Management Magazine

Technology has made manufacturing better

An automated workforce has a large number of benefits over human capital: the investment of a single robotic worker can replace 3 to 4 human workers carrying out their duties at the same speed.

Prof. Richard Miller

Ever since the birth of modern manufacturing in the textile industry in Northern Engl ‘and, new ‘and cutting edge trends to create ‘and grow businesses have always played leading roles in successful business decision-making. It was trends in technology that pushed forward the coal industry, transforming manufacturing ‘and keeping everything intertwined. Profits are often garnered through differentiation of costs, ‘and those with the technological advantage can gain market share through finding ways to lower costs.

The McKinsey Group has identified five major groups of manufacturing (with a percentage of global value added). These are: global innovation for local markets such as machinery, cars ‘and appliances (35 per cent); regional processing of items like rubber, food/beverage, ‘and printing (28 per cent); energy resources including wood, pulp, ‘and oil (22 per cent); global technologies with computers, medical ‘and semiconductors (nine per cent) ‘and labour intensive industries including textiles, leather, ‘and furniture (seven per cent). All these areas are going through fundamental changes as new scientific discoveries are applied to the industry.

Traditional economics explain that large capital outlays ‘and lower costs of labour keep manufacturing following a familiar formula: as the costs of the workforce become higher, it is replaced by lower priced wage producing countries. Thus, manufacturing from the richer countries would move to the lower-cost markets – particularly the smallest segment of manufacturing, which started out at the top.

This means that Africa would expect greater numbers of labour intensive manufacturing, with the higher value added manufacturing remaining in the more developed world. This has thus far been proven true, to some extent, in places like Ethiopia, where all around the Addis Ababa airport are shoe factories that make footwear for the export market.

The game changer

But, with the “flattening of the world”, as Thomas Friedman calls it, in recent decades there are unprecedented opportunities with a variety of newer technologies that can affect manufacturing costs dramatically. The 3D printer is an example of this type of revolutionary method of dissemination of technology ‘and knowledge. The term “printer” is a misnomer as it usually conjures up images printing paper from a computer, but the 3D printer actually creates ‘and makes items from specialized polymers guided by computerized instructions. These can range from simple to complex, ‘and that also means that there are stronger opportunities for greater value added manufacturing being established in Kenya.

The think-tank Stratfor refers to this shift as fundamental to the changes in world trade, as eventually various types of robotics will change geopolitics as there is less trade flow because of locally manufactured goods. This cost-driven change is increasingly possible as the prices of the printers continue to decrease. Bringing the manufactured end products closer to the markets also ensures that the variables with transport costs are largely mitigated. In a never-ending, possibly unstable, energy- driven transport sector, this stability can lead to better long-term decision-making.

Robotics replace workers

Japan has seen a dramatic shift in demographics as they are not having children, ‘and the population is aging to the point where there are now more adult diapers being sold than baby ones. A major solution for that nation has been a move towards robotics in order to replace workers. This fundamental shift has hit all segments of the economy (there are now completely automated hotels ‘and restaurants). As a result, manufacturing has seen a rebirth in some areas. Therefore some of the most innovative robotics globally continue to originate from Japan. This process of robotization has been taking place from some nursing functions by automation, to death, as seen with the recent debut at a funeral trade show of a robotic Buddhist priest that recites sutras ‘and funeral rites, which debuted at the August funeral trade show in Tokyo.

Robotics have traditionally been prevalent in a variety of manufacturing from the 1970’s when it was widely used in automobile assembly. At that time, the costs were so high that it was only efficient to use them in a very limited number of places in the world. Included in the costs were the computers to make the robots run as well as the costs of experts needed to run ‘and maintain the robots. Both of these costs have fallen dramatically as the technology ‘and the development of the software have become increasingly more sophisticated. The computers along with the software to run them have seen precipitous decline in costs, ‘and they have become much easier to run ‘and maintain. Combined with the interconnectivity of the world, it has become cost effective ‘and possible to outsource much of the software troubleshooting, maintenance, ‘and programming to overseas specialists who might live on the other side of the world.

Change of tact

An automated workforce has a large number of benefits over human capital: the investment of a single robotic worker can replace 3 to 4 human workers carrying out their duties at the same speed (with greater possibilities if automation can work faster) as the machines can work 24 hours a day, 7 days a week with almost no holidays ‘and no sick days (unless there are breakdowns or issues with power).

What will be required are stable utilities, including power sources ‘and internet connectivity in order to run an effective manufacturing hub. This along with the infrastructure to move the products out to the market (even if it is close) ‘and a market for goods are all areas that Kenya is making progress towards. Therefore, a combination of an increased number of platforms for online sales to national ‘and international markets ‘and stable infrastructure means that the East African market will be ideal for this type of technological shift.

As with many applications of new technology are opportunities for innovation in places where few thought they existed, such as small-scale retail sales (M-Pesa) ‘and taxi business (Uber). The best application advantages go to those who can envision ‘and enable technology for their own purposes.

The writer is a lecturer at Management University of Africa.


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