Archive | February 2014

Remember Names with Plastic Storage

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#Plastic Storage

5 Tricks to Remembering Anybody’s Name

BY  | January 24, 2014|
 
What’s in a name? A lot, it turns out — particularly when it comes to garnering new business contacts. When you remember somebody’s name — even after meeting them just briefly — it sends the message that the interaction was important to you. Perhaps no other skill can make others feel as valued, or open as many doors to new connections.

While some people possess a gift for remembering names, for others, it’s more of a learned skill. But every new introduction is an opportunity to practice recognizing faces, and, as you improve, others will begin to perceive you as a valuable connector in business and in life.

 Use the strategies below to practice — and make it a point to challenge yourself at networking events. My advice? Start slowly, and then increase your repertoire with each new introduction:

1. Repeat names throughout the exchange. Repetition helps your brain form the connections necessary to retain information. As soon as you’re introduced, say, “It’s lovely to meet you, Jane.” Refer to the person by name upon greeting and then repeat it again in parting.

2. Make mental associations. Make a visual connection with a person’s name to something memorable in your world — the more outlandish, the better. For example, if you meet someone named Jay who happens to be a music producer, visualize a blue jay at a mixing board. The humorous image will imprint his name and career onto your memory.

Related: How to Nail an Introduction

3. Study names in print. Use your eyes as well as your ears. When someone wears a nametag, for instance, look at the nametag as well as the face to create an association. As soon as you receive a business card, glance at the name and say, “Thank you, John.”

4. Ask for clarification with difficult names. If a new acquaintance has a name that is difficult to pronounce or happens to mumble their introduction, simply ask him or her to repeat it. Then say it again yourself for verification. In addition to gaining clarity, the extra effort will speak to your attention to detail.           

5. If you forget a name, address it head on. If you absolutely can’t remember a name, try to offer any information you can remember, such as where the two of you may have met. Alternatively, if you shake hands and introduce yourself, your contact will most likely follow suit.

If you think you know someone’s name, but are unsure, venture a guess: “Bill, right?” Or you could simply apologize and say, “I’m sorry, I’m a little forgetful at the moment. Please remind me of your name.” Don’t worry, it happens to everyone.

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Be Creative with Plastic Storage Containers

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#Plastic Storage Containers

The secret to creativity, intelligence and scientific thinking: Being able to make connections

Posted on Wednesday, January 22nd, 2014

Written by 

When we shared this image from the @buffer Twitter account recently, it got me thinking. The Tweet resulted in over 1,000 retweets, which somehow was an indication that a lot of people seemed to agree with this statement. There’s a key difference between knowledge and experience and it’s best described like this:

knoweldge

The original is from cartoonist Hugh MacLeod, who came up with such a brilliant way to express a concept that’s often not that easy to grasp.

 

The image makes a clear point—that knowledge alone is not useful unless we can make connections between what we know. Whether you use the terms “knowledge” and “experience” to explain the difference or not, the concept itself is sound.

Lots of great writers, artists and scientists have talked about the importance of collecting ideas and bits of knowledge from the world around us, and making connections between those dots to fuel creative thinking and new ideas.

This is a really fun, inspiring topic to read about, so I collected some quotes and advice from my favorite creative thinkers about the importance of making connections in your brain. I’ve added emphasis to the important parts, but if you have time I’d recommend reading the whole post and even digging into the sources I’ve linked to.

To start with though, I want to look at some research that shows intelligence is closely linked with the physical connections in our brains.

Intelligence and connections: why your brain needs to communicate well with itself

Research from the California Institute of Technology showed that intelligence is something found all across the brain, rather than in one specific region:

The researchers found that, rather than residing in a single structure, general intelligence is determined by a network of regions across both sides of the brain.

One of the researchers explained that the study showed the brain working as a distributed system:

“Several brain regions, and the connections between them, were what was most important to general intelligence,” explains Gläscher.

The study also supported an existing theory about intelligence that says general intelligence is based on the brain’s ability to pull together and integrate various kinds of processing, such as working memory.

At Washington University, a research study found that connectivity with a particular area of the prefrontal cortex has a correlation with a person’s general intelligence.

This study showed that intelligence relied partly on high functioning brain areas, and partly on their ability to communicate with other areas in the brain.

Aside from physical connectivity in the brain, being able to make connections between ideas and knowledge we hold in our memories can help us to think more creatively and produce higher quality work.

Connections fuel creativity: nothing is original

stevejobsSteve Jobs is an obvious person to reference whenever you’re talking about creativity or innovation, so I wasn’t surprised to find that he has spoken about making connections before. This great quote is from a Wired interview in 1996:

Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something.

Jobs went on to explain that experience (as we saw in the image at the top of this post) is the secret to being able to make connections so readily:

That’s because they were able to connect experiences they’ve had and synthesize new things. And the reason they were able to do that was that they’ve had more experiences or they have thought more about their experiences than other people.

Maria Popova is arguably one of the best examples (and proponents) of what she calls “combinatorial creativity.” That is, connecting things to create new ideas:

… in order for us to truly create and contribute to the world, we have to be able to connect countless dots, to cross-pollinate ideas from a wealth of disciplines, to combine and recombine these pieces and build new castles.

She’s given a talk on this at a Creative Mornings event before, and made some great points. Being able to read about a wide range of topics is often one of of the most important elements. I really liked how she pointed out the way our egos affect our willingness to build on what others have done before:

… something we all understand on a deep intuitive level, but our creative egos sort of don’t really want to accept: And that is the idea that creativity is combinatorial, that nothing is entirely original, that everything builds on what came before…

My favorite part of this talk is Popova’s LEGO analogy, where she likens the dots of knowledge we have to LEGO building blocks:

The more of these building blocks we have, and the more diverse their shapes and colors, the more interesting our castles will become.

Author Austin Kleon is someone who immediately comes to mind whenever the topic of connections and remixing art comes up. Kleon is the author of Steal Like An Artist, a book about using the work of others to inspire and inform your own.

It starts off like this:

Every artist gets asked the question, “Where do you get your ideas?”

The honest artist answers, “I steal them.”

Kleon is inspiring because he’s so upfront about how the work of other people has become part of his own work. He’s also keen on the phrase I quoted from Maria Popova above, that “nothing is original”:

Every new idea is just a mashup or a remix of one or more previous ideas.

If you’re looking for advice on creating more connections between the knowledge you have (and collecting even more knowledge), Kleon’s book is a great place to start. He offers suggests like:

  • carry a notebook everywhere
  • read a lot
  • keep a scratch file

How scientific thinking is all about making connections

When it comes to the field of science, making connections between those dots of knowledge seems to be just as important. In The Art of Scientific Investigation, Cambridge University professor W. I. B. Beveridge wrote that successful scientists “have often been people with wide interests,” which led to their originality:

Originality often consists in linking up ideas whose connection was not previously suspected.

He also suggested that scientists should expand their reading outside of their own field, in order to add to their knowledge (so they would have more dots when it came time to connect them, later):

Most scientists consider that it is a more serious handicap to investigate a problem in ignorance of what is already known about it.

Lastly, science writer Dorian Sagan agrees that science is about connections:

Nature no more obeys the territorial divisions of scientific academic disciplines than do continents appear from space to be colored to reflect the national divisions of their human inhabitants. For me, the great scientific satoris, epiphanies, eurekas, and aha! moments are characterized by their ability to connect.

Start making connections and getting creative

I’ll leave you with some suggestions for improving your own ability to make connections.

1. Add to your knowledge – the power of brand new experiences

After all, the more knowledge you have, the more connections you can make. Start by reading more, reading more widely, and exploring new opportunities for gathering knowledge (for instance, try some new experiences—travel, go to meetups or take up a new hobby).

As researcher Dr.Duezel explained when it comes to experiencing new things:

“Only completely new things cause strong activity in the midbrain area.”

So trying something new and forcing a gentle brain overload can make a dramatic improvement for your brain activity.

2. Keep track of everything – especially in the shower

As Austin Kleon suggests, take a notebook (or your phone) with you everywhere and take notes. Don’t expect your brain to remember everything—give it a hand by noting down important concepts or ideas you come across. As you do this, you may remember previous notes that relate (hey, you’re making connections already!)—make a note of those as well.

You can do this even when you’re in the shower with something like Acqua Notes. The shower isespecially a place that has proven to make us more creative.

3. Review your notes daily – the Benjamin Franklin method

Going over your notes often can help you to more easily recall them when you need to. Read through what you’ve made notes of before, and you might find that in the time that’s passed, you’ve added more knowledge to your repertoire that you can now connect to your old notes!

In fact, this used to be one of Benjamin Franklin’s best kept secrets. Every morning and every evening he would review his day answering 1 simple question:

“What good have I done today?”

Here is his original daily routine from way back:

No doubt you have some great ideas of your own—let us know in the comments what works for you.

If you liked this post, you might like Why positive encouragement works better than criticism, according to science and How our brains work when we are creative: The science of great ideas

Plastic Storage and Successful Business

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Plastic Storage

Billionaire Jack Ma teaches you how to be successful in life and business

By Pris @prischoo · On February 25, 2014

Billionaire Jack Ma, the founder and ex-CEO of Alibaba Group, as well as one of the most successful Chinese Internet entrepreneurs, shares his wealth of experiences.

Jack Ma: The mistake I regretted the most

In 2001, I made a mistake. I told 18 of my fellow comrades whom embarked on the entrepreneurship journey with me that the highest positions they could go was a managerial role. To fill all our Vice President and Senior Executive positions, we would have to hire from external parties.

Years later, those I hired were gone, but those whom I doubted their abilities became Vice Presidents or Directors.

I believe in two principles: Your attitude is more important than your capabilities. Similarly, your decision is more important than your capabilities!

Jack Ma: You cannot unify everyone’s thoughts, but you can unify everyone through a common goal.

  1. Don’t even trust that you are able to unify what everyone is thinking; it is impossible.
  2. 30% of all people will never believe you. Do not allow your colleagues and employees to work for you. Instead, let them work for a common goal.
  3. It is a lot easier to unite the company under a common goal rather than uniting the company around a particular person.

 

Jack Ma: What does a leader have that an employee doesn’t?

A leader should never compare his technical skills with his employee’s. Your employee should have superior technical skills than you. If he doesn’t, it means you have hired the wrong person.

What, then, makes the leader stands out?

  1. A leader should be a visionary and have more foresight than an employee.
  2. A leader should have higher grit and tenacity, and be able to endure what the employees can’t.
  3. A leader should have higher endurance and ability to accept and embrace failure.

The quality of a good leader therefore is his vision, tenacity, and his capability.

Jack Ma: Don’t be involved in politics

  1. One should always understand that money and political power can never go hand in hand. Once you are in politics, don’t ever think about money anymore. Once you are running a business, don’t ever think of being involved in politics.
  2. When money meets political power, it is similar to a match meeting an explosive- waiting to go off.

Jack Ma: The 4 main questions the young generation must ponder on

  1. What is failure: Giving up is the greatest failure.
  2. What is resilience: Once you have been through hardships, grievances and disappointments, only then will you understand what is resilience.
  3. What your duties are: To be more diligent, hardworking, and ambitious than others.
  4. Only fools use their mouth to speak. A smart man uses his brain, and a wise man uses his heart.

 

Jack Ma: We are born to live and experience life.

I always tell myself that we are born here not to work, but to enjoy life. We are here to make things better for one another, and not to work. If you are spending your whole life working, you will certainly regret it.

No matter how successful you are in your career, you must always remember that we are here to live. If you keep yourself busy working, you will surely regret it.

Jack Ma on competing and competition

  1. Those that compete aggressively with one another are the foolish ones.
  2. If you view everyone as your enemies, everyone around you will be your enemies.
  3. When you are competing with one another, don’t bring hatred along. Hatred will take you down.
  4. Competition is similar to playing a board of chess. If you lose, we can always have another round. Both players should never fight.
  5. A real businessman or entrepreneur has no enemies. Once he understand this, the sky’s the limit.

Jack Ma: Don’t make complaining and whining a habit

If you complain or whine once in a while, it is not a big deal.

However, if it becomes habitual, it will be similar to drinking: the more you drink, the stronger the thirst. On the path to success, you will notice that the successful ones are not whiners, nor do they complain often.

The world will not remember what you say, but it will certainly not forget what you have done.

Jack Ma’s advice to entrepreneurs

  1. The opportunities that everyone cannot see are the real opportunities.
  2. Always let your employees come to work with a smile.
  3. Customers should be number 1, Employees number 2, and then only your Shareholders come at number 3.
  4. Adopt and change before any major trends or changes.
  5. Forget the money; Forget about earning money.
  6. Rather than having small smart tricks to get by, focus on holding on and persevering.
  7. Your attitude determines your altitude.

Jack Ma on entrepreneurship

  1. A great opportunity is often hard to be explained clearly; things that can be explained clearly are often not the best opportunities.
  2. You should find someone who has complementary skills to start a company with. You shouldn’t necessarily look for someone successful. Find the right people, not the best people.
  3. The most unreliable thing in this world is human relationships.
  4. “Free” is the most expensive word.
  5. Today is cruel, tomorrow will be worse, but the day after tomorrow will be beautiful.

 

Jack Ma: The 4 don’ts of entrepreneurship

  1. The scariest things about starting up is the inability to see, to be snobbish, to be unable to understand what is going on, as well as to be unable to keep up with pace.
  2. If you do not know where your competitor is, or overconfident and snobbish about your competitor, or are unable to comprehend how your competitor became a real threat, you will surely fall behind him. Don’t be the “they” in this idiom: First they ignore you, then they laugh at you, then they fight you, then you win.
  3. Even if your competitor is still small in size or weak, you should take him seriously and treat him as a giant. Likewise, even if your competitor is massive in size, you shouldn’t regard yourself as a weakling.

Jack Ma on starting your own company

What starting your company means: you will lose your stable income, your right to apply for a leave of absence, and your right to get a bonus.

However, it also means your income will no longer be limited, you will use your time more effectively, and you will no longer need to beg for favours from people anymore.

If you have a different mindset, you will have a different outcome: if you make different choices from your peers, your life will then be different from your peers.

Jack Ma on opportunities

If there are over 90% of the crowd saying “Yes” to approving a proposal, I will surely dispose the proposal into the bin. The reason is simple: if there are so many people who thinks that the proposal is good, surely there will be many people who would have been working on it, and the opportunity no longer belongs to us.

The article is originally published in Chinese, and is translated into English. If you think this was helpful, feel free to share it with your friends.

About Jack Ma: Jack Ma is a Chinese Internet entrepreneur. He is the Executive Chairman of Alibaba Group, a family of highly successful Internet-based businesses. He is also the first mainland Chinese entrepreneur to appear on the cover of Forbes Magazine and ranks as one of the world’s billionaires.Ma was named the Financial Times’ 2013 Person of the Year because he personifies the Chinese internet, referring to him as the “godfather of China’s scrappy entrepreneurial spirit.”.

 

Be Creative with Plastic Storage

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Plastic Boxes

The 10 Stages of the Creative Process

by 

Listen to your hunches, sponge up ideas, let them marinate, and know when you’re done.

The question of what creativity is and how it works will perhaps remain humanity’s most unanswerable — but that hasn’t stopped us from trying. On the heels ofNeil Gaiman’s recent reflection on the subject comes one from filmmakerTiffany Shlain, founder of the Webby Awards and daughter of the great Leonard Shlain of Art & Physics fame. In this short installment from AOL’s The Future Starts Here series, Shlain offers ten steps to the creative process based on her own experience in film and art, expanding, perhaps inadvertently, on Graham Wallace’s famous 1926 model of the four stages of the creative process and incorporating other notable theories of yore, like John Dewey’s emphasis on hunches and T.S. Eliot’s insistence on idea-incubation.

    1. The Hunch

Any project starts with a hunch, and you have to act on it. It’s a total risk because you’re just about to jump off a cliff, and you have to go for it if you believe in it.

    1. Talk About It

Tell your family, tell your friends, tell your community … they’re the ones who are going to support you on this whole treacherous journey of the creative process, so involve them, engage them.

    1. The Sponge

I’m going to tons of art shows, I’m watching a lot of movies, I’m reading voraciously… and I’m just sponging up ideas and trying to formulate my own idea about the subject.

    1. Build

I love the world “filmmaker” because it has “maker” in it. My team and I are … building an armature — the architecture for the project.

    1. Confusion

Dread. Heart of Darkness. Forest of fire, doubt, fear… [But] as hard as it is — and it is really hard — any project … gets infinitely better after I’ve rumbled with all of my fears.

    1. Just Step Away

Take a breather — literally just step away from the project… Let it marinate — don’t look at it or think about it.

    1. “The Love Sandwich”

To give constructive feedback, always snuggle it in love — because we’re only human, and we’re vulnerable… Set expectations for where you are in the project, then ask questions in a way that allows for “the love sandwich”: First, “What works for you?” Then, “What doesn’t work for you?” Then, “What works for you?” again. If you just ask people for feedback, they’ll go straight for the jugular.

    1. The Premature Breakthroughlation

You’ll find in a project that you’ll have many small breakthroughs — and you have to celebrate those breakthroughs, because they’re ultimately going to lead to the Big Breakthrough.

    1. Revisit Your Notes

I always do this throughout the project, but especially during that last home stretch… I revisit all my notes and think back, and always find a clue — that missing link that brings it all home.

  1. Know When You’re Done

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Plastic Storage Solutions

Article|McKinsey Quarterly

Next-shoring: A CEO’s guide

Proximity to demand and innovative supply ecosystems will trump labor costs as technology transforms operations in the years ahead.

January 2014 | byKaty George, Sree Ramaswamy, and Lou Rassey

 

When offshoring entered the popular lexicon, in the 1990s, it became shorthand for efforts to arbitrage labor costs by using lower-wage workers in developing nations. But savvy manufacturing leaders saw it as more: a decisive change in globalization, made possible by a wave of liberalization in countries such as China and India, a steady improvement in the capabilities of emerging-market suppliers and workers, a growing ability to transfer proven management processes to new locales, and increasingly favorable transportation and communications economics.

Something of equal moment is occurring today. As we settle into a “new normal” catalyzed by the global financial crisis, the ensuing recession, and an uneven global recovery, traditional arbitrage models seem increasingly outmoded.1 For some products, low labor costs still furnish a decisive competitive edge, of course. But as wages and purchasing power rise in emerging markets, their relative importance as centers of demand, not just supply, is growing.

Global energy dynamics too are evolving—not just the now-familiar shale-gas revolution in the United States, but also rising levels of innovation in areas such as battery storage and renewables—potentially reframing manufacturers’ strategic options. Simultaneously, advances stemming from the expanding Internet of Things, the next wave of robotics, and other disruptive technologies are enabling radical operational innovations while boosting the importance of new workforce skills.

Rather than focus on offshoring or even “reshoring”—a term used to describe the return of manufacturing to developed markets as wages rise in emerging ones—today’s manufacturing strategies need to concentrate on what’s coming next. Anext-shoring perspective emphasizes proximity to demand and proximity to innovation. Both are crucial in a world where evolving demand from new markets places a premium on the ability to adapt products to different regions and where emerging technologies that could disrupt costs and processes are making new supply ecosystems a differentiator. Next-shoring strategies encompass elements such as a diverse and agile set of production locations, a rich network of innovation-oriented partnerships, and a strong focus on technical skills.

In this article, we’ll describe the economic forces sweeping across the manufacturing landscape and examine technologies coming to the fore. Then we’ll suggest some principles for executives operating in this new world. The picture we’re painting is of necessity impressionistic: next-shoring is still taking shape and no doubt will evolve in unexpected ways. What’s increasingly clear, though, is that the assumptions underlying its predecessor, offshoring, are giving way to something new.

Economic fundamentals

The case for next-shoring starts with the economic fundamentals of demand (since the importance of local factors is growing) and supply (as the dynamics of labor and energy costs evolve).

The importance of local demand factors

More than two-thirds of global manufacturing activity takes place in industries that tend to locate close to demand. This simple fact helps explain why manufacturing output and employment have recently risen—not only in Europe and North America, but also in emerging markets, such as China—since demand bottomed out during the recession following the financial crisis of 2008.

Regional demand looms large in sectors such as automobiles, machinery, food and beverages, and fabricated metals. In the United States, about 85 percent of the industrial rebound (half a million jobs since 2010) can be explained just by output growth in automobiles, machinery, and oil and gas—along with the linkages between these sectors and locally oriented suppliers of fabricated metals, rubber, and plastics (Exhibit 1).2 The automotive, machinery, and oil and gas industries consume nearly 80 percent of US metals output, for example.

Exhibit 1

 

In the recent US industrial rebound, about 85 percent of the job growth in manufacturing occurred in automobiles, machinery, and regional-supplier industries.

In China too, locally oriented manufacturers have contributed significantly to rising regional investment and employment. The country has, for example, emerged as the world’s largest market and producer for the automotive industry, and many rapidly growing manufacturing sectors there have deep ties to it. As automotive OEMs expand their capacity in emerging markets to serve regional demand, their suppliers have followed; the number of automotive-supplier plants in Asia has tripled in just the past decade.

The emerging markets’ share of global demand is steadily climbing, from roughly 40 percent in 2008 to an expected 66 percent by 2025 (Exhibit 2). As that share rises, it also is fragmenting into many product varieties, feature and quality levels, price points, service needs, and marketing channels. The regional, ethnic, income, and cultural diversity of markets such as Africa, Brazil, China, and India (where some local segments exceed the size of entire markets in developed nations) is raising the ante for meeting local demand. In the automobile industry, for example, fragmenting customer demand has led to a 30 to 50 percent increase in the number of models. Ninety percent of recent capital expenditures in the automotive sector have involved product derivatives worldwide and capacity expansions in new markets.

Exhibit 2

 

Emerging markets’ share of global demand is expected to reach 66 percent by 2025.

The limits of labor-cost arbitrage

Surging local demand helps explain why rapid wage growth in China hasn’t choked off manufacturing expansion there. Wages have nearly doubled since 2008, partly as a result of domestic minimum-wage policies.3 (The country’s 2011 five-year plan called for 13 percent average annual minimum-wage increases, a rate some provinces have already exceeded.) True, in a few labor-intensive, trade-oriented industries, such as apparel production and consumer electronics, labor-cost changes do tend to tip the balance between different geographic regions; manufacturing employment in Bangladesh and Vietnam, for instance, has benefited from China’s wage surge, even as Chinese manufacturers are seeking to raise productivity.

But these are far from the only implications of rising wages. Just as Henry Ford’s $5 day helped create a new consuming class, so higher wages in China are increasing local demand, thus reinforcing the local-investment choices of OEMs and suppliers. At the same time, there is little evidence of a zero-sum game between China and advanced economies, such as the United States. Rather, the narrowing labor-cost gap reinforces the importance of local demand factors in driving manufacturing employment. Indeed, factor costs often have the greatest impact on location decisions within a region—for example, Airbus moving to Alabama instead of Texas or North Carolina. These costs interact with policy factors, such as infrastructure spending and tax incentives, to shape a region’s overall economic attractiveness.

The impact of energy costs

The price of natural gas in the United States has fallen by two-thirds as gas production from shale deposits rose by 50 percent annually since 2007. A narrow range of sectors—gas-intensive manufacturing, such as the production of petrochemicals, fertilizer, and steel—are benefiting most directly. Some downstream players in the energy value chain have begun shifting investments. Dow Chemical, BASF, and Methanex, for example, have announced plans for new US manufacturing capacity to take advantage of cheaper, abundant energy supplies.

These moves are important for such companies and subsectors; McKinsey Global Institute (MGI) research suggests that by 2020, lower-cost energy could boost US GDP by somewhere between $400 billion and $700 billion.4 But do they presage a dramatic rebalancing of global manufacturing activity? Electricity costs were already lower in the United States than in many countries, including China—which, along with others, also has opportunities to boost its own energy output through hydraulic fracturing. And fossil fuels aren’t the only area where the energy-supply picture is morphing.

Consider, for example, the potential impact of energy-storage technologies, especially lithium-ion batteries and fuel cells, which are becoming more capable and less costly. At the same time, the improving economics of renewable-energy production—particularly solar and wind power—offers manufacturers an expanding range of future supply options. In some developing regions where power grids are unreliable or nonexistent, factory complexes served by distributed solar power may be feasible. Distributed generation is also growing in combined heat–power (CHP) plants, which use heat created in the production process to run steam turbines and generate electricity locally.

None of these is a silver bullet today. But as advances continue over time, more and more companies may become able to ask themselves where they would place major strategic bets if the availability and price of energy were lesser concerns. That too will probably lead back to a focus on local demand patterns. Interestingly, the country representing the greatest source of future demand growth—China—also is actively stimulating the development of a range of new energy sources and storage technologies through a focus on new strategic industries in its five-year plans.5

Technology disruption ahead

Technology is affecting far more than energy dynamics. Advanced robotics, 3-D printers, and the large-scale digitization of operations are poised to alter fundamental assumptions about manufacturing costs and footprints.6 To derive value from these shifts, companies will have to make significant investments and ensure access to hubs of innovation, capable suppliers, and highly skilled workers.

Advanced robotics

Investments in industrial robots have increased by nearly 50 percent since 2008—even in emerging nations such as China—as a new generation of advanced systems develops, with greater dexterity and ability to process information. These robots can perform an expanding array of factory tasks—for instance, manipulating small electronic parts, and picking and packing individual products. They can work side by side with humans and be trained by factory-floor operators rather than programmed by teams of highly paid engineers. Improved economics and capabilities eventually may yield productivity gains that are unforeseen today, as well as better products and faster speed to market. As that happens, companies will be able to retool their manufacturing systems to provide new roles for these mechanical “workers.”

Cheaper, more proficient robots that can substitute for a wider variety of human tasks are another reason companies may locate more manufacturing closer to major demand markets, even where wage rates are higher. In developing nations, robots could speed up rates of automation and help bridge shortages of some production skills. MGI research suggests that 15 to 25 percent of the tasks of industrial workers in developed countries and 5 to 15 percent of those in developing countries could be automated by 2025.

Further out, highly robotized factories also equipped with other information technologies might shift competition to areas such as the ownership of customer networks, which should become increasingly valuable as information embedded in them starts guiding production priorities and flows. Flexible, intelligent assembly robots also should enable contract manufacturers to serve an increasingly diverse range of customers, creating new opportunities for attackers to target attractive microsegments.

3-D printing

The economics of 3-D printing are improving rapidly, as well. While still only a sliver of value in the manufacturing sector (0.02 percent), sales of 3-D printers are set to double, to $4 billion, by 2015, and prices for the equipment are declining swiftly.7 Also, 3-D printers open up the possibility of more distributed production networks and radical customization. In early manufacturing applications, some companies are using the devices to accelerate product development, since they eliminate wait times for prototyping by faraway specialists. Companies will be able to consider new supply-chain models and, in some cases, replace traditional suppliers of parts with targeted usage of in-house printers.

These printers won’t replace traditional high-volume modes of production, such as die casting and stamping. For more specialized goods, though, it’s easy to imagine the emergence of service businesses—the equivalent of copy or print shops—that would manufacture items based on design specifications provided by B2B or B2C customers. Crowdsourcing networks for new-product ideas could one day complement traditional R&D activities for some manufacturers. (For more on 3-D printing, see “3-D printing takes shape.”)

Digitized operations

Significant as advanced robotics and 3-D printers are, they represent just two plot lines in a much bigger story about the digitization of operations. Cloud computing, mobile communications, and the Internet of Things8 are beginning to combine with advanced analytics to create threads of intelligent data that link assets and stakeholders as never before. Increasingly, products will communicate with each other, with robots and advanced machines inside factories, and with customers and suppliers. Digital “DNA” for parts (including the materials, equipment, and time required to make them) will also be increasingly available.

The implication is that we are approaching a day when manufacturers will have unprecedented global visibility into who makes what, where, and how well. They’ll be able to run virtual operations “war rooms” on their phones. They’ll have new opportunities to solve plant-floor optimization problems as intelligent machines interface with each other and with people on the line. In the near future, manufacturers also will exploit opportunities for crowdsourced design and on-demand production. These opportunities will extend well beyond goods made by 3-D printers; manufacturers will pursue the buying and selling of previously underutilized production lines “by the hour” and will rely on dynamic databases to determine what every part should cost. And new forms of technology-enabled collaboration, such as the three-dimensional virtual assembly and testing of vehicles, will redefine what it means to be proximate to innovation—which may be locally generated or accessed via broadband.

Digital operations aren’t a far-off fantasy. GE already has a 400-person industrial Internet software team and its employees use iPads to run an advanced battery factory in New York State. Amazon.com is employing growing numbers of smart warehouse robots. Fiat has reduced the number of physical prototypes needed to introduce a new product; Alcoa has compressed prototyping time and costs for some products; and an auto supplier recently slashed an eight-month prototyping process to one week.

Next-shoring

Although these forces are still gathering strength, they’re already pointing toward two defining priorities for manufacturing strategy in the era of next-shoring: proximity to demand and proximity to innovation, particularly an innovative base of suppliers. In developed and emerging markets alike, both ingredients will be critical. Next-shoring isn’t about the shift of manufacturing from one place toanother but about adapting to, and preparing for, the changing nature of manufacturing everywhere.

Optimizing location decisions

Being close to demand is particularly important at a time when consumption in emerging markets is growing rapidly, boosting with it the diversity of the regional preferences that manufacturers must contend with. In a 2012 interview with McKinsey, Timken CEO James Griffith explained his company’s approach: “Over the last ten years, we’ve added a very strong Eastern European, Indian, and Chinese manufacturing base,” not because wages are low there “but because those were the markets that were growing.” This expansion has been accompanied by a strategic shift away from a focus on automotive parts—“we could make a car last for a million miles, but nobody cares.” The new emphasis is on fast-growing mining, trucking, steelmaking, and cement-making customers in emerging markets. For them, Timken’s reliability is a decisive asset.9

Locating manufacturing close to demand makes it easier to identify and meet local needs. It’s a delicate balancing act, though, to create an efficient global manufacturing footprint that embraces a wide range of local tastes, since economies of scale still matter in many industries. Volkswagen has coped by moving from vehicle platforms to more modular architectures that provide greater flexibility for manufacturing several product variants or derivatives.

New products, market segments, and consumer preferences are combining with perennial risks (such as seasonal variations in demand and fluctuations in wages and currency rates) to boost uncertainty in manufacturing and supply networks. That uncertainty places a premium on operational agility—the ability to adapt design, production, and supply chains rapidly to fluctuating conditions.10 This too may play into location decisions.

Take the experience of a consumer-products company that had relied on one plant to supply its major market. When the company began experiencing unaccustomed spikes in regional and seasonal purchasing patterns, shortages and lost sales ensued. To accommodate rising variations in demand, the company built a second plant, with similar cost characteristics, in a different region. This additional capacity helped ensure supplies to the prime market, where the problems were most acute, while also allowing the company to meet growing demand opportunistically in several new markets close to the new plant. Although the investment was considerable, it lowered the company’s risk exposure, eliminated damaging stockouts, and improved the bottom line.

Building supplier ecosystems

New combinations of technical expertise and local domain knowledge will become the basis for powerful new product strategies. Responsive, collaborative, and tech-savvy supplier ecosystems will therefore be increasingly important competitive assets in a growing number of regional markets. To keep up with the opportunities afforded by technological change, for example, a major manufacturer that until recently had relied on a low-cost supplier in Mexico for parts has begun working with a new supplier that has cutting-edge 3-D printing capabilities. The new relationship has lowered stocking costs (since parts are made on demand), while providing avenues for developing prototypes more quickly.

Examples like this are just a start. As information flows among partners become more robust, they will usher in a range of improvements, from surer logistics to better payment systems. These will create a virtuous cycle of collaborative benefits. The supply bases of many manufacturers thus may soon need significant upgrades and capital investments to create joint competencies in areas such as robotics. Collaboration and management investment in skill-development programs could be necessary as well. In some cases, it may be valuable to collaborate with local or national governments to create the conditions in which the manufacturing ecosystems of the future can flourish. Tighter supply networks also will foster production systems that reduce the need for virgin natural resources, a topic addressed in more detail by our colleagues in “Remaking the industrial economy,” available on mckinsey.com on February 5.

A failure to develop innovative supply ecosystems will have growing competitive implications for countries as well as companies. The competitive challenges facing the United States sometimes look more like a system failure than an economic one. US investment in advanced robotics, for example, often lags behind that of other developed economies, with trade deficits prevailing even in sectors where wage-rate differentials aren’t a big influence on location decisions.

Developing people and skills

All this will place a premium on manufacturing talent, creating a range of regional challenges. In Europe and the United States, educational institutions aren’t producing workers with the technical skills advanced manufacturers need. In developing economies, such as China, the millions of lower-cost production associates who are well adapted to routine manufacturing may find it difficult to climb to the next level. Line supervisors—often fresh out of regional universities—struggle to manage baseline operations and to coordinate teams. Organizations will need to invest more in formal training and on-the-job coaching to bridge the gaps. They must also cast a wider net, supporting local community colleges and technical institutes to shape curricula and gain access to new talent streams.

A related challenge is the need for new management muscle. As it gets harder to hide behind labor-cost arbitrage, regional manufacturing executives and midlevel managers will need to become both better at running a tight operational ship and more versatile. They should be able to grasp the productivity potential of a range of new technologies and have enough ground-level knowledge of local markets to influence product strategies and investment trade-offs. The ability to build external relationships—with suppliers, education partners, and local-government officials who can influence the development of vibrant, sophisticated supply ecosystems—will also be a source of competitive advantage.

 

Next-shoring will look different in different locales, of course. Europe and the United States have impressive advantages in areas such as biopharmaceuticals, automotive engineering, and advanced materials. China, meanwhile, is quickly climbing the expertise curve, with increasingly sophisticated corporate and university research facilities and growing experience in advanced processes and emerging industries.11 In the world we’re entering, the question won’t be whether to produce in one market for another but how to tailor product strategies for each and how to match local needs with the latest veins of manufacturing know-how and digital expertise. While the road map for every company, industry, and location will be different, we believe that the principles we’ve laid out here should be useful for all.

About the authors

Katy George is a director in McKinsey’s New Jersey office; Sree Ramaswamy is a fellow of the McKinsey Global Institute and is based in the Washington, DC, office; and Lou Rassey is a principal in the Chicago office.

The authors would like to thank Michael Chui, James Manyika, and Venu Nagali for their contributions to this article.

Ideas to help you!

 

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