Key to Innovation? Onshoring Manufacturing of Course

One day a couple of years ago, Gary Pisano woke me out of a sound sleep.

Not literally, but figuratively through a Harvard Business Review podcast I was listening to. He was talking about his research into the impact of offshoring manufacturing on design .

In the interview, he talks about the concept of the industrial commons:

Some of them are public resources, but many of them are resources that are shared among other companies in the business, but they're embedded in suppliers, they're embedded in the manufacturers, they're embedded in customers. Everyone in the network is reliant upon other companies in the network for those resources. If you lose one part of that chain, it can make it very difficult for other companies in the business, or as part of that chain, to continue to compete.

Pisano wasn't exactly a voice in the wilderness in 2009, but he didn't have a lot of company. Corporate America was racing offshore to slash costs and “get closer to customers” as the Great Recession accelerated. Turns out you need to get closer to your design chain.

Now he's got company.

Just down the road from Pisano's Harvard offices, MIT Professors Suzanne Berger and Phillip Sharp have helpedstart the Production in the Innovation Economy project, which brings together leading MIT faculty from a variety of disciplines — economics, engineering, political science, management, biology, and others — to look at US industry from different perspectives: national, sectoral, and global.

The study's goal, simply put, is to revitalize American innovation by better understanding how design and manufacturing are symbiotic.

Researchers are looking at eight core modules including new manufacturing technologies, the challenge of scale-up, comparative analysis of manufacturing economies, and success stories.

The project has created so much buzz it inspired a recent New York Times story on changing perceptions of American innovation. In it, Berger is quoted as saying:

It is something that's very difficult to establish systematically. You really have to be willing to look at case-by-case evidence, qualitative evidence. That's what we're trying to do.

Wrote the Times:

Thus far, she said, the anecdotal evidence from about 200 companies has proved striking, with company after company detailing the advantages of keeping makers and thinkers together.

All this collective work is worth keeping an eye on in the coming months as the global economy staggers out of its malaise. There will be new winners and losers and winners likely will be able to credit a smart design-and-manufacturing strategy.

This article originally appeared on Drive for Innovation.

6 comments on “Key to Innovation? Onshoring Manufacturing of Course

  1. SP
    December 14, 2013

    Manufacturing in US can be a viable idea if cost is low. Else the discussion of oustsourcing will always creep in.

  2. Wale Bakare
    December 14, 2013

    Idea of bringing experts together is a great thing. What about multi-stakeholder to reaching a better framework – potential fund managers and/or investors?

  3. itguyphil
    December 14, 2013

    With all of the negative PR associated with 'outsourcing' as we know it, it can be more costly for larger organizations by sending jobs offshore. So even if it saves a few bucks in the short-term, it can end up being more costly in the long term with the loss of tax breaks & incentives.

  4. SP
    December 15, 2013

    Its good for the counttry's growth and overall manpower growth if manufacturng is done locally. It has many advantages. With labor charges increasing in Asian countries and of course chances of copying the design in China its good to manufacture locally.

  5. apek
    December 15, 2013

    Ofshoring of jobs to earn short term profits kills the domestic consumer purchang capacity and it also leads to other Political Tensions. For ahealthy economy and sustainable economy, Domstic consumer purchang capacty decdes the econoic demand and also the value of domestic currency Haivng design and manufacture done domestically is not just good business sense but alos common sense. It also restores legitmacy of supply chain and mitigates introduction of counterfeit electronics into supply chain

  6. itguyphil
    December 23, 2013

    It's a debate that'll continue until the cows come home. It all depends on how bug your company is & the size of your budget. There's no one-size-fits-all approach to operations.

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