4th Generation Manufacturing
Updated: Nov 7, 2020
by Ulises Pabon
I met Professor Steven Wheelright, co-author of Dynamic Manufacturing, while I worked at Intel, back in the ’90s. He was commissioned by Intel to help us reflect and learn about a specific technology-transfer project we had just completed and I was immediately attracted to his ideas regarding the evolution of manufacturing.
Wheelright argued that manufacturing plants evolve along a curve defined by two variables: their focus (from internal to external) and their proactiveness (from passive/reactive to proactive). He suggested a path from being "the place that makes the stuff" to becoming a strategic asset for the corporation, culminating in what we refer to as 3rd Generation Manufacturing in the figure above. The evolution towards 3rd Generation Manufacturing requires, among other developments, strengthening ties and building synergies with R&D, with Sales and Marketing, and with other external stakeholders such as government, universities, and suppliers.
Years later, I ran into an extraordinary paper titled The Metanational Corporation by Yves Doz, Kaz Asakawa, José F. P. Santos, and Peter Williamson. It presented a strong argument regarding the obsolescence of the traditional multinational corporation and the emergence of the “metanational” corporation. The paper eventually grew into a book titled: From Global to Metanational: How Companies Win in the Knowledge Economy. If you hold a leadership position in a multinational corporation and, particularly, if you have a leadership role in manufacturing, I strongly recommend you study this thesis.
The research behind the metanational corporation concept points out that the traditional model of the multinational corporation - centralized decision making with strong "tentacles" that stretch throughout the planet to implement these decisions - has become obsolete.
The researchers share a new model based on three distinct capabilities: sensing, mobilizing, and operations (see figure at right).
Because knowledge is spread throughout the world and because critical knowledge can be tacit and contextual, these three capabilities need to be equally spread throughout the world. The traditional octopus metaphor that fits the multinational corporation so well, is obsolete.
The metanational corporation concept suggests an additional evolutionary stage for manufacturing beyond being a strategic partner or asset. At QBS, we've coined this additional stage 4th generation manufacturing.
For over two decades, we've been helping manufacturing leaders understand what 4th generation manufacturing is and we've been helping them design roadmaps to get there.
There's a paradoxical element regarding the journey from 1st Generation Manufacturing to 3rd and 4th. The route towards 3rd and 4th Generation Manufacturing is seldom planned and driven top-down from “corporate”. If you lead manufacturing, you can’t wait for “corporate” to dictate this journey. Waiting for "corporate" is what a 1st Generation plant would do, the exact opposite of what's required!
Equally paradoxical is the realization that, while "corporate" will eventually applaud a plant that achieves 4th Generation status and will showcase it as a corporate success story, during the journey, many corporate stakeholders will oppose, resist, and block the evolution. Why? Because most of these stakeholders operate with a silo mentality and have no idea about what it means to view an organization as a system.
Another barrier we've seen is what we call the cost-quality-delivery mantra. Walk into a manufacturing plant and you are likely to find the following phrase within their mission statement: "we manufacture (fill-in your favorite product) at low cost, high quality, and deliver on-time". For sure, cost, quality, and the ability to deliver on-time are instrumental; they are sine qua non. Yet, think of these three factors as table-stakes. While instrumental, they can't deliver the kind of value a 3rd or 4th Generation plant can deliver - e.g., accelerated product introduction because of early manufacturing involvement in R&D, serve as a showroom to clients enabling sales to close mega-deals, develop capabilities that facilitate the creation of next-generation products, and capture tacit knowledge within its ecosystem and mobilize this knowledge for the benefit of the corporation.
The COVID-19 pandemic has challenged supply chains and has resurfaced concerns regarding globalization. Executives are reassessing their corporate manufacturing footprint and studying avenues to increase the reliability of their value stream. 3rd and 4th Generation manufacturing sites will be better equipped to contribute to this corporate agenda.
We would enjoy talking to your manufacturing leadership team about our ideas and our experience regarding 4th Generation Manufacturing. If you're curious about or interested in this journey, reach out to us at 1-787-758-1003 or through email@example.com and we'll gladly respond.