Recomposing the Sources of Value and Cost: Changing Relations Between Design and Production in Global Manufacturing Industries

Saturday, 4 July 2015: 8:30 AM-10:00 AM
TW2.2.03 (Tower Two)
Gary Herrigel, University of Chicago, Chicago, IL
The growth of huge consumer markets in Asia and even in Latin America in the last decade or so has, among manufacturing Multinational Corporations, given rise to a relative shift away from exporting to a strategy of "produce where you sell".  This, in turn, has fostered upgrading of MNC facilities in offshore markets, at the level of production, supply chains and design.  Automobile companies, for example, use newly cultivated offshore engineering and production skill to adapt high quality global models to local regulations and tastes and even design new models for (increasingly sophisticated) offshore consumers. These shifts (upgrading and local product adaptation and development) suggest a (re)-newed awareness among manufacturers of the advantages in close design-production integration. This may not seem surprising in the case of German multinationals, who have long regarded design-production integration as a competitive advantage, although that they are seeking to reproduce that advantage offshore in emerging markets is a clear shift. Indeed, the fact of growing offshore sophistication gives rise to both role and strategic shifts for home location production and design operations.  A return to design-production integration offshore is perhaps more surprising in the case of US producers who have long flirted with the idea of minimizing the significance of production in their innovation and value creation strategies. There are, however, signs that the success of "produce where you sell" in offshore contexts, where design and production integration are central to the strategy, is having the effect of reviving MNC awareness of design-production integration in the home market.