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OM in the News: The New Industrial Revolution

June 16, 2013
The upper for Nike's Flyknit shoe

The upper for Nike’s Flyknit shoe

“Welcome to the New Industrial Revolution,” writes The Wall Street Journal (June 11, 2013)—a wave of technologies and ideas that are creating a computer-driven manufacturing environment that bears little resemblance to the gritty and grimy shop floors of the past. The revolution threatens to shatter long-standing business models, upend global trade patterns and revive American industry.

“Manufacturing is undergoing a change that is every bit as significant as the introduction of interchangeable parts or the production line,” says the head of GE’s global research lab. “The future is not going to be about stretched-out global supply chains connected to a web of distant giant factories. It’s about small, nimble manufacturing operations using highly sophisticated new tools and new materials.” The upheaval is accelerating thanks to the convergence of a number of trends: the low cost and accessibility of Big Data associated with cloud computing; the plummeting cost of electronic sensors and microprocessors that can be used to make machines more adept; and software advances that allow a whole new level of manufacturing precision.

To get an up-close look at how the new technologies are already disrupting the old ways of doing things, consider Nike’s Flyknit shoe. As high-tech as some sneakers may be in materials and appearance, almost all of them are still made on assembly lines that put heavy emphasis on human labor. Workers sit side by side in enormous facilities, cutting material and stitching and gluing shoe components together. But with new technology, Nike has begun to make a shoe with just a few parts instead of dozens– and with up to 80% less waste. Out of the blue, the reason for making shoes in low-wage countries begins to evaporate and the advantages of locating the machine closer to the customer—in part for faster delivery—begin to loom much larger.

Boston Consulting Group just published a report predicting that as much as 30% of America’s exports from China could be domestically produced by 2020.

Discussion questions:

1. What is the “new industrial revolution”?

2. Will the number of manufacturing jobs in the US increase dramatically? Why?

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