Flutterby™! : Insourcing Boom 2012-12-03 17:49:16.544838+00

Insourcing Boom

2012-12-03 17:49:16.544838+00 by Dan Lyke 3 comments

In the midst of this revival, Immelt made a startling assertion. Writing in Harvard Business Review in March, he declared that outsourcing is “quickly becoming mostly outdated as a business model for GE Appliances.” Just four years after he tried to sell Appliance Park, believing it to be a relic of an era GE had transcended, he’s spending some $800 million to bring the place back to life. “I don’t do that because I run a charity,” he said at a public event in September. “I do that because I think we can do it here and make more money.”

Turns out that if you get the designers closer to the manufacturing process you can use the insight of people on the line to not only make the products easier to assemble, but in the process use less material and be more reliable.

You mean drawing up some doodles, emailing them overseas to be manufactured, and then marketing the hell out of the results isn't where the value really is? Who knew?

First, my experience with Chinese factories is that there is a very hierarchical structure which squashes suggestions from the floor. The times I've visited Chinese factories I've been extremely uncomfortable with security guards snapping to attention and saluting when I walked by, and the top-down management structure.

But the second is that those companies are often subcontracted from the U.S. brand. They may have other customers. Your U.S. based brand may or may not be the organization that they get the best benefit out of feeding suggestions back to...

And that latter element is why I'm concerned about brands which don't do their own manufacturing.

As for what we'll get out of an all-robot factory: I think that slightly misses the point. No matter the automation, making sure that the designers are tightly coupled with the manufacturing processes is the win.

So, the Chinese don't have any suggestions to make, or is their business plan based on doing what they are told, as quickly as possible? Of course we have the the situation of the American worker thinking the butter compartment of the fridge could be bigger, while the chinese worker don't know what butter is in the first place. And what worker suggestions will we get from an all-robot factory?