy, Walmart states that suppliers who fail to meet Walmart’s new guidelines could risk being permanently barred from doing business with the retailing giant. Is this move by Walmart just PR damage control or do you think the company will truly follow through on this new policy? If the company does follow through, is this new stance based purely on calculated analysis that will save money in the long run, or does Walmart truly care about human rights?

On April 24th a Bangladeshi garment factory complex collapsed killing 362 people, although the building housed nearly 6,000 employees and many are still unaccounted for (Link #1). This disaster is at least the third of its kind to occur in the south-Asian nation since 112 workers died in a factory fire in November 2012.

With wages and inflation increasing in China, Bangladesh has seen many garment manufactures move to the impoverished nation. China’s average hourly wage is now $1.34, while Bangladeshi wages are on average between 18 and 26 cents per hour, the lowest in the world. Spurred by cheap labor, the garment manufacturing industry in Bangladesh has grown to about $19 billion as of 2013 (Link #2). This quick growth, coupled with a low-cost focus, has led to unsafe conditions in which many factories have been converted from residential buildings, thus not meeting fire safety or maximum occupancy regulations. According to the executive director of the Bangladesh Center for Worker Solidarity, about half of the factories in Bangladesh do not meet legally required work safety standards, standards that are much lower than other emerging nations to begin with.

To combat this problem, Walmart has released a document spelling out its “zero tolerance policy” pertaining to working and safety conditions in factories suppliers subcontract with (Link #3). Within this document, Walmart states it “would like to improve the safety of [its] global supply chains”, and that it “is committed to value chains that empower people who work in them.” To oversee this goal, all factories in Bangladesh are to be audited by Walmart to ensure they are abiding by acceptable safety standard regulations and “Ethical Sourcing” requirements. Factories that fail to meet these requirements will be added to a “red card” list on Walmart’s corporate website, which will bar them from being included in the company’s massive supply chain. Further, according to the “Zero Tolerance” document, Walmart has been meeting with government officials and other companies who outsource manufacturing to Bangladesh in order to create a united front against subpar labor standards.

If the “Zero Tolerance” measures don’t work in Bangladesh, Walmart’s suppliers may have to move contracts to countries like Cambodia or Vietnam where average hourly wages are 29 cents and 55 cents, respectively. This move will undoubtedly raise costs associated with Walmart’s supply chain, as will implementing the auditing process of Bangladeshi factories.

As a reader of this blog, what do you think Walmart’s motives are for implementing these strategies? From a profit and loss standpoint, do you think this will help or hurt Walmart’s shareholders?

JIT – Just-in-Time or Just-in-Trouble?

Posted on by w13walney

The importance of managing risk through the supply chain has become painfully evident as a result of natural disasters which have occurred in recent months and years. Despite the obvious human cost and tragedy that ensued, catastrophes caused by the earthquakes, tsunamis, flooding, factory explosions and volcanic eruptions have all impacted enterprises who source globally, and who have embraced Lean/JIT practices at least to some degree.

The supply chain effects of these catastrophes have lead to a JIT rethink, but it is clear that many companies have failed to put in place back-up plans to cope with emergencies like the Japanese catastrophe. They were content to place all their eggs in one basket like Japan or China owing to low production costs while ignoring the obvious risks of natural disasters. But even where companies had a disaster-recovery plan in place, room for maneuver depends largely on the nature of the industry.

The production philosophy born on the factory floors of Japanese car companies is a global management practice and has saved companies billions of dollars. The idea behind JIT, or lean manufacturing, is to have the supplies a firm needs at the exact moment that they are needed. Most of the companies, with production systems based on just-in-time inventory management, understand keeping minimum inventory has its risks.

The problem for many global corporations is that they are mesmerized by cheap production costs in disaster-prone countries. They know the natural disaster risks but feel that their infrequent occurrences on a major scale justify the risks. Nature is not the only threat to the supply chain; there are also significant political risks to be considered in many politically unstable countries.

The rising production costs in China will favor a shift of production back to countries concerned to have a more secure source of supply unaffected by natural disasters. There are, however, other reasons favoring a production shift back to regions close to their markets, like flexibility to react to market changes more responsively.

There are number of avenues open to risk mitigation strategies to deal with large scale disruptions of supply chains, including:

–        Challenge suppliers to develop disaster plans so that they can make provisions to move to alternate sites for production, in the event that they are unable to produce product at their main plant.

–        Eliminate sole-source suppliers, and developing the capabilities of additional companies. Having one supplier is probably too few, but having five suppliers is too many in terms of achieving economies of scale.

–        Analyze where suppliers are located, and limiting the number of critical component suppliers that are geographically situated in a risky area.

–        Review insurance policies and consider taking-out contingent business interruption insurance that protects against losses relating to the inability of suppliers to deliver.

Experts have been recommending for years that manufacturers diversify their supply base. After all, recent history is full of examples of widespread supply chain disruptions and their consequences for manufacturers reliant on too few sources, such examples are: attacks to WTC and Hurricane Katrina in USA, flooding in Thailand, factory explosions in Germany, volcanic ash from Iceland and earthquake and tsunami in Japan.

References:

Japanese Earthquake-Tsunami Show Flaws In Just-In-Time

http://nhne-pulse.org/flaws-in-just-in-time-production/

Reducing Risk in The Automotive Supply Chain

http://businesstheory.com/reducing-risk-automotive-supply-chain-2/

Japan’s earthquake must force JIT supply changes

http://logisticswithballs.blogspot.com/2011/04/japans-earthquake-must-force-jit-supply.html

Auto companies relook at just-in-time mantra

http://articles.timesofindia.indiatimes.com/2011-05-18/india-business/29555380_1_shekar-viswanathan-toyota-production-system-tsunami

 Japan One Year Later: What Did Supply Chain Practitioners Learn from the Tsunami?

http://supplychainalmanac.com/2610/japan-one-year-later-what-did-supply-chain-practitioners-learn-from-the-tsunami/

3-D Printing

Posted on by w13trista

Mechanics and engineers have been using 3-D printing for several years.  Prototypes are printed during the Research and Design (R&D) phase as it is cheaper to print one prototype than have to pay to manufacture several only to find out that specifications may be slightly off.  Today more than 20% of goods printed by a 3-D printer are not prototypes, but actual products.  And it’s estimated that by 2020, this will rise to 50%.1

The process of using 3-D printing in the manufacturing industry is known as “additive” manufacturing whereby the manual construction of a prototype is known as “subtractive” manufacturing.  This is because utilizing software to print a prototype saves a lot of retooling costs that would otherwise eat up a large portion of the R&D budget.  3-D printing also saves time and raw materials since the printer is more precise and more efficient than cutting, molding, soldering, etc. by hand.

Not only does 3-D lower costs, but it also lowers risk associated with developing a new product.  Before, a manufacturer would have manufacture and sell hundreds and even thousands of a new product just to recoup the R&D and manufacturing costs.  With 3-D printing, the break-even point is lowered substantially.  This is good for consumers as well as more unique products may be brought to market for consumption.

Another cost savings of 3-D printing is the reduction of scrap waste.  During the normal manufacturing process, sheets or coils of steel may be used and the edges are considered scrap after the shape of the product has been cut out of the sheet/coal.  With 3-D printing, you hit a “print” button, much like a typical ink-filled printer we use today at home.  However, there is no scrap because the 3-D printer prints in layers, and only uses the raw materials necessary to make the object.

This article mainly discussed the 3-D printing of airplane parts, but there’s no telling how far this new technology will take other industries as well.

The world of 3-D printing is pretty amazing.  I was pretty impressed with the concept and found that it has opened a lot of doors for a lot of people.  Hobbyists such as jewelry makers can utilize a 3-D printer to print their designs.  What was once a hobby can perhaps turn into a small business.  And an architect at MIT is experimenting with the possibility of printing buildings!  In her experiment, the 3-D printer is able to print layers of concrete for the building construction.

Furthermore, human organs have even been printed with a 3-D printer!2  Ten years ago, a young boy was given a printed bladder.  The bladder was printed using a combination of synthetic, biomaterials and the boy’s own cells.  The boy would go barely go outside for recess and had been on dialysis for ten years went to become captain of his high school wrestling team and is now majoring in Communications at the University of Connecticut.  His quality of life improved drastically due to 3-D printing.  Other 3-D organs are currently undergoing testing before being approved for transplant.

In summary, I think the possibilities are endless.  It’s hard to believe that this technology has actually been around in manufacturing for at least ten years, but it’s not hard to see that it is taking off rapidly (and with great success) in many fields.  It’ll be exciting to see what comes next!  Which industries do you think 3-D printing may have the most impact on?

Sources:

  1. http://www.economist.com/node/18114221

2. http://blog.ted.com/2011/03/07/printing-a-human-kidney-anthony-atala-on-ted-com/

 

Manufacturing Taking a Turn for The Better

Posted on by f1222akrippinger


As I was growing up, as a kid in the early 90’s, I quickly learned that anything that said it was made in China was an inferior product to those that were made here in the USA.  However, even with this connotation of poor quality it seemed that every product that I came into contact with was made somewhere outside of the country.  Over these years, leading to this very day, the vision of these products has moved away from the poor quality of old.  Now it seems that what truly upsets us about products not made in with the USA is the fact that we have many of our own looking high and low for a job in the manufacturing industry.

In recent years it has seemed to have come nearly impossible to compete with markets like China, where it comes to manufacturing, with considerably low wages being received by their workers.  While wages in China are coming up, from an average of 58 cents per hour in 2001 and an estimated $6 per hour in 2015 http://www.csmonitor.com/Business/new-economy/2012/0510/As-Chinese-wages-rise-US-manufacturers-head-back-home, there is still a large gap compared to their American counterpart, at about $19 per hour http://www.trade.gov/mas/ian/MBU/index.html.  Even so, as stated in the Wall Street Journal article “Once Made in China: Jobs Trickle Back to U.S. Plants” manufacturing jobs are starting to make their way back to the good old USA.  The progress has been slow in the American manufacturing market after a 35% decline in jobs between 1998 and 2010 we have seen just a 4.3% increase since.  But, this increase that is expected to be about 3.2% this year compares to that of just 1.6% in all other fields.

These changes in the American manufacturing market have reasons that are not solely based on the increase in wages overseas.  It has been said that the American is more than 3 times more productive than that of their counterparts from China http://online.wsj.com/article/SB10001424052702304587704577333482423070376.html#project%3DSLIDESHOW08%26s%3DSB10001424052702304363104577390470454369272%26articleTabs%3Darticle.  Shipping costs are becoming increasingly more expensive and companies are coming out close to even, if not better off, manufacturing in America when these costs are put into play.  These factors and the fact that overseeing the physical production becomes worlds easier when it is taking place in your back yard are bringing manufacturing jobs, little by little, back to the USA.