The real costs behind miscommunication

January 22, 2013
By: Tim Heston

At the last FABTECH® show, I ran into an engineer who works for GE Appliance & Lighting, looking for products that would speed that all-important art-to-part time--that all-important product-development time. Their comments make sense in light of recent growth of the company’s Louisville, Ky., Appliance Park. After years of decline, the massive industrial campus has njoyed a welcome rebound in recent years, as described in great detail by The Atlantic magazine last month.

For certain product lines at least, no longer will GE’s supply chain span the globe. Instead, manufacturing will benefit from a tight, local supply chain. Shorter product life cycles demand it, as do the short times to market required today. As The Atlantic article described it for one of GE’s water heaters:

“It used to take five weeks to get the GeoSpring water heaters from the factory to U.S. retailers--four weeks on the boat from China and one week dockside to clear customs. Today, the water heaters--and the dishwashers and refrigerators--move straight from the manufacturing buildings to Appliance Park’s warehouse out back, from which they can be delivered to Lowe’s and Home Depot. Total time from factory to warehouse: 30 minutes.”

The article also details the benefits of collaboration between designers and manufacturers. Designing not only for customer usability but also for manufacturability has helped companies like GE beat the China price. When GeoSpring water heaters were made in China, they retailed for $1,599. Today, the Louisville-made units sell for $300 less.

As the article describes, distance alone doesn’t necessarily prove that making things down the street is always better than making them across the Pacific. Sure, there are all sorts of hard costs that are easily quantifiable. But the less quantifiable problems, including communication breakdowns, may be even more costly. Boeing’s recent troubles with the Dreamliner exemplify this.

Some have said that the fact Boeing spread design duties up and down the supply chain decentralized control, leading to all sorts of production problems. But really, the fact that Boeing spread design duties down the supply chain didn’t directly cause the problems. Throughout manufacturing, suppliers assist in designs all the time. It’s what helps suppliers win business.

It was the breakdown in communication. Everybody wasn’t on the same page. Combine this with the fact that the Dreamliner took such a new approach to so many design details, and you’ve got a recipe for, well, the drama that has played out in recent years.

Boiled down, it’s not about where a manufacturer is; it’s about how well that manufacturer communicates with others, be it other departments within the same company, or other manufacturers in the supply chain. This bodes well for U.S. manufacturing because, at last, the conversation is moving away from labor costs. Cheap labor making bad components is, really, the most expensive labor of all.

GE’s Louisville campus may be proof that good collaboration between design and manufacturing may give the U.S. a leg up not only because of its location--close to consumers--but also because of efficient information exchange. Shipping parts back and forth across an ocean costs time and money, but miscommunication between designers, engineers, and manufacturers can cost so much more.
Tim Heston

Tim Heston

Senior Editor
FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-381-1314