I

The Many Facets of Manufacturing

During the first half of the forum, each of the seven panelists identified what he or she saw as the most important issues in manufacturing. Some spoke broadly about manufacturing, while others examined specific topics. But all pointed to the importance of manufacturing and to the need to retain a strong manufacturing base in the United States.

PREREQUISITES FOR SUCCESS

For manufacturing to take place in the United States, three critical conditions must be met, said Craig Barrett, the former chairman and CEO of Intel Corporation.

First, the individuals involved in manufacturing must add value to the process. For modern manufacturing, adding value requires a solid educational background. “If you want an effective manufacturing, design, and engineering workforce, you have to have an effective education system,” said Barrett. Yet the K–12 education system in the United States is “mediocre,” according to Barrett. “We’re failing in that fundamental aspect. If we’re going to talk about anything, it should be the implementation of improvement in the education system.”

Second, manufacturing needs to be associated with activities that add value to the process. For example, intellectual property and fast-changing products both add value to manufacturing. Products that are not protected by intellectual property or do not change over time are “a target for the rest of the world.” Many of the technologies associated with the Grand Challenges (see Box 1) identified by the National Academy of Engineering are undergoing rapid change, Barrett noted, and are



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I The Many Facets of Manufacturing D uring the first half of the forum, each of the seven panelists identified what he or she saw as the most important issues in manufacturing. Some spoke broadly about manufacturing, while others examined specific topics. But all pointed to the importance of manufacturing and to the need to retain a strong manufacturing base in the United States. PREREQUISITES FOR SUCCESS For manufacturing to take place in the United States, three critical conditions must be met, said Craig Barrett, the former chairman and CEO of Intel Corporation. First, the individuals involved in manufacturing must add value to the process. For modern manufacturing, adding value requires a solid educational background. “If you want an effective manufactur- ing, design, and engineering workforce, you have to have an effective education system,” said Barrett. Yet the K–12 education system in the United States is “mediocre,” according to Barrett. “We’re failing in that fundamental aspect. If we’re going to talk about anything, it should be the implementation of improvement in the education system.” Second, manufacturing needs to be associated with activities that add value to the process. For example, intellectual property and fast- changing products both add value to manufacturing. Products that are not protected by intellectual property or do not change over time are “a target for the rest of the world.” Many of the technologies associated with the Grand Challenges (see Box 1) identified by the National Acad- emy of Engineering are undergoing rapid change, Barrett noted, and are 1

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2 MAKING THINGS Box 1 The Grand Challenges for Engineering In 2008, a National Academy of Engineering committee released a list of 14 engineering challenges that, if met, could help people and the planet thrive. Many of these challenges have manufacturing components and could lie at the core of vigorous U.S. industries in the future. 1. Make solar energy economical 2. Provide energy from fusion 3. Develop carbon sequestration methods 4. Manage the nitrogen cycle 5. Provide access to clean water 6. Restore and improve urban infrastructure 7. Advance health informatics 8. Engineer better medicines 9. Reverse-engineer the brain 10. Prevent nuclear terror 11. Secure cyberspace 12. Enhance virtual reality 13. Advance personalized learning 14. Engineer the tools of scientific discovery For more information, see http://www.engineeringchallenges.org. likely areas for the United States to lead in design and manufacturing. “If you want an effective manufacturing, design, and Third, the right government engineering workforce, you policies need to be in place. Immi- have to have an effective gration policy is undermining man- education system.” ufacturing, said Barrett, by making Craig Barrett it more difficult for well-trained sci- entists and engineers to work in the United States. So is corporate tax policy, which is discouraging the construction of manufacturing facilities in the United States. “We need a lot more than talk” about these and other issues, said Barrett. “We need action.” The day after the forum, Barrett was traveling to Portland, Ore- gon, where Intel has about 15,000 employees involved in design and manufacturing. Their average salary is three times the average for other

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3 THE MANY FACETS OF MANUFACTURING Craig R. Barrett, former CEO and chairman of Intel Corporation. Oregon workers. “If you are involved in the right areas, manufacturing and design are alive and well in the United States.” But these three issues need to be addressed for manufacturing to thrive. A HIGH-TECH APPROACH TO LOW-TECH PRODUCTS Engineers are enamored of high technology, said Rodney Brooks, the founder, chairman, and CTO of Heartland Robotics and MIT pro - fessor emeritus. But this fascination with the fastest and most advanced technologies should not cause them to overlook the potential inherent in low-technology products. Information technology has had a tremen - dous run over the past half century. The continual decrease in price and increase in processing power have transformed computers from gigantic machines that ordinary people could not touch to devices that people put in their pockets and briefcases. Computers also have trans - formed many jobs, making them much more productive. For example, computer-enabled increases in the productivity of office workers have been cited as the main driver of the economic boom of the 1990s. Manufacturing in the United States still adds $2 trillion of value to products every year—about the same amount of value as is produced by manufacturing in Europe and in China and twice the value produced in Japan. America has maintained this level of added value by moving con - tinually toward the manufacturing of high-value products. The manu- facturing of low-value products—which Brooks called “Walmart-class

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4 MAKING THINGS Rodney A. Brooks, Panasonic Professor of Robotics Emeritus, Massachusetts Institute of Technology. manufacturing, the fry pans, the stuff that is technologically simple”— generally occurs in other countries. Only in particular areas such as cosmetics, where fashion changes so fast that long supply chains are too slow, is low-value-added manufacturing done in the United States. The United States loses something by not manufacturing ordinary things in this country. Much valuable innovation in products and pro- cesses occurs in the everyday effort to improve manufacturing. “We lose the place where innovation happens,” said Brooks. Information technology now has the potential to change the way people build ordinary, low-tech products. In particular, robotics can “democratize low-end manufacturing,” according to Brooks. In most factories today, robots are only cost effective with long-run, high-value goods because they are expensive and complex to build. But when robotics evolves to the point where “If you [manufacture low- technology products] close personal computers are today, ordi- to where they are sold, they nary factory workers will be able become fast moving, and to program them to do short pro- you get a lot more innovation duction runs. Then, all products, happening here in the United whether high tech or low tech, can States.” have short supply chains and quick Rodney Brooks response times. “If you [manufac-

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5 THE MANY FACETS OF MANUFACTURING ture low-technology products] close to where they are sold, they become fast moving and you get a lot more innovation happening here in the United States,” said Brooks. There is tremendous opportunity for information technology to transform low-end manufacturing,” said Brooks, and already venture capitalists are starting to invest in the trend. “It’s not real glamorous, but there’s a lot of impact to be had.” FIVE LESSONS FOR THE NEXT GENERATION Design and manufacturing are processes that convert resources into experiences desired by customers, said Lawrence Burns, former vice president for research and development (R&D) and strategic planning, General Motors Corporation. Design and manufacturing thus encom- pass all facets of a customer’s experience, not just the physical product. Burns outlined five lessons for the next generation that he has dis- tilled from what went right and what went wrong during his time at General Motors. 1. Manufacturing is an integrated system. Manufacturing is a lot more than what goes on in factories. It includes designing, engineering, sourcing, producing, distributing, mar- keting, and selling products. The best manufacturers, said Burns, are the ones that do all of these as part of an integrated system. This often requires working across disci- plines and beyond walls. Examples of this integrative approach include: • Simultaneous engineering: the practice of product develop- ment such that all aspects of the design phases are considered simultaneously. • Design for manufacturing: the process of proactively designing a product for low-cost, high-quality manufacturing. • Math-based design and engineering: for example, computer- aided design. • Six Sigma quality: a process that uses data and statistical meth- ods to measure and improve the quality of a company’s opera- tional performance by identifying and eliminating the causes of defects (with the goal of only two defective outputs per bil- lion) and minimizing variability in manufacturing and business processes.

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6 MAKING THINGS • The Toyota Production System: a manufacturing methodology/ philosophy developed by Toyota with the goal of maximizing value by eliminating waste. • Supply chain management: the integration of key business pro- cesses across the supply chain for the purpose of creating value for customers and stakeholders. • Life-cycle analysis: a technique to assess environmental impacts associated with all the stages of a product’s life from cradle to grave (i.e., from raw material extraction through materials pro - cessing, manufacture, distribution, use, repair and maintenance, and disposal or recycling). “We must teach the next generation about manufacturing in this broad context,” said Burns. 2. Manufacturers must be driven by customer experiences. Customers realize value through their experiences with products and brands. Consistently positive experiences result in greater value, higher brand equity, and superior prices. These positive experiences have to be explicitly designed and delivered in a product. “When I get asked, ‘Why did GM go bankrupt?’ I humbly tell people that we lost sight of our purpose, which was to consistently Lawrence D. Burns, former vice president for research and development and strategic planning, General Motors Corporation.

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7 THE MANY FACETS OF MANUFACTURING deliver positive customer experiences. The next generation must never make this mistake.” 3. Manufacturers must grow better beans in addition to counting them. Successful manufacturing requires more than effective operations. It also requires a strategy that provides a sustainable advantage. This means embracing innovation, which Burns described as “perhaps the only truly “When I get asked, ‘Why did sustainable advantage for manufac- GM go bankrupt?’ I humbly turers.” He provided a short list of tell people that we lost sight industries that have been disrupted of our purpose, which was to by new technologies or new busi- consistently deliver positive ness models: customer experiences. The next generation must never make this mistake.” • Photography Lawrence Burns • Media • Entertainment • Computer • Telecommunication • Television • Pharmaceutical When industries are disrupted, the incumbents usually do poorly. “For this reason, I believe the best approach is to do unto yourself before others do unto you,” said Burns. 4. Manufacturing innovation is still quite young. Though Burns has witnessed extraordinary developments during his career, the best is yet to come, he predicted. He challenged the audience to consider the possibilities that might follow from recent advances, such as: • The “materials genome”: a public-private partnership that aims to double the speed with which new materials are discovered, developed, and manufactured. • Nanotechnology • “Mecha-ma-tronics”: the integration of mechanical systems, smart materials, and electronics. • Wireless integrated microsystems: integrated microsystems capable of measuring or controlling physical parameters, inter-

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8 MAKING THINGS preting data, and communicating information over a wireless connection. • Optimized, agile, real-time manufacturing systems: production systems supported by processes, tools, and training that enable manufacturers to respond quickly to customer needs and market changes while minimizing costs and maximizing customer value. • Digital manufacturing: the use of an integrated, computer-based system comprised of simulation, three-dimensional (3D) visual- ization, analytics and collaboration tools to define and optimize product and manufacturing process design simultaneously. • Advanced robotics: devices that act largely, or partly, autono- mously; that interact physically with people or their environ - ment; and that are capable of modifying their behavior based upon sensor data. • High-performance computing: the use of parallel processing to solve advanced computational problems efficiently, reliably, and quickly. • Intelligent machine-to-machine systems: networks that allow machines to communicate with each other and use relayed infor- mation to adapt their actions to accomplish specific tasks in the face of uncertainty and variability. • The “mobility Internet”: the emerging information/communi- cation infrastructure that enables precise coordination of the movement of people and goods; it will do for vehicles what the information Internet did for computers. • Cradle-to-cradle design, where materials are essentially “leased” rather than consumed. “I wish I were a 23-year-old engineer looking forward to applying these opportunities to enhance customer experiences. The potential is endless.” 5. Engineers with integrative minds will be the leaders. Innovation and engineering are learning processes aimed at reaching market “tipping points” for new ideas, said Burns. Markets tip when customer value is greater than the market price and the market price is greater than the supplier cost. At that point, customers demand new experiences, manufacturers supply them, and transformation occurs at a scale that makes a difference. Engineers with integrative minds focused on designing and delivering innovative customer experiences have the

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9 THE MANY FACETS OF MANUFACTURING opportunity to lead this process. From Burn’s perspective, no other dis - cipline is capable of designing, developing, and validating the integrated systems that will turn tomorrow’s science into sustainable and positive customer experiences. Burns closed by recounting his own transformative experience. “Eighteen years ago, I woke up deaf. Today, I hear with cochlear implants, but what impresses me most about this technology is how the manufacturer of my implants, the Cochlear Corporation, has consis - tently innovated to enhance my experience. When manufacturers do this right, they create powerful brands, they become formidable competitors, they grow jobs, they prosper.” The next generation needs to recognize that design and manufactur- ing will continue to be fundamental to our future. “They need to know that these are exciting and rewarding fields that will positively transform how people live their daily lives.” FOSTERING IMPATIENCE WITH THE STATUS QUO The United States cannot be successful without a healthy manu- facturing sector, said Ursula Burns, chairman and CEO of the Xerox Corporation. That requires a steady stream of talented and well-trained scientists, engineers, and innovators. It also requires an infrastructure and governmental policies that can increase exports and fuel job cre- ation. Whether the nation needs to produce well to live well is a “no- brainer,” said Burns. “This is one of the things that we must know, that we should know, and that we “We need to celebrate impatience and make it the shouldn’t have to prove again and virtue by which we do business again.” every day.” The more important question is Ursula Burns whether the United States can gen- erate the will needed to sustain the manufacturing sector. For much of the 20th century, the nation’s eco- nomic power and quality of life depended on its ability to innovate and manufacture. That combination spawned the automotive industry, the aviation industry, the computer and information technology industry, biotechnology, space exploration, and other sources of groundbreaking products and skilled, high-paying jobs. The potential loss of that capac - ity is a “Sputnik moment,” said Burns. “We’ve lost sight of that formula for success and we’re running out of time to fix it.”

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10 MAKING THINGS Ursula M. Burns, chairman and CEO of Xerox Corporation. Several obstacles are holding America back, said Burns. Xerox has good jobs for engineers and innovators, but it is having trouble finding suitable candidates to fill those jobs. The country’s education system is not producing the well-trained employees needed to do this work, and immigration policy is driving skilled workers out of the country rather than attracting them into the country. Policies on taxation, trade, and intellectual property all make it more advantageous to locate business activities in other countries rather than in the United States. Xerox is a company that still makes things in America and plans to do so for many years to come, said Burns. Still, manufacturing jobs are becoming increasingly sophisticated, and she worries about the ability of American workers to keep up with international competition. The United States needs policies that promote rather than stymie trade, according to Burns. Far more people live outside the United States than live in it. Emphasizing the tremendous opportunity of trade can build support for government policies that will further U.S. manu- facturing and job creation. Finally, the United States needs to invest in its manufacturing infra - structure, Burns observed. Manufacturers need to get products to the places where people will buy and use them, which requires a strong transportation infrastructure. Whether the nation needs such an infra - structure is “a silly debate that we should be very impatient about hav - ing.” America needs to invest for the long term to protect and maintain its historical strengths.

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11 THE MANY FACETS OF MANUFACTURING Policymakers and other leaders need to be more impatient with the status quo, Burns said. They should focus on how the nation can create more jobs, not on why the nation is not creating more jobs. They should ask how the nation can compete more effectively while eliminating hun - ger, poverty, and injustice. “We need to celebrate impatience and make it the virtue by which we do business every day.” PRODUCE TO PROTECT Americans today consume more goods manufactured overseas than ever before and are less likely to be employed in manufacturing than at any time in the past century. What does that mean for the nation’s defense capabilities? asked Regina Dugan, director of the Defense Advanced Research Projects Agency (DARPA). Even Adam Smith warned that “if any particular manufacture was necessary, indeed, for the defense of the society, it might not always be prudent to depend upon our neighbors for the supply.” Perhaps times are different now and the United States will never experience warfare on the scale of the two world wars, Dugan acknowledged, but “perhaps we will.” The innovations that DARPA has pioneered, such as the Inter- net or the Global Positioning System, have had major consequences not only for national security but also for the United States as a whole. That should not be surprising, said Dugan. The Department Regina E. Dugan, director, Defense Advanced Research Projects Agency.

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12 MAKING THINGS of Defense is essentially a mini-society. It has the same problems as the broader society, from health care to communications. Solving problems for that mini-society almost always has implications for the larger society. The same observation can be made about manufacturing. Manufac- turing is fundamental to both national security and economic security. “The question is not whether U.S. manufacturing is essential to our national security [or our] diplomatic and economic health,” said Dugan. “The question is how best to revital- “The question is not whether ize our manufacturing base.” U.S. manufacturing is essential to our national security [or Acquisition reform is an urgent our] diplomatic and economic need, Dugan insisted. Over the past health. The question is decade, more than 100 congressio- how best to revitalize our nal directives, GAO reports, pub- manufacturing base.” lic and private studies, and task Regina Dugan forces have addressed the issue. As Norman Augustine, former CEO of Lockheed Martin Corporation, has noted, if current trends in the manufacturing of defense aircraft continue, by the year 2054 the entire Department of Defense budget will be required to purchase one fighter airplane. Quite obviously, that trend is not sustainable. With very few exceptions, complex defense systems undergo increases in unit cost and decreases in the number purchased rather than being canceled. “No healthy industry has such trend lines,” said Dugan. DARPA is not a policy organization in charge of laws or regulations that govern acquisition; but it is heavily involved in the technical means by which defense technologies are made. It plans to spend $1 billion over the next 5 years on manufacturing-related technologies, from meta- tools for design and simulation to novel manufacturing to putting 1,000 three-dimensional printers in high schools to boost STEM education. “If successful, these efforts could contribute alternative design and produc- tion methods for systems spanning ground combat vehicles to vaccine production,” said Dugan. The keys to innovation are speed, number, and diversity. Just as the Internet enabled massive innovation in electronics and information technologies, DARPA is seeking enabling technologies that will spur innovation in manufacturing. In particular, it is focused on high-value- added manufacturing where innovation and unique capabilities offer a competitive edge.

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13 THE MANY FACETS OF MANUFACTURING To remain competitive economically and militarily, the nation must innovate, and to innovate, the nation must make things. As Dugan put it, “to protect, we must produce.” PRODUCE TO LIVE The 2009 H1N1 epidemic and failing grades in assessments of U.S. biosecurity preparedness have been a “wake up call,” said Brett Giroir, vice chancellor for strategic initiatives. The Texas A&M University Sys - tem, and president and CEO, National Biosecurity Foundation. Manu- facturing has become the rate-limiting step for getting new vaccines and treatments to market, including biosecurity products for defense. Giroir suggested that an appropriate addition to the statement “to live well, a nation must produce well” is “to live at all, the nation must produce.” Vaccine production relies on a 60-year-old technology that grows flu virus in chicken embryos. Because the process takes a long time, vaccines to combat H1N1 during the epidemic did not become widely available until a large portion of the population had become infected. As a national security official was quoted as saying, “We did not dodge a bullet. Nature hit us square in the chest, but this time she was shoot- ing a BB gun.” The problem of manufacturing is not limited to vaccines. For exam - ple, a growing number of new cancer medications now represent $150 billion of the $850 billion global pharmaceutical market, said Giroir. Brett P. Giroir, vice chancellor for strategic initiatives, The Texas A&M University System.

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14 MAKING THINGS These are large and complex molecules that can have tens of thousands of atoms—as complex, compared to a simple molecule like aspirin, as “a business jet is to a bicycle,” according to Giroir. The fundamental problem, he said, is that biological drug manufac - turing is stuck in an inflexible paradigm that keeps innovative products from entering the clinical pipeline. Manufacturing facilities have long lead times for design and construction and can cost $500 million to $1 billion to build, but intellectual property protection is relatively short. A factory can make only one product, and because of the nuances of FDA regulations, the factory must be built before the final clinical trial of a product takes place, which means that billion-dollar investments sometimes need to be scrapped. A consortium led by Texas A&M and supported by DARPA has taken two dramatic steps to change this paradigm. The first is to modularize the manufacturing architecture for phar- maceuticals. Instead of a Taj Mahal, what is needed is a trailer park, said “If you’re attacked, you can switch your entire factory Giroir. The fundamental building overnight to the product in block in this paradigm is a modular question to protect the country.” clean room that is completely self- Brett Giroir contained. It plugs into chilled water and power and is on air bearings so that it can be moved. Clean hallways serve as docking stations for indi- vidual pods. This architecture has reduced capital costs by an order of magnitude, and construction times are 15 to 18 months. A single facility can accommodate multiple products, and new products can be manu- factured by undocking a pod and re-docking one containing the process for a new product. Furthermore, production can be rapidly ramped up by plugging in additional units. “Think about that for biodefense,” said Giroir. “If you’re attacked, you can switch your entire factory overnight to the product in question to protect the country.” The second major step has been to get rid of the chicken embryos and grow vaccines in plants. A prototype facility has been constructed that can grow more than 2.2 million nicotiana plants, which is a relative of tobacco that can be grown indoors and hydroponically. The facility was designed, built, and brought online within 15 months and, again, at an order of magnitude less cost than a conventional facility. Much work remains to be done to gain FDA regulatory approval, but this one facility has the capacity to produce 100 million doses of vaccine each month at an extraordinarily low cost.

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15 THE MANY FACETS OF MANUFACTURING These innovations “will dramatically lower the unit cost and incen - tivize companies to manufacture in America.” Even more important, small companies and universities will have far lower barriers to entry, which will allow a flood of new life-saving vaccines and treatments to enter the marketplace. CREATIVITY, CONFIDENCE, AND INNOVATION David Kelley, founder and chairman of IDEO and Stanford Uni- versity professor of mechanical engineering, said that his life’s work has been to help individuals and organizations with their creative con- fidence. A lack of confidence and fear of failure is keeping individuals and organizations from doing new things, he said. “That’s what’s causing us to not innovate.” This loss of confidence starts early. Children are inherently creative, Kelley said. If a classroom of kindergarteners is asked who is creative, everyone raises his or her hand. But by the fourth grade, students start to opt out of being creative. “They say they’re not creative, and those muscles atrophy.” Both at Stanford and IDEO, Kelley teaches what he calls design thinking. It is a step-by-step approach that allows people to continu - ously improve their methods of being creative. The approach teaches people to trust the intuitive side of their brain that synthesizes ideas and experiences. Design thinking is “like fertilizer, water, and sunshine for people who want to create.” David M. Kelley, founder and chairman of IDEO.

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16 MAKING THINGS The idea has taken off, according to Kelley. The $35 million Hasso Plattner Institute of Design at Stanford is organized around design thinking. Concepts such as agile software, lean start-ups, and 21st- century skills in K–12 education all overlap significantly with the idea. Design thinking is human centered, said Kelley. What companies really need is to be deeply connected with their customers. Companies may be experts with the products and services they provide, but they also need deep empathy for the people who use those products and services. Recognizing the nonobvious latent needs that lead to break - throughs can be a “messy” process, said Kelley. But “we do that on a daily basis and it is working.” Another important aspect of design thinking is iterative prototyping. The idea is to build something in a very tentative and unpolished form. Then show it to people and let them improve it. “It is amazing how they will help you. They’ll tell you what’s wrong with it, and then you can go back and fix it.” Kelley terms that approach “build to think,” in which showing is a way of thinking. Finally, design thinking uses what Kelley calls radical collabo- ration. People often say that U.S. Design thinking is “like fertilizer, water, and sunshine students are the most creative in the for people who want to create.” world, but that is not true, said Kel- David Kelley ley. “What we are is more diverse.” By building teams of collaborators consisting of people with different backgrounds, people can build on each other’s ideas and come up with solutions that they never would have created if all the members of the team had the same background. “I’m a mechanical engineering professor,” said Kelley. “Five mechanical engineers as a team do not come up with the same ideas as a team with a business person, an anthropologist, a social scientist, an educator, and a mechanical engineer. . . . Putting that diversity to work is a great thing.” Design thinking is helping students, entrepreneurs, and companies design new products and make better decisions. “Building creative con - fidence in students and in companies is the way to solve the problems we have about not manufacturing and not innovating as much as we did before. . . . When you are confident, you come up with a whole different set of choices, so you make a better decision. . . . That is our ‘change the world’ strategy.”