‘Antifragility’ Meets Manufacturing: Turning Crisis Into Opportunity
Every so often, we are reminded that modern manufacturing is actually quite fragile despite years of optimization. The coronavirus pandemic has provided a brutal reminder of this fact, but significant manufacturing disruptions are not new. We could have learned this lesson in 2008 when both Dell and HP faced shortages of laptop batteries after a single factory caught fire. Or in 2017, when Hurricane Maria shut down the production of IV equipment in Puerto Rico, causing shortages nationwide. A global pandemic and a rising tide of unstable trade agreements, in addition to disasters both natural and human-made, all but guarantee that constant interruption will be manufacturing’s new normal in the coming decade.
To get through the next disruption – as well as this one –we can’t keep doing things the old way. In his 2012 book, Antifragile: Things That Gain from Disorder, Nassim Taleb purports that we must learn how to make ourselves anti-fragile, rather than merely less vulnerable to randomness and chaos. By actively preparing ourselves for nonlinear events, we can learn to take advantage of stress, errors, and change, all of which are inevitable.
Ironically, manufacturing’s vulnerability lies in the optimizations developed over the many years since the industrial revolution. The first optimization was learning how to make large quantities of a product repeatedly—a mechanization capability. The second optimization, linked to the first, was creating large, physical spaces (aka factories) designed for production, and large labor forces trained to work in these environments. The most recent optimization, enabled by shipping lanes, digital networks, and global trade agreements, was the ability to locate factories and labor anywhere in the world. The cumulative effect of these is that manufacturing now relies on vast physical spaces and low-cost labor.
That means you’re in trouble, obviously, when access to your physical space is no longer possible. You’re in trouble when your labor force is impacted by a pandemic, a climate event, or a global conflict. And you’re in trouble when the demand for your product suddenly drops, and you’ve got a large workforce and physical space sitting idle.
To be anti-fragile, manufacturers need to build a data-driven, all-digital infrastructure that is inherently scalable—both up and down—in response to demand. That infrastructure needs to be equally flexible in terms of the actual items that are being manufactured, and where that production takes place.
Radical supply-chain transparency
One key to the success of modern e-commerce businesses has been their ability to connect customer demand to fulfillment. Ride-hailing applications instantly display their “inventory” to potential customers and the set of waiting customers to their drivers, instantly connecting demand and supply. Amazon’s ability to connect its e-commerce website with its warehouse and shipping logistics capabilities gives it an edge over competitors.
Modern manufacturers need to make similar investments in understanding their customer demand as well as their visibility into inventory, supply chain availability, and performance. All manufacturers should be able to answer basic questions about their supply chains: How long will it take to respond to a surge or drop in customer demand? How many components are set aside for you on a daily or hourly basis? If you need a second source, how much capacity will they have? If you can’t answer these questions, it’s time to invest in infrastructure that will give you greater visibility into your supply chain.
Automation is the key to building flexibility and scalability in responding to real-time changes in customer demand and in the supply chain. Using sensors and advanced software, machines can be instructed to build different products in different locations. And because the infrastructure to manage these machines is now digital, it can be managed remotely.
Management by console
Over the past two decades, the world of IT has moved outside the server room. Data centers, applications, users – these are all managed using software consoles. The workers who use these consoles can be located anywhere, and, increasingly, the consoles can manage themselves too. These days, when an application runs on a server and that server goes down, its workload automatically switches over to another. When the load increases, another server is added, and so on.
This is the future of manufacturing. Sure, it’s easy to dismiss the idea of data-driven, digital, and automated manufacturing as a fantasy. But this change has happened in many other industries – in IT, defense, retail, and logistics, for starters. Manufacturing is not going to be an exception. It’s a question of when, not if.
By changing our mindset and our manufacturing practices, we’ll have shown that a crisis really is an opportunity. And we’ll have demonstrated that we were able to seize that opportunity to build an antifragile infrastructure—one that enables us to create great products and continually renew our competitiveness, long after this current disruption, and many others, have passed.