The Beer Game -or- Why Apple Can’t Build iPads in the US • Hacker News Board

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#91

Post by excuse-me » Thu, Apr 05, 2012, 4:22 PM UTC

kevinalexbrown wrote: post #79

From a practical perspective, it seems to me that the Beer Game rests in three parts: in imperfect information, time delays, and most importantly, independence of agents. If each member of the supply chain knew consumer demand perfectly far enough in the future, they could compensate. Likewise, if each member of the supply chain could instantly scale their process, they could compensate. The key, though, is that even…

Yes if you knew the number of iPad 5s that people in each city in the world were going to buy in 2years time you could scale the production in advance and it wouldn't matter how many delays there were in the supply chain.

Since you don't know the demand - you need a responsive, high bandwidth, system.

Having suppliers that can't respond quickly - either because they are a 2week container ship voyage away, or they take 3months to respond to quote requests, or they think they can make more money by demanding huge penalty clauses for any changes in order - all these add resistance and slow the response.

There is also a cost consideration. Once you start making a component it is costing you money until the consumer pays for it. Having to make a billion $ worth of screens/chips/cases 2 years in advance is costing that whole network of suppliers money - costs which will be passed onto the customer

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#92

Post by roc » Thu, Apr 05, 2012, 4:24 PM UTC

mhurron wrote: post #55

roc wrote: post #6

See also: https://en.wikipedia.org/wiki/Business_cluster It's worth noting that one needn't offset all the advantages of a cluster for production outside of it to make sense: There is no shortage of US auto manufacturing plants that are not in Detroit nor in places with anything remotely like its cluster advantage. But for rapidly-changing products, the advantages of a cluster are compounded. If you're not changing s…

What do you think is going to provide more short term profit, move manufacturing back the the US and build X with US workers, or move manufacturing out of China to another cheap country when Chinese labor gets too expensive? What's gone isn't coming back until it's cheaper to build it in the US. That's what moved it to China in the first place, and that's what will move it from China.

> "What's gone isn't coming back until it's cheaper to build it in the US."

Yes and no. Yes, at a high level that's true. But you seem to be making an assumption that human labor costs will remain an important component and that the "it" being manufactured will remain constant.

Consider that automation may not even be cheaper on a 'net screws turned per hour' basis than cheap humans. But quality and consistency matters. Speed of line changes matters. Speed of retraining matters. And, further, current designs are limited to what can be assembled cheaply (that is: reasonably quickly/safely/accurately) by two human hands and ten human fingers, with a human attached (who hopefully doesn't require slow or expensive tools/safety equipment/etc).

Automation removes those concerns entirely. Caustic compounds could be mixed on the spot, fixation technologies that are infeasible for human dexterity are possible, multiple steps could be completed in parallel, etc.

So keep in mind that while it may be sufficiently cheaper to have, say, Brazilians turning screws than Chinese, such that iPads could some day be cheaper to build in Brazil - it's entirely likely that before that happens, robots will be building newer iPad designs, more cheaply than could ever be feasibly constructed by humans even at a zero wage.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#93

Post by egsmith » Thu, Apr 05, 2012, 4:24 PM UTC

jonknee wrote: post #49

> Because of the bullwhip effect illustrated by the game, Apple needs to have factories in China because the supply chain is there. We learned in the Beer Game that minute changes have massive ripple effects along the supply chain. > The U.S. has lost that industrial base and it’s extremely difficult to get it back. It’s not about unions, jobs Americans don’t want - it’s about delay. Considering that Foxconn is start…

Brazil factory is MUCH smaller, for example the new iPad factory only has 1.4K employees, and Brazil gives them tax benefits. http://translate.google.com/translate?hl=en&sl=auto&...

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#94

Post by damoncali » Thu, Apr 05, 2012, 4:24 PM UTC

mindslight wrote: post #78

damoncali wrote: post #27

Or they could just do like Dell does - require suppliers to carry inventory (on the suppliers' books) within minutes of their factories. You can do that in America just as easily as you can in China.

"Solve" it on paper by making it someone else's problem? This philosophy is a large part of why manufacturing jobs left in the first place.

You think they don't do this in China? Look around. Making your problems someone else's problems is a time honored business practice.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#95

Post by krupan » Thu, Apr 05, 2012, 4:25 PM UTC

mikescar wrote: post #75

clarkmoody wrote: post #60

I love the article up until the lame political statement at the end. GM / Chrysler bankruptcy != Business disappears and all suppliers go bankrupt. This is the straw-man argument of the left. The American auto bailout was a purely political play to save the unions who supported the Democrats. With billions in hard assets and a huge intellectual property base, the auto companies would have made great investments to po…

> The American auto bailout was a purely political play to save the unions who supported the Democrats. Are you kidding? http://www.politico.com/news/stories/1208/16740.html

To be fair, the article this whole discussion is referencing says, "Obama was right in bailing out the auto industry when GM and Chrysler were going bankrupt."

As usual, both sides want to take credit for the positives and blame each other for the negatives. :-)

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#96

Post by randomdata » Thu, Apr 05, 2012, 4:25 PM UTC

jonknee wrote: post #76

crazygringo wrote: post #67

Earlier quoted context omitted.

Brazil is an exceptional case because of their import tariffs which are far, far higher than any other country in the world. From the linked article: "with domestic production of the iPhone and iPad providing a means by which Apple could avoid hefty import taxes in one of the world's most populous countries. " I don't know any of the details, but I would assume Foxconn is performing the absolute minimum level of asse…

> I don't know any of the details, but I would assume Foxconn is performing the absolute minimum level of assembly necessary to meet "domestic manufacturing" requirements. So it is in no way an effective counterexample. It's absolutely a counterexample. The iPad is assembled in China, but its parts are from all over the world. Now it's also assembled in Brazil. The supply chain in China isn't critical to the iPad's a…

I recall from another article that Apple requires 9,000 engineers to oversee the production of the iPhone. It is not that the USA has fewer than 9,000 engineers, but you would be lucky to find one engineer that is unemployed, let alone 9,000 of them. China, on the other hand, and perhaps Brazil, has engineers looking for work.

Nothing is insurmountable with enough time and effort, but demonstrating that Brazil can easily accommodate a factory says nothing about the ability of doing the same in the USA.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#97

Post by ktizo » Thu, Apr 05, 2012, 4:26 PM UTC

In the UK, you pay much higher taxes for importing components than you do for importing final product, so manufacturing anything in the UK that requires parts from overseas is economically pointless, even if you wanted to (such as in the case of the raspberry pi).

I have always been suspicious of the concept of post-industrial economies as I have always thought that they relied on a colonial logic of intellectual superiority which doesn't really exist.

The plan seemed to be that the western world is good at organising and designing stuff, and those people over there are much cheaper for doing the actual work of building this stuff for us, especially since our local labour market started getting ideas about rights and profit share and stuff.

However, the organising and designing of stuff turned out not to be quite as difficult as we had so arrogantly assumed, so all we do is get rid of out ability to make stuff by having an entire generation used to someone else doing it for them, while eventually all the white collar jobs go overseas as well.

Personally, I think that if you try being a post-industrial economy for long enough, you will end up being something much more like a pre-industrial one, but with a few rich people left, all flying around on those nifty new Chinese jetpacks.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#98

Post by e40 » Thu, Apr 05, 2012, 4:27 PM UTC

acslater00 wrote: post #54

e40 wrote: post #48

Earlier quoted context omitted.

But what is the cause and what is the effect? The supply chain latency in the US is so high because over the last 3-4 decades we've moved from a producer to a consumer. It's because we don't manufacture stuff anymore that this latency is an issue.

That's a myth. The US has a huge and growing manufacturing base. We make airplane engines, medical devices, computer chips; all kinds of complex, high-tech manufacturing. We have the highest manufacturing productivity per worker in the world. What we don't make anymore are the kinds of products that require rote assembly tasks, like shoes and clothes and iPads. The upshot is that we have decreasing manufacturing empl…

You realize I didn't mean we manufacture nothing, but that we manufacture much, much less than we used to, right?

If we can't agree that manufacturing started to move out of the US decades ago, was accelerated by NAFTA, and that we are a consumer of goods made elsewhere (more than others are a consumer of goods made here), then this conversation isn't going to go well.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#99

Post by e40 » Thu, Apr 05, 2012, 4:28 PM UTC

bdunbar wrote: post #53

e40 wrote: post #48

Earlier quoted context omitted.

But what is the cause and what is the effect? The supply chain latency in the US is so high because over the last 3-4 decades we've moved from a producer to a consumer. It's because we don't manufacture stuff anymore that this latency is an issue.

It's because we don't manufacture stuff anymore that this latency is an issue. I love it when people say that. I love it because I work for a company that very much does still make stuff in the US. We just make more stuff, with fewer people. We also make stuff in Asia, EU, Mexico. It's hard to stereotype who makes what - but generally sites in NA make the complicated, expensive widgets, Asia make the high volume not-…

So because you work for a company that makes stuff, my argument is invalid. You realize I wasn't saying we make nothing at all, right? It's that we are ever making less in the US and ever buying more made elsewhere.

Re: The Beer Game -or- Why Apple Can’t Build iPads in the US

#100

Post by damoncali » Thu, Apr 05, 2012, 4:29 PM UTC

brendn wrote: post #50

damoncali wrote: post #27

Or they could just do like Dell does - require suppliers to carry inventory (on the suppliers' books) within minutes of their factories. You can do that in America just as easily as you can in China.

That may insulate factories from fluctuating inventory supply, but it doesn't solve the problem of fast turnaround when changes are needed. If a part needs to be redesigned, the supplier may still have a weeks-long lead time to get the new part shipped, and has the additional problem of obsolete inventory that is now wasting space near the factory.

You're missing my (sloppily made) point. China vs US has nothing to do with that. Either you consolidate your suppliers and squeeze the snot out of them, or you suffer the bullwhip effect. It can be done in the US, China, or the North Pole. The reason it's in China is cost.