AUGUST 4, 2013

VW’s plant in Chattanooga TN

Clustering is an interesting topic. In Orlando, over 70,000 people are employed in the theme park cluster that includes Disney, Universal, Legoland, Sea World, Gatorland, and more. This week, Universal Studios announced record profits after sinking a quarter billion dollars into the Harry Potter exhibit–and is adding yet another 1,800 room hotel to its site.The Wall Street Journal (July 31, 2013) adds to the discussion with an article titled “Detroit Was a Cluster”.

“Clusters,” writes The Journal, ”offer powerful advantages such as labor market pooling. But these potent synergies can be lost when special technological competence becomes outmoded.” With lean manufacturing, clustering has become more important in the auto industry, with suppliers required to be between one hour and one day’s drive of factories. A new cluster has formed, known as the “auto corridor” between I-75 and I-65, which still includes the upper Midwest but has pulled the industry’s center of gravity steadily south.

The reason is well known: The Japanese, Germans and Koreans located their plants in the South to avoid the United Auto Workers. Honda was the bellwether when in 1980 it picked Marysville, Ohio for its first plant. Honda was expected to be required to employ the UAW, but picked a site in rural Ohio with little union presence. The firm soon concluded that its production system would be impossible with union workers, and that a UAW workforce could be avoided without undue political consequence.

Even a decade ago, more than half of all auto production jobs were still in Ohio, Indiana and Michigan. Now it’s below 44%. Kentucky alone today claims 440 auto manufacturing-related businesses! The transplants made little secret of their motivation in passing up the substantial benefits of the then-cluster around Detroit. Every Toyota factory in the U.S. is non-union and all but one is in the South. Ditto Nissan, Mercedes, Hyundai, BMW and Kia.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

According to a recent survey by the Manufacturing Leadership Council, 13% of manufacturing executives plan to digitize their design/production processes, and social media tools represent an important component. By 2023, that percentage will rise to more than half. “What’s the goal of increased social media-based interactions, ” asks Cisco News Network? Manufacturers want to tap into valuable customer opinions, preferences and desires. They also want to encourage collaborations between employees, partners and suppliers in order to create better end products.

For example, Frito Lay offers one illustration of a manufacturer going directly to its core constituency for critical product feedback. The company collaborated with customers via social media to define and select the most appealing flavor ideas. Such combinations of crowdsourcing—a form of distributive problem-solving—and taste buds represents a novel, and completely different, approach to the use of social media in manufacturing.

At the other end of the spectrum, a range of more industrial companies are beginning to employ social media-driven, collaborative tools for their workforce.  Airbus offers partners and dealers a range of interactive procurement portals. These platform-based resources enable suppliers to describe their capabilities to Airbus buyers in addition to exchanging requirements and proposals online during the bid process.

Such social media trends extend even further. Industrial Mold and Machine in Twinsburg, Ohio makes custom molds for plastic bottle manufacturers. The company empowers its workers by providing an iPad-accessible Social Media platform for production-line quality control, design access and problem-solving.

It appears that more and more manufacturers will use collaborative Social Media technology to advance their operations through multiple, diverse collaborations.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.