Two articles on the front page of the Business and Technology section of the Wall Street Journal on April 19th are, at first glance, entirely unrelated: one about the earthquakes in Japan and the other about Airbus’ satellite production announcement.
The first article (“Earthquakes Expose Supply-Chain Frailty”, Wall Street Journal, 4/19/16, print edition page B1) discusses how the once envy of the world, Japan’s “Just in Time” (JIT) production has made it such that any disruption at all – let alone one as large as the series of earthquakes recently to hit Japan – often leads to disastrous production delays (in this case, Toyota temporarily shutting down 26 car assembly lines in Japan). Lean assembly without disruption can be incredibly efficient, but disruption in one part of the chain can reverberate throughout the entire chain and lead to costly delays.
The second article (Airbus Joint Venture Aims to Churn out Satellites, http://www.wsj.com/articles/airbus-joint-venture-aims-to-churn-out-satellites-1461011968) discusses Airbus’ joint venture to produce small (around 300 pounds) advanced satellites at a rate never before even remotely achieved – as much as 15 satellites per week. The facility is slated to be located, interestingly, at a site located at the Kennedy Space Center next to Jeff Bezos’ Blue Origin LLC.
The old model of production efficiency is rapidly – with light speed – giving way to IoT (Internet of Things) cloud-based interconnectivity led by automated robotics, Artificial Intelligence (AI), additive manufacturing (3D printing) and interconnected devises resulting in supply chain efficiencies and factory automation in ways we have never seen before. Gartner group, in numbers that are likely inflated, but not by as much as you may think, estimates that the “Industrial Internet” will dwarf the “Consume Internet,” generating a staggering $37 trillion in revenue by 2025, just 9 years away.
So, we read about supply chain disruptions in Japan due to a series of earthquakes and we realize quickly that the JIT production that made Japan great in the 1970’s and 1980’s is rapidly giving way to IoT interconnected devises so that the supply chain – now interconnected through the cloud and guided by AI optimization algorithms – adjusts to any supply chain disruption automatically.
How are all of these processes connected globally? Through the IoT interoperability provided by the satellite communications that Airbus, Boeing, Google, Facebook, Amazon and others are frantically fighting for as you read this. The winners in this battle will be the backbone of future production just like Japan’s Lean Six Sigma and JIT production efficiency transformed factories worldwide back in the 1980s.
The pace of change we see today, however, won’t take decades; rather it will take a short number of years … and supply chain disruptions like we see in Toyota’s supply chain today will be a thing of the past.
The winner? Global growth. Hold your hats. You think the Internet, as we know it, has transformed out lives? We are about to witness an explosion in growth unlike we have ever seen. Get ready for the ride!