STIMS Institute offers its vision of 21st Century Manufacturing.

CEO Dialogue 2I

In a recent CEO Forum organized by MGTL, Dr. K. (Subbu) Subramanian, President STIMS Institute Inc., offered his vision of the 21st Century Manufacturing and outlined the need for requisite work force skills to meet the emerging needs. This forum was held at Pune, India on Nov. 21, 2014. For a complete presentation, please see: Manufacturing in the 21st Century

Few excerpts:

  • “Manufacturing” is a collection of (a) physical processes enabled by a host of (b) information processes and aided by a collection of (c) pick and place and transfer processes, which at the moment are a combination of physical events and information events.
  • Core capability for any manufacturing:  repetitive use of physical processes, to achieve or USE the “Product” at the required quantity, place and time to meet the end user needs.
  • Manufacturers have two options: (a) Steady improvement in the processes already deployed; The result is a constant reduction in the explicit knowledge and skill required with respect to the Physical Processes used. Over time, they have become the black boxes surrounded by a myriad of service processes, which are generic and practiced in all companies and industries. (b) Introduction of a stream of new solutions resulting in New Products, New Processes and New Applications/ USE. These new solutions are the result of intense knowledge of the physical processes unique to the manufacturing company.
  • Breakthrough – step change – solutions will be expected as a routine output of manufacturing professionals of the future. But, in order to sustain such improvements the process has to be managed as a whole – as a system. Constant tweaking or small changes in the system which disturbs the equilibrium of the process cannot be tolerated, if maximum impact is the desired outcome. This will require manufacturing professionals who are simultaneously good at process science as well as process economics, with expertise to integrate knowledge from all available sources.
  • We find two parallel chains operating across all manufacturing companies (i.e.) Supply Chain which deals with the information processes that interconnect the various tiers of manufacturers and Functional Value Chain, where the physical processes and their exploitation play a silent but foundational role across the manufacturers.
  •  Since the products are enables by processes and the USE is also a process in a manner of speaking, we are left with “Process and its knowledge and the capability to manipulate any process” may be the primary core capability or skill set of future manufacturing professionals! The role of human labor and their employment in large numbers is not a critical need in this description of manufacturing. It is important for policy makers to make note of this subtle but significant point.
  • Work force skills required for 21st century manufacturing:

Manufacturing Processes

Traditional Sources of Knowledge

New Knowledge Required

 Traditional Worker Skills

 New Worker Skills Required

   Physical Processes Engineers and shop floor workers with technical training, trade skills and academic education. ·  Process Science·  Diagnostics·  Data and   Analysis·  Sector specific know-how Engineers with years of experience located close to the shop floor operations ·       System Thinkers and Solution Providers Reliant on Process Science·       Reliant on sensors, signals and their use.
 Information Processes Collection of tasks that evolved through the years ·       IT·       Data Base·       Big data·       Analytics White Collar Workers with standard plug and play IT solutions ·       System Thinkers·       Solution Providers·       Customized IT solutions
  Pick and Place / Transfer Processes Industrial work force through many years of training and hands on experience. ·       CNC, Robotics and AGV·       Drones ·       Blue collar workers·       Standard work and tasks·       Physical effort and de-skilled operations. ·       System Thinkers·       Solution Providers·       Comfortable in virtual control environment

Learn to swim against the tide of Binary Economy

It is an undeniable axiom of globalization: anyone in any job or profession has to be better than anyone else who can do the same job from a pool of workers across the globe. Conversely, those who can do a job in a similar manner to others around the globe will be rewarded for their effort at the lowest value at which the work can be procured from anyone else across the globe! Every worker will fall into one of these two extremes. Anyone in the middle will be ultimately swept to the low-labor-cost pool.
While there will be a natural tendency to be swept into the lower-wage pool, it will require a special effort to swim against the current to be associated with the limited few in the high-wage, high-reward pool. Swim against the stream and reach a high place (of New Solutions with identifiable impact) or be swept away into the global pool of low-cost resources (needed for Replication Solutions) is the true paradigm of globalization. There is little or no opportunity for treading water in this paradigm. This constant struggle to swim upstream and against the current is what is perceived as the volatility and uncertainty in the workplace. Suggestions such as higher education, higher SAT scores, and more grit and perseverance are all means to the same end. But as we have detailed in our book – see the links below – all of these have to be formatted toward identification, development, and exploitation of New Solutions using Transformational Skills as the means to this end.

Do you know your “core” capability?

Are you the owner of a small or medium sized manufacturing company? Are you the head of a profit center or a Business Unit that is part of a company group? If you are, it is very likely that you are one of the business leaders, trying to find ways to keep your business above water. Some of you may be concerned about growing your bottom line and in rare occasions seeking ways to further grow your business. But, no matter what your needs are, it is certain that you are facing the stiff winds of global competition, cost pressures, challenges from outsourced operations and above all a sense of uncertainty about the future.

We believe that such pessimism and the sense of gloom and doom about manufacturing industries and their future is not warranted. It is true that there are stiff head winds and it is also true that the waters are turbulent. But, you are not up the creek, with out a paddle!

Have you ever sat back and asked yourself, “How did we (your business unit) get here?” No, I do not mean, how you got into a situation of stiff competition and low profit margins and high costs. These are all obvious and readily known to every one. But, have you figured out how your business or operation grew from its beginnings to where it is today? It did not happen by chance or by some luck or through magic! It happened because you and your people along with your suppliers and your customers contributed their share of knowledge and know-how that resulted in the products you manufacture, the processes you use to make them and also the applications know-how through which your customers use your products. The “Products. Processes and Applications knowhow” are your core capabilities. These core capabilities are embedded in the knowledge of many people connected with your company – through your employees, suppliers and customers and their customers.

You might say “It is indeed true that we did not grow out of thin air. We built our company, brick by brick though our products, manufacturing process capabilities and our know-how to help our customers use our products better. Then, whatever happened to my business or operation, over the years? Why are we struggling today with low profitability and shrinking margins and low to no growth?” One can ask such valid questions and wallow in misery or merely be nostalgic about the good old days for ever. Instead, you can muster the passion to dig deeper.

Your product is not any widget you put in your shipping box. It is not merely something you identify by a product number or a bar code. Product is something of value to some one (the user), who is willing to pay you (the manufacturer) something of value to you. Can you describe your “Product” using the above definition? Is there any one in your sales, product design/development, manufacturing/production, tech-support or general management who can describe your product in terms of the value to your customer and the expected value for you in return? Do you know who they are? Do they all have the same understanding of the user value and manufacture’s value or are they speaking over each other in different languages? Your journey for the future can start right here and now, by developing a common definition of your “Product” and developing a core team across the business functions that speaks the same language about your product.

How well do you know your Processes to manufacture your products? They are not “black box” that nobody knows anything about, after Joe Smith retires from the company! All processes in your manufacturing floor have well defined Inputs, which are converted into Outputs. All processes are “Input/Transformation/Output” system. No, we are not talking about Ph.D language. In the past years, few who knew about the process could tweak them and keep them going, while others were simply pairs of hands to help them out. We can not do that any more. All processes can be diagnosed (using proper sensors and IT tools for measurement), repaired, improved and in some cases changed dramatically. But, you can not do any of the above, if you think that the processes in your shop floor are merely “black box” put in place by some one who left the company years ago! Your journey for the future can start right here and now, by developing a common definition of the key “Processes” in your manufacturing floor and developing a system view of these processes across all the business functions that support such processes. You would not like to see any medical professional with out a stethoscope and a thermometer. Then, why would you not want all your manufacturing process professionals have similar capability to measure and diagnose and cure the problem with respect to your processes and their health?

How well do you know your customer’s processes (Application) and how you can add value in their processes through your products? If software is the enabler of all the growth and success in the IT industry, you can make your AT (Applications Technology) as the enabler for your growth and success in the manufacturing industry. AT helps you to build alliances with your suppliers and customers towards building solutions of shared benefits. If you have treated your process as a black box, it is likely that your customers have done the same with their processes. It is about time, you helped them to do a “health check up” on their processes, while they use your product. After all, strong and healthy customer process is essential for your long term strength and success.

Product, Process and Applications know-how are your core capabilities, which got you where you are today! They are the bench strength of your team. You can do more or less with them enabled by all the plug and play IT capabilities. But, you can not build a manufacturing industry with out the brick and mortar (i.e) Product, Process and Applications Technology. Have you taken the time to cultivate them? If not, may be it is time for you and the key personnel in your team to go through the “Core Capability Boot Camp”?

Methodologies for “Problem Solving”

Recently we came across the article titled: “How to master the seven-step problem solving process: Structured problem solving can be used to address almost any complex challenge in business or public policy” from Mckinsey & Co.  This article makes a very useful and interesting reading material. Below is a table that shows the alignment of the STIMS Strategy for System Thinking and Transformational Skills as well the as the differences.

STIMS strategy emphasizes knowledge integration across the disciplines of Science, Engineering and Management, skills which are dependent on collective core capabilities of human resources involved in the project and problem solving. STIMS Strategy also requires treating every problem as a “System” and handling the solution at three levels: Awareness, Analysis and Synthesis.

The referenced article also makes reference to the “Design Thinking” methodology. The table below provides a comparison between this methodology and the STIMS methodology for System Thinking and Transformational Skills.

Figure 1
Figure 2.
McKinsey: seven-step process Institute: System Thinking and Transformational Skills.
1.Problem definitionDevelop a Common Language:  Define the “problem” as Input / Transformation / Output system. (See Figure 1)
2. Use logic trees to disaggregate the problem. (e.g.): “How can we save Pacific salmon?”Decompose the outputs between the “What?” – the deliverables (TECHNICAL Outputs) – and the “Why?”- value /benefit for the user (SYSTEM Outputs). This is the STRATEGY behind the solution. Transformation = The “SCIENCE”, the causal  connection between the inputs and the outputs;
ENGINEERING is the application of the “Science” to achieve the deliverables Problem and its solution = Knowledge Integration (Across relevant Science, Engineering and Management (Strategy) relevant to that problem.
3. Rigorous prioritization—we ask the questions “How important is this lever or this branch of the tree in the overall outcome that we seek to achieve? How much can I move that lever?Decompose the “inputs” in four categories: Investment / Expenses / Need / Constraints  or Platform (Hardware) / Tooling (Software) / Need / Specifications
Machine / Tools (Supplies) / Component / Parameters.
Develop tools and methods to validate the “Science” and the “Strategy”
4. Work plan: Depending on what you’ve prioritized: It could be breaking the work among the team members so that people have a clear piece of the work to do. It could be defining the specific analyses that need to get done and executed, and being clear on time lines. There’s always a level one answer, there’s a level-two answer, there’s a level-three answer.  One can solve any problem during a good dinner with wine. It won’t have a whole lot of backing.Complete the STIMS Diagram. Identify the gaps and find the data and resources to fill the gaps: This step leads to a natural formation of inter-disciplinary Team (Eco-system) across relevant resources inside the company, across companies and other players. Develop a “Hypothesis” – science based model – based on real life data. Demonstrate the hypothesis and its modifications: Using a controlled “testing” or “incubator” unit. More rigorous the understanding of relevant Science and Engineering more accurate and reliable is the testing and validation. At this stage the TECHNICAL Outputs and how to achieve them (in a scaled down version) are well established. Scale up the testing unit to achieve the desired outcomes – the SYSTEM Outputs.
Some people think of problem solving as a linear thing, but of course what’s critical is that it’s iterative.System Thinking involves three levels:
AWARENESS (of the problem as a whole) – Steps 1and 2 above.
ANALYSIS (of the problem in terms of relevant Science, Engineering and Strategy) – Steps 2, 3 and 4 (See Figure 2).).
SYNTHESIS (Knowledge integration and delivery of SYSTEM outputs) – Step 4
It’s also the place where we can deal with biases. Bias is a feature of every human decision-making process.Bias is an outcome of subjective (task oriented) approach for problem solving; System Thinking (and related knowledge Integration) is non-personal and hence distances human bias from the solution process. However caution must be exercised with respect to bias due to lack of relevant knowledge (Science, Engineering and Management (Strategy / operations) – core capabilities) behind the problem and its solution.
5. AnalysisSee Step 4
6. and 7.
Synthesize the pieces that came out of the analysis and begin to weave those into a story; That helps people answer the question “What should I do?” Motivating people to action
Synthesize the solution at three levels or scales:  
Feasibility demonstration (Bench Scale) where the Science is validated.
Scale up where the Engineering (and its constraints) are established.
Full scale implementation where the SYSTEM outputs (from Item 2 above) are validated.
“Design Thinking”:
Start with an incredible amount of empathy for the user and use that to define the problem; go out in the wild and spend an enormous amount of time seeing how people interact with objects, seeing the experience they’re getting, seeing the pain points or joy—and uses that to infer and define the problem.
System thinking and Transformational Skills (Seven steps):
1. Develop a common language: Define the problem as Input / Transformation / Output system
2. Decompose the “problem” into relevant Science / Engg. / Mgt.
3. Distinguish between “deliverables” and “Value/benefits” – end user experience (Technical Vs. System Outputs).
4. Emphasize on Science and Strategy;
Rely on diagnostic tools, in-process (real life) data and analysis.
5. Eco – system Development (Every solution requires many partners both inside the company as well as outside).All partners in the eco-system are connected through the common Science, Engineering and Strategy (System Outputs).
6. End to End Innovation (Awareness to Analysis to SYNTHESIS)
7. Emotional Intelligence (for innovation and problem solving)

Transformational Skills that are critical (and missing today) in many service engineering / science solutions.

           Take for example the customer experience when one calls the “Call Centers” for any help such as your cable TV service or phone bill or whatever. The automated systems are designed to minimize interaction with human respondents at all cost. More efficient and modern the system, more are ways of routing the customers internally to as many automated options as possible. Only the most ardent and persevering customer may get through. The rest will give up merely due to sheer fatigue! :-(         

In all of the above the “customer” is designed into the system as the “enemy” to get rid off as fast as possible. The myriad of options the company deals with have to be sorted through by the customer by listening to the endless pull down menu presented in so many ways. Poor application of data science on the part of the programmer is inflicted as the burden on the customer in the above interaction!          

In the mean time and when the customer finally gets through to a real live person, the poor call center workers are trained to say “Is there anything else I can help you with?” when the original problem is not resolved or left to the next agent. These call center workers are endless chain of people with responsibility to communicate without any authority to resolve the issue on hand.         

All of the above suggest a need for (a) Common Language (b) System thinking or integrated view of the problem from a larger perspective vs. task oriented actions seen as the “job”) (c) emphasis on End to End innovation and (d) Emotional Intelligence that treats customer as one with a need (instead of merely as a source of data). These are four of the seven Transformational Skills essential to be practiced by the service solution developers (who are in most cases technical professionals). For more details:

Ethics and AI

Recently I attended an on-line seminar on “Ethics and Artificial Intelligence (AI)” by Roberto Zicari (Prof. of DBIS) – Goethe University Frankfurt) on the need of an Ethical AI Due Diligence.

It was an interesting seminar that addressed the issues relevant to measurement and management of ethics in the development and use of AI Tools. As a result of this seminar, I was motivated to ask the question: Ethics is a matter of philosophy. Do we need a sustained education on Philosophy and the related topics on Subjectivity Vs. Objectivity as part of AI Technology education? The speaker acknowledged the need and pointed out some effort in this direction in the academic circles.

Following are some reflections on ethics and philosophy:

We have discussed earlier that Philosophy is an in-depth analytical study of any subject matter:

It is not a mere coincidence that the highest degree awarded in any field of study is called “Doctor of Philosophy”. The best researcher in any field has the best KNOWLEDGE of the laws of nature at play in that field, the limitations (IGNORANCE) of such knowledge and possible wrong or erroneous interpretations (BIAS) of the same! The same can be said of any true professional – the best engineer, doctor, surgeon, musician, carpenter, etc.  The knowledge, bias and ignorance are the three connectors through which we relate to the subject matter. The process of understanding these connectors, when it is explicit and analytical and quantitative, we call the process as “scientific”. The more intuitive and inferential the process, we call it as “Common sense”.  

The relative proportion of the three co-existing connectors – Knowledge, Bias and Ignorance – with respect to the subject on hand and the dominance of one is not always easy to identify and separate out. If we observe carefully, we find that our “education” of every kind is intended to facilitate our skills to identify these three connectors, their relative proportions and how to sort them out! One who is good at this skill (to identify these connectors in any given field) becomes “expert” in that field of study.

This process of search for the three connectors and their relative proportions can be precise, only when there is equal weight placed on all three connectors! Consideration of all evidences with equal weight and emphasis on all three connectors – knowledge, bias and ignorance – is called “Objectivity”. An objective person is not swayed by his/her knowledge nor tends to understate or diminish the evidences pertaining to bias and ignorance. An objective frame of mind treats all three connectors with equal weight or merit.

The characteristic features of Knowledge, Bias and Ignorance have been outlined earlier:

  Knowledge Bias Ignorance
Features or key characteristics of the three Connectors (Guna). Knowledge adds illumination and clarification of the situation or problem on hand Bias arises out of personal needs and wants and our attachment to them. Ignorance is driven by illusion, fantasy or irrational expectations.
  Knowledge binds a person through genuine sense of happiness Bias binds a person to endless chain of activities Ignorance binds one through lack of directions.
  Knowledge can be recognized through the happiness and contentment based on the well-being for all. Bias can be recognized through associated endless chain or recurrence of additional activities, without a sense of closure, satisfaction or fulfillment. Ignorance shrouds the knowledge and leads to lack of direction.
How can one perceive the dominance of each connector? When knowledge, illumination or comprehension is perceived in every aspect of the subject matter and its functions, one can recognize that through the tranquility that follows. When Bias is dominant the subject matter or activity is drawn into greed or desires of endless nature, driven by intense personal needs, initiation of innumerable activities due to a lack of satisfaction or contentment, unease and longing. When stagnation or inactivity prevails, the result is ineptness, lack of direction or sense of purpose and illusion (attraction born out of ignorance).
At a time of crisis or when a decision needs to be made,  the dominant connector leads to: True Knowledge transforms a person to a higher plane of existence (of total self-control and unattached active participation). Bias leads a person to more activities, merely as a means to satisfy growing personal wants and desires which continue to remain as unfulfilled. Ignorance leads one to the vicious cycle of being shrouded by ignorance
The result or fruit of dominance of each Connector: Proper or virtuous acts and purity or clarity  Sorrow. Depression and despair
Each Connector Leads to:  Knowledge and understanding  Greed Lack of direction and illusion
Accomplishment of the intended purpose by the persons under the influence of each connector: Rise to the higher level (through greater levels of engagement of self-control and the reasoning and logic that occurs as a result) Stay in the middle (due to the self and its reasoning being constantly over ruled by attachments and its insatiable needs and wants) Sink to the lower level (since the reasoning and logic of the self never occurs, like the fire being shrouded by the ashes eventually gets quenched).

Now let us discuss the relevance of these three connectors with respect to “Ethics”. Whatever we learn on this aspect would be applicable as it pertains to “ethics in any subject” including AI.

Let us begin our discussion by first defining the subject matter. AI is often thought of a solution using the tools of Machine Learning and Data Science. The AI proliferates depending on the data, its collection methods, tools for analysis, etc. To keep it simple let us state that the end result is a “solution” and its use. Ethics will be of concern during the development of the solution, its application / use, benefits achieved of value to the developer of the solution as well as the user and finally the impact of the solution and its benefits to the society at large. This chain of events is illustrated in the schematic diagram as noted above.

While ethics is often thought of as the impact of the solution on the society at large, such focus will be like attempting to lock the cattle inside after the barn door has been left open for a while! In many respects this might be the ignorance as it pertains to ethics and its management. In fact, ethics must be taken into account at every stage – from solution development, testing and USE or deployment – keeping in mind the impact to the developer, user and the society at large. This emphasis on benefit at large (which in turn also leads to the benefit to the self) may be described as the Emotional Intelligence for innovation. For details:

Focus on ethics at every stage of the innovation process also requires a passionate engagement of professionals in areas beyond their comfort zone. It is natural for engineers and technical professionals – often computer scientists – to think of their work as “technical” and leave all the rest to “others” to worry about. This bias and attachment to partial knowledge is often the source of problems that manifest as larger issues. The same can be said of ethics and how it is impacted by the bias or task oriented approach to solution development and implementation of AI solutions. To overcome such limitations of bias, it is imperative to teach and train professionals on “System Thinking” and its comprehensive understanding:

Once we have minimized the ignorance and bias as described above Knowledge pertaining to ethics permeates. Ethics is no longer seen as an afterthought, but built into every phase of the solution development and deployment. Such effort is preceded by comprehensive description and definition of the entire solution chain. Ethics is no longer a thought or task to be carried out. Instead ethics becomes a way of life, the life blood of every professional at every level engaged in the solution. Taken in abstract, this statement may sound Utopian. But, when efforts are made and education is provided to minimize the ignorance and bias as described above, ethics as a way of life, ethical solutions as the only acceptable solutions become a natural and accepted practice.

System Thinking and Emotional Intelligence are part of a set of seven Transformational Skills described in two books:

Rendering a human touch to smart manufacturing!

Rendering a human touch to smart manufacturing


If we can treat the Physical Processes in the manufacturing shop floor as human beings, then much of the information management practices may be applicable to the manufacturing sector as well. This humane treatment of machines and manufacturing processes may be the next generation Smart Manufacturing?

“Value Manufacturing” Vs. “Volume Manufacturing”.

Recently I came across an article Stories&pgtype=Homepage

Following are few extracts from this article and our views:

“To start building their damn computers and things in this country,” Apple is unlikely to bring its manufacturing closer to home. A tiny screw illustrates why?

When Apple began making the $3,000 computer in Austin, Tex., it struggled to find enough screws, according to three people who worked on the project and spoke on the condition of anonymity because of confidentiality agreements.

In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not.

Tests of new versions of the computer were hamstrung because a 20-employee machine shop that Apple’s manufacturing contractor was relying on could produce at most 1,000 screws a day.

Chinese suppliers shipped their components to Texas. But in some cases, the Texas team needed new parts as designs changed, and engineers who were tasked with designing the computer found themselves calling machine shops in central Texas.

That is how they found Stephen Melo, the owner and president of Caldwell Manufacturing in Lockhart. Employees of Flextronics, the company hired by Apple to build the computers, in turn hired Caldwell to make 28,000 screws — though they would have liked more.

When Mr. Melo bought Caldwell in 2002, it was capable of the high-volume production Apple needed. But demand for that had dried up as manufacturing moved to China.He said he had replaced the old stamping presses that could mass-produce screws with machines designed for more precise, specialized jobs.

He made do with his new machines, although he could not make the exact screws Apple wanted. His company delivered 28,000 screws over 22 trips. Mr. Melo often made the one-hour drive himself in his Lexus sedan.

Let us look at the above story a bit closer. There is a real story behind this simple minded statement that Apple is unlikely to bring the manufacturing back to the U.S. shores because of a few small screws!

Manufacture of small lots of custom screws on demand is different from manufacture of large volume lots for mass manufacturing. 

Apple did enjoy and does enjoy the luxury of custom manufactured items at low cost and short lead times in China thanks to many factors listed in the article – low labor cost, massive investment by Chinese Government in the manufacturing sector, authoritarian rule that can flex its muscle at will to make things – even custom manufacturing – happen on demand and at will.

If U.S. manufacturing has to take hold again, U.S. Government and Apple as the end user must invest in such mass customization resources for manufacturing.  But this investment has to be well thought out – between “Value Manufacturing” and “Volume Manufacturing”.

As noted in the story above, Apple had a good source for quality screws in the USA in 2002. When they shifted their manufacturing to China, the local manufacturer had to shift their production capability. Now Apple cannot expect to rely on its old friends in US, without systematic rebuilding of the needed eco-system and capabilities. These are the shortages in the planning for manufacturing in the USA. PLEASE DON’T BLAME THE TINY SCREWS!

The screw shortage was one of several problems that postponed sales of the computer for months, the people who worked on the project said. By the time the computer was ready for mass production, Apple had ordered screws from China.

Read the above carefully and again! Apple did not strive to work on the manufacturing infra-structure. Instead they chose to ship their procurement to China! Detroit was not built as the automotive capital of the world by large manufacturers fleeing away from Detroit at the drop of a dime. This eco-system development has to be one of Transformational Skills for the return of US Manufacturing base.

The challenges in Texas illustrate problems that Apple would face if it tried to move a significant amount of manufacturing out of China. Apple has found that no country — and certainly not the United States — can match China’s combination of scale, skills, infrastructure and cost.

Above is an opinion stated as a fact. It is true that China has a unique combination of scale, skills, infrastructure and cost. But these advantages are not eternal or cast in stone. These are relative advantages gained through investments – both private and public – over a period of time. Since the late 70s US Govt. and the private sector as well as the educators have given lip service to these factors, the essentials for manufacturing competitive advantage. Now we are complaining that the barn is empty after having left the door wide open for decades. The answer is not to state that China has these advantages as a foregone event. Instead discussions and investments have to focus on how to corral more horses and fill the barn. It will require mfg. infra structure investments worthy of a leading global power. But we are far from any thought or discussions in this direction.

“In the U.S., you could have a meeting of tooling engineers and I’m not sure we could fill the room,” he said. “In China, you could fill multiple football fields.”

The above statement means nothing. Today there are conferences on Brain and Cognitive sciences or Computer forum in the USA that attract over 30,000 attendees. Engineers are also people who will converge where they see opportunities. Let us create the right climate and opportunities in order for people to be attracted to that field. For over four decades there has been a drum beat of news coverage to describe everything “manufacturing” as “brick and mortar”, “legacy technologies”, etc. With that kind of beating down it is no surprise there are few left in the US who are proud to stand up and proclaim themselves as “manufacturing professionals”.

Kristin Huguet, an Apple spokeswoman, said the company was “an engine of economic growth in the United States” that spent $60 billion last year with 9,000 American suppliers, helping to support 450,000 jobs. Apple’s Texas manufacturer, Flextronics, did not respond to requests for comment.

If Apple invested so much in the manufacturing infrastructure in US and they could not get the screw they needed at the right time, place and quantity, does it reflect on Apple’s effectiveness in their supply chain management as much as it reflects on the Supplier base?

Mr. Cook often bristles at the notion that iPhones are Chinese-made. Apple points out that Corning, at a factory in Kentucky, makes many iPhone screens and that a company in Allen, Tex., makes laser technology for the iPhones’ facial-recognition system.

The above is the most interesting and valid point pertaining to “manufacturing” in the USA. The Gorilla Glass from Corning is a great example of the kind of success one can envision in US Manufacturing – high value added products, design, services, capabilities, manufacturing resources. Instead of treating all manufacturing in one bucket, it may be necessary to discriminate between “Value addition” Vs. “High Volume low value added manufacturing”. As an example in the disk drive industry, the hardware for thin film heads are manufactured in the USA as hundreds of heads nestled in a single substrate. After this high value added manufacturing, a large amount of large volume fabrication and assembly are carried out off shore using low cost labor.

Mr. Cook has also disputed that cheap labor is the reason Apple is still in China. But it doesn’t hurt.

There is nothing to be ashamed of in using low cost labor where it counts. Low cost labor is a reflection of the prevailing standard of living in the given country or region. As long as there are lower cost resources – products, suppliers, labor, etc. it is imperative for any manufacturer to take advantage of that. But, what do you do and how do you take care of the people on whose back you built your company and products is a moral question that must be addressed by the manufacturer (seeking off shore resources) as well as the Government. The profit made on low cost manufacturing comes from the earlier work of people in home countries who invested their skills and toil leading up to the high volume manufacturing stage. Today the manufacturers (Capitalists) and the Government (ruled for and by special interests and lobbyists) are morally deficient. That is the reality, which this article, the author of the referenced article and the media at large miss when they discuss manufacturing.  I have witnessed highly skilled workers travel to China to set up plants and train the workers there only to find their pink slips on their return. This lack of empathy, moral commitment and emotional intelligence on the part of the Capitalists and the Government has to be the critical issue to be addressed ASAP.

A former Apple manager who spoke on the condition of anonymity said the Flextronics team had also been far smaller than what he typically found on similar Apple projects in China. It was unclear exactly why the project was understaffed, the manager said, speculating that it was because American workers were more expensive.

Insufficient resources in a supplier are a reflection of poor Project Management. Speculating on higher wages of the US workers (which is an obvious constraint) as the reason suggests a total lack of understanding of the basic principles of Supply Chain Management! SAD!!

Another frustration with manufacturing in Texas: American workers won’t work around the clock. Chinese factories have shifts working at all hours, if necessary, and workers are sometimes even roused from their sleep to meet production goals. That was not an option in Texas.

How could one write such hypocritical views and then print that as well?

American workers won’t work around the clock” is a self-full filling prophecy? Has anyone seen the millennials who work in the Bay Area or in the startup companies across the globe? Aren’t those hundreds of workers who travel across the globe to get their job done evidences of US workers who are ready to lose their sleep to meet their goals? Aren’t those employed today in manufacturing sector in the USA working days and sleepless nights just to keep their jobs, pay checks and hence put food on the table?

Ms. Helper said Apple could make more products in the United States if it invested significant time and money and relied more on robotics and specialized engineers instead of large numbers of low-wage line workers.

Ms. Helper and Apple may need to look at their “manufacturing” in a holistic manner and segregate the ”Value intensive” aspects of their manufacturing Vs. “Volume intensive” aspects of manufacturing and then foster infra-structure and invest plans in alignment with these two needs. This may not automatically imply robotics vs. low wage workers. This will certainly require high skilled engineers who are System Thinkers with Transformational Skills.

She said government and industry would also need to improve job training and promote the development of a supply-chain infrastructure.

Everyone can agree on these needs. Let us hope that Apple (and other manufacturers) and the US Govt. can work collaboratively on these needs.

But, she added, there is a low chance of all that happening.

Sadly this is also the fact and reality. But, to articulate the above needs is also the role of the Media. Let us hope we can read more of articles reasoned on real needs as opposed to glib statements, full of opinions and pre-conceived notions as noted in this article.

High Tech. Vs. …..?

After having moved recently I am often asked how do I find living in the Bay Area or what is new or different? Something caught my attention this morning as I was flipping through the Sunday morning shows. After “Meet The Press”, the nationally televised TV program, the local channel had a 30 min. program which covered the following:

  • Electric Vehicle and the subsidy and its future;
  • A startup Company providing electric charging services at department stores and shopping malls.
  • Low frequency radar to guide vehicles vs. laser assisted radar (LIDAR) system for driverless cars being developed by a startup Co. founded by a Physicist from MIT;
  • A startup venture capital Co. that works on behalf of banks to fund very small and small companies.

Every topic was covered in depth and with language jargons that will make any nerd happy and proud.

For example the disappearing subsidy for Electric Vehicles was discussed not as a hand out, but a way to reward success. Subsidies ran out since it was meant only for 200,000 cars and Tesla blew through that quota early on.

The electric charging services Co. is not an energy utility Co. at all. Instead it is an IT based Co. much like Airbnb with no investments in physical infra structure! The discussion on business model and market segmentation will easily blow away any MBA from a top school!

During the discussion on low frequency radars I learned all the details on how they work, why they are safe (since they are mm wave low energy beams) and the entrepreneur prediction that Automated Driverless cars will be here to stay in ten years! I couldn’t not believe that I was hearing details on analog Vs. digital signals in a TV Channel program!

The startup VC Co. CEO explained why the banks are not doing this investing directly and were relying on this middle man Co. His explanation of data base and how it is used was amazing.

All in all, a fast paced show; music for someone proficient in science and technology.

But I was also wondering how far away is this show from the stuff covered in the main TV channels in East Coast? Believe me what I saw was a mainstream TV program in the Bay Area, CA. not a Geek show. It was not Science Friday on Public Radio channel.

Wonder how these topics and subject will ever be covered in the TV channels in middle and rural America? How will the larger popiulation in USA wiull get immersed on these details and possibilities? It is in this widening chasm between the entrepreneurial, make it happen High Tech. world and the rest of the country that economists, political leaders and policy planners have to come to terms with. Sooner they do, better off will be everyone and the nation as a whole.

It is the “Binary Economy stupid”

The economic upheavals we face today has not been well understood and/or articulated effectively by the political leaders, intellectuals and the media. When the cause and effect is not clear, irrationality sets in. It creates a vacuum, an opening where demagogues can fill the space with their vile accusations pitting one group against other. It creates a conducive climate for anger, vitriol and racial animosity to thrive like the fungus which is ever present but  grows in dark spaces.

Now the mid term elections are over. There is now some opportunity for both the major political parties to address the anguish of the true “Trump voters” on the right and the “Bernie voters” on the left. Their common concern is their Economic Anxiety, despite the strong economic indicators such as low unemployment. But this will require a true and genuine understanding of the fundamental economic issues. We summarize this as the “Binary Economy stupid”.

James Corville, Democratic Strategist coined the phrase “The Economy Stupid”. It may be time to restate that as “It is the Binary Economy stupid”. There are not enough well-paying jobs for every one across the globe. Fewer such jobs are created against the many that are being depleted. The rest are being pushed into low wage jobs with stagnant wages. Those who are not at either end of this binary job pool are being left behind, like falling in the chasm in this economic divide. This is the “Binary Economy” evolving across the globe for the past four decades. This is the true source of anguish of the large US population? This anguish has been exploited through demagoguery and pitting one group against other?

In a recent opinion piece by Nick Robertson titled “The world is changing before our eyes. And we can’t do anything to stop it” he writes the following:

We are watching the world order being ripped up over fears of a return to a world order that our current post-war world order was designed to forestall. …… It sounds complicated, but it is not.     …………There is not enough of everything to go around. There are not enough people making decent livings in a global economy. So, we are reverting to protectionist nationalism to insulate ourselves from the deficit. …………. The suggestion that “There are not enough people making decent livings in a global economy” is true and well documented. But the conclusion that “we are reverting to protectionist nationalism to insulate ourselves from the deficit” may not be correct or accurate as a rationale.

If poverty and economic disparity has been the source of protectionism, racism, bigotry and ethnic centered phobia, then the world as we know of it could never have lived in peace at large. Yes, there will always be social unrest thanks to economic inequity. But, it has never reached the current fever pitch and irrationality.

At times of economic disparity, the “haves” have figured out a way to share their wealth in some proportion with the “have-not”. Whenever this sharing of wealth has been voluntary social equilibrium has been maintained and political unrest held under check. There have been times in the history, when the rich – economically well off – did not pay attention to the needs of the poor among them and restoration of tolerable economic equity was forced upon them.  While many of these revolutions such as the French RevolutionIndian Independence movement, the American Revolution,  are seen as “political”, each of them were fueled by the oppression of the poor by the rich and powerful holding the seats of power.

But there are few significant differences from the past to the present:

First, the economic angst felt is universal (i.e.) worldwide. It is not limited to one country or region. Within each country there are pockets of economic abundance – like the East and West coast regions of U.S. and the economically depressed central and mid-west. Even such segregation as a broad sweep might be inaccurate. Few with drive and motivation to learn new skills are well off, such as the educated and the millennial, who congregate in the urban communities. Their neighbors affected by globalization – less than four year college degree, white, living in the rural areas and without a sense of direction for the future fall prey for the blame game against the ethnic minorities and the immigrants.

In other words the “us” and “them” are not segregated by country, region, state, etc. This insidious economic upheaval is like the cancer affecting all body organs with different impact at each location!

In addition to the widespread inequality, the cause of such inequality is not simple and evident upfront. Why did the “globalization” that is supposed to lift all boats has not lifted many boats? How is it that one boat in the rural Wisconsin or New Hampshire – well educated, professional with skills to adapt to modern work force – gets lifted, while the boat next to it – neighbor- is getting left behind?

If world is flat, is the much touted outcome, then why do we see rise of right wing authoritarianism rising in Brazil, one of the BRIC countries supposed to have benefitted from globalization?

The conclusion has to be that reason for the economic upheavals we face today has not been well understood and/or articulated effectively by the political leaders, intellectuals and the media. When the cause and effect is not clear, irrationality sets in. It creates a vacuum, an opening where demagogues can fill the space with their vile accusations pitting one group against other. It creates a conducive climate for anger, vitriol and racial animosity to thrive like the fungus which is ever present but  grows in dark spaces.

Consider for example the Trump supporters.

“They are primarily white, older men with low levels of education and income. They believe that immigrants and free trade deals have harmed their earning power and they prefer an America in which white people are the majority”.

But their major concern is “Better Economy”. But, every one of the actions of the GOP supported Trump administration – Tax cuts which favor the rich, ballooning deficits which threatens the future economy for all, deregulation which favor those in power and affect the safety and living quality for the masses, assault on public education, health care, …- are totally against the needs of the economic needs and well being of the poor, less educated, less skilled (as seen in the modern economy), rural white population. The support for the Trump led GOP, who blatantly and openly work against the economic self-interest of their supporters, is nothing short of Irrationality.

But, before the rational GOP leaders, Democrats, intellectuals and the Media attempt to address the needs of the changing world and stop the above irrationality – which is now seen as spreading across the globe – they need to get a clear handle on what is changing and why?

The world we live in today is driven by “Binary Economy”. It is like two sides of a large chasm: One side that connects and informs every one across the globe about anything and everything, while the other side isolates people into their narrow subsets and twitter lists, specialties and task oriented efforts and Standard de-skilled work. More pervasive the role and impact of Digital Technology, faster and greater will be the polarization into these extremes with a constantly disappearing middle.

Pope Francis has addressed this development as follows:

“Taken as a whole, do our technological advances — news in real time, live global communication, access to more information and entertainment (and all the shades in between) than we could ever fully absorb — help or hurt the causes when those causes should be engaging with our lives to the fullest, and fostering peace, love and happiness? “

 “Real relationships with others, with all the challenges they entail,” Pope Francis said, “is giving way to more fickle online relationships and “a new type of contrived emotion which has more to do with devices and displays than with other people and with nature.”

 “Nobody is suggesting a return to the Stone Age, but we do need to slow down and look at reality in a different way?”

 “When media and the digital world become omnipresent, their influence can stop people from learning how to live wisely, to think deeply and to love generously. In this context, the great sages of the past run the risk of going unheard amid the noise and distractions of an information overload.”

Few Years ago, Chris Mathews at CNN raised the question: “Can the economy continue to grow while creating fewer well-paying jobs? Our answer is a resounding “YES”.

Wage earning work of all employees can be divided between:

  • Professional Work – where the wages are earned for value added solutions – something new and unique. Higher education and learning new skills qualifies one for these jobs. But higher education is merely a ticket to the ball game. Long term survival and success depends a lot more on certain sustained learning and a new set of skills.
  • Information Work – where wages are earned for executing well defined tasks to collect, process and disseminate information (much of the work in call centers, BPOs, front end and back office work, etc. belong to this category), The Draftsmen in the early 80s was replaced by CAD solutions and software. Their jobs are not coming back.
  • Physical work – where wages are earned literally for well-defined physical tasks (like flipping burgers or driving trucks or Taxi cab, factory work, moving packages at FedEx distribution centers, etc.). The loss of such jobs through “Technology”, outsourcing and automation is well documented.

Of these three categories of work, the professional work is the highest paying. In fact the U.S. economy with low inflation, moderate growth, and lowest unemployment rate has been very good for a small class of “Professional workers”. These are the affluent in the two coasts of the U.S. They are also seen in the large cities and the suburbs across the nation. They are rarely seen among the rural populations.  This evolution of a small segment of well-paid professional workers can be seen in all nations and across the globe. These are workers who have also marginally benefited further through the GOP tax cuts with most gains going to the richest. They have managed to acquire the necessary skills to find well-paying jobs in the Binary Economy. To be part of this gold rush or mirage is why everyone is pushing for higher education. The H1B Visa workers fall in this category. Enough U.S. citizens cannot fill these needs because they do not pursue necessary education or cannot accept the lower wages paid to the H1B temporary workers by U.S. employers. Major organized effort to educate and train for such workers in the U.S. is also absent at all levels – local, state or federal – from both the major parties.

Pure information work and physical labor as the means for well-paying jobs is the thing of the past.  It started with elimination of Draftsmen and office secretaries. It started with outsourcing and automation. Both these trends started in the late 70s and have continued unabated in the past four decades.AI and Automation will further diminish these kinds of jobs further in the future.

Those who merely do the tasks they are asked to do unwittingly fall into the two categories: The information work and physical labor intensive work. They are able to do maintain their economic needs by working through two or three jobs, all at minimum or low wages. These are the affected millennial. But their wages have been stagnant. They are not the Trump voters. They will continue to be paid poorly (since their value addition is only that much – very low) as their work continues to be de-skilled, standardized and automated. Unions and organized labor cannot help, when the human centered worker skills for processing information or labor are no longer seen as indispensable. Instead they would benefit very much from the upward rise of minimum wages across the board. They would also benefit from the equal pay for equal work, child care at work, as well as programs for learning new skills.

But, how about the workers whose jobs are never coming back and who do not have the wherewithal to acquire new skills in the Binary Economy? These are the segment of the population – the Trump voters for whom economy is the major concern – are dispersed across the nation. To address this question we need to better understand the Binary Economy at work:

Till the 1970s these three classes of work were somewhat intermixed. One could migrate from one layer to the next (upward) and this created the large pool of middle class. Such mobility across the levels of jobs also created the American Dream: If you work hard and smart you can get ahead. This doctrine is no more valid. The layers of work in the Binary Economy are nearly water tight and with a steady effort to push the work content and number of jobs to the lower paying information tasks and physical work tasks. The numbers of such low wage jobs created are increasing as we continue to bleed the professional work jobs to fewer and fewer in number. This is reflected in the low unemployment together with stagnant wages in a growing U.S. economy.

Now there is also a constant effort to de-skill and standardize information work and physical labor. As a result their value addition will continue to decline and hence the wages for such jobs will also decline. Programmable automation, robotics. AI, etc. will also take more out of the lower paying information work and physical work jobs as well. (e.g.): The octopod to deliver packages for Amazon will reduce more of the truck driver jobs. The number of professional jobs needed to create and implement the octopod will be far fewer than the professional jobs and lower paying jobs they will replace. This is the productivity gain and the JOBLESS RECOVERY! In the beginning there could be an appearance of job growth at some locations, but across the globe there will continue to be less of a need for human centered activities called work and the reward for them.

Hence the answer to the question: Can we continue to grow while creating fewer well-paying jobs? – is “YES”.  Evolution in Digital Technology applications and their ability access to resources across the globe are the drivers for this development. It is not the outcome or ploy by a few.

It should be made clear that no single technology is good or bad. In that sense Digital Technology is neutral and agnostic for employment or economic conditions of the population. But wide and prudent deployment of any “Technology” is the role of political leaders, thought leaders and administration. In this regard there is a collective failure across the board and across the globe! “we are reverting to protectionist nationalism to insulate ourselves from the deficit” may be accurate and correct. But the “deficit” is the diminishing need for human centered work enabled by Digital Technology capabilities. Their wide spread application, without regard for the economic consequences for the broad population has been the failure across the globe for the past four decades. This failure continues unabated leaving the opening for irrational choice and support as seen in the Trump voters. This is also evidenced in the protectionist nationalism and the rise of ultra-right wing ideologies across the globe.

The sad thing is that neither the liberals nor the conservatives or angry folks – the burn everything down ultra-right or the far left seem to understand this basic truth. Or they choose to ignore the sad reality and find their escape through irrational alternatives as solutions. The heads of institutions and leaders in every function of the society also pay only lip service to this evolving fundamental issue. The media has totally failed to articulate the view (i.e.) It is the Binary Economy stupid! When the agricultural industry evolved, 40% employment in agriculture shrunk to 1% of the population now working in it. Industry driven employment replaced agricultural employment. Now, we are headed in the direction in all forms of employment where few workers are needed. But there is no replacement in sight.

Can there be a solution to this? – YES.

But, to get there, we need to recognize the problem, first (i.e.) It is the “Binary Economy stupid”! At times of economic disparity, the “haves” have figured out a way to share their wealth in some proportion with the “have nots”. Whenever this sharing of wealth has been voluntary social equilibrium has been maintained and political unrest held under check. This may require an economic security program as a safety net for those who cannot adjust to the diminishing opportunities for well-paying jobs. At a time, when Social Security is in the chopping block to pay for the deficits created by the tax cut for the wealthy, any thought of “Economic Security” program is a non-starter. Instead what we are offered are fears of economic insecurity and the protectionist nationalism it fosters.