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

#171

Post by rbarooah » Thu, Apr 05, 2012, 8:19 PM UTC

rbarooah wrote: post #115

mseebach wrote: post #107

Earlier quoted context omitted.

There is no possible way I can read the GP to mean that. He only mentions imperialism and racism after talking about, and with clear reference to, "Buy American". Most of the movements are voluntary for now, but not all: http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestm... > Might there not be good reasons for supporting those who are economically tied to you by culture and legal jurisdiction? Yes and no.…

So, do you disagree with the point in the original article about the bail-out of the auto industry preventing a much wider loss?

Good grief. Downvoted multiple times without explanation?

The original top-level article that this thread is about made what seemed to be a reasoned point at the end about the bailout of the auto-industry, and I am simply asking mseebach whether he disagrees with it, since he made reference to bailouts.

Why on earth would that get downvoted?

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

#172

Post by randomafrican » Thu, Apr 05, 2012, 8:29 PM UTC

jonknee wrote: post #63

tlb wrote: post #17

Having gone through the painful exercise of building robots in the US, I appreciate the problem. Our end-end supply chain latency was 16 weeks, far too long to scale effectively to match demand. Many component changes we wanted to make would have created a 6-week delay, so we had to compromise. A place with a factory across the street that could make screws in 3 hours sounds like heaven.

You were also operating at an entirely different scale than Apple. You'd have a hard time getting your end product to the US, while Apple simply buys up enough air freight from China to screw up everyone else's supply chain. Apple doesn't go to the factory next door and buy screws when it needs them, they need millions of screws to very specific specs and sign deals to have them made by different suppliers for years…

Apple goes further than simply buying more air freight.

I work for an APPLE/DELL/otherstuff reseller.

The decision to use sea or air freight is based on a calculation based on the size of the product and its value (and therefore the amount of capital that would float for weeks instead of being here quite fast).

Apple, with its valuable and small product is always Air Freight.

An iMac 27" is twice the value and half the size of an OptiPlex 790. So Air Freight would only make it 10% more expensive.

Apple designs with that in mind.

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

#173

Post by JVIDEL » Thu, Apr 05, 2012, 8:33 PM UTC

Considering less than 1% of the price of an iPhone or iPad "stays" in China as the cost of assembly, moving all production back to the US for that 1% seems ridiculous.

In any case you guys should concentrate in the 30% (or so) of the price that goes into parts and components, almost all made by Korean and Taiwanese companies.

Besides most of those components are already made using highly-automated processes because humans lack the precision needed to manufacture at such small scales.

Not saying it would be easy, just that it isn't impossible, and 30% is a much better deal than 1%.

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

#174

Post by eli_gottlieb » Thu, Apr 05, 2012, 8:36 PM UTC

krupan wrote: post #168

eli_gottlieb wrote: post #148

Earlier quoted context omitted.

Actually, I'd say this is a long-term problem that we won't solve until we stop expecting everyone to have a job and figure out some way to distribute out to everyone a piece of the value created by automation.

Some day we are going to expect only some people to have to work for a living? How are we going to choose the poor saps that have to work while the robots feed all the rest of us while we sit by our swimming pools?

Simple: we don't set it up like that, with the few as slaves to the many. We just distribute a basic living to everyone, shorten the length of the work necessary for "full-time" status (or ideally abolish the distinction between part-time and full-time), and let anyone who wants extra go work for it.

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

#175

Post by scott_s » Thu, Apr 05, 2012, 8:44 PM UTC

Retric wrote: post #166

scott_s wrote: post #162

Earlier quoted context omitted.

The estimate was manufacturing in the US would cost up to 65$ per iPhone Versus how much in China? The conclusion I recall was that the difference was small - so small that even if the prices were flipped, Apple would still probably opt for China because of the speed. Which, again, is because of the integrated supply chain.

That was how much extra the labor would cost to manufacture in the US not the total cost. They did mention a low estimate of 10$ but that's still close to a billion a year in lost profits on iPhones. Add iPod's, iPad's, and Mac's and you quickly get back around 5 billion.

You are correct, and I wanted to check what exactly they did say. Luckily, there is a full transcript: http://podcast.thisamericanlife.org/special/TAL_460_Retracti... The discussion on this point starts on page 17. In there is the point I originally wanted to make, voiced by Charles Duhigg:

But labor is such an enormously small part of any electronic device, right? Compared to the cost of buying chips or making sure that you have a plant that can turn out thousands of these things a day or being able to get strengthened glass cut exactly right within, you know, two days of this thing being due, that's what's important. Labor is almost insignificant. What is really important are supply chains and flexibility of factories.

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

#176

Post by Splines » Thu, Apr 05, 2012, 9:24 PM UTC

dgabriel wrote: post #2

I think they teach this game at most business schools, and it seems to be a popular and eye-opening experience. If you hit wikipedia, there are a number of links to online versions you can play (some for free, some not). http://en.wikipedia.org/wiki/Beer_distribution_game

This would make an interesting RTS. 2 teams, 4 players on each side. Each economy can survive on their own, but there is a natural chain that can be built to allow one player on each side to have an overwhelming advantage over the other team (think "tip of the spear").

Only by carefully coordinating resources can you get this to work - the same costs in the beer game apply here (making too much of the upstream resource (inventory) has an opportunity cost in you not being able to produce your own units, and not making enough of the upstream resource (backlog) results in poor teamwork and and having the other team eventually out-pace you.

Co-op RTS games sometimes have resource sharing, but I don't think I've ever seen one with a legitimate supply chain (maybe because it ends up being so difficult to coordinate).

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

#177

Post by cube13 » Thu, Apr 05, 2012, 9:50 PM UTC

raganwald wrote: post #7

People often draw analogies between software development and manufacturing. If you’re going to do that, it’s vital to take the “supply chain” of information into account. The inefficiencies inherent in creating a supply chain consisting of a developer, a tech lead, a product manager, an operations manager, and finally a user resemble the supply chain in the drinking game. Orders go one way, features go the other way.

I don't think this is really an analogy. This chain occurs with both in both physical manufacturing and software. In both, developers/design engineers design the product, leads make sure that everything stays within budget and time, and product managers get requirements through sales or marketing staff. There really isn't a difference with either process at all, and for software that's sold on physical copies, it's is the exact same process. The major difference between releasing software on the internet and making a physical product is the end of the entire process, where the product is built and sent to the customer. With a physical product, it has to be built, stored until sold, then shipped out.

Also, unless your developers are so misanthropic that putting them in front of a client might just cause wars to break out, most of this chain can be circumvented by involving all parts of the chain in requirements gathering. The key part of the beer game is that none of the parties can talk to any party that's more than one link away from them.

Finally, and this is myself being a nitpicky bastard, but the operations manager will almost never have direct contact with a client. They will be the ones that work with the developers, the leads, product managers, and suppliers to make sure that the product can actually be made with the given budget, and that every step of the production chain is working correctly. They will also work with marketing and sales to make sure that the projected demand will be met, and that the product actually gets out to the clients. A better position would be sales people, because they are generally the only point of contact users have with the manufacturer.

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

#178

Post by mhartl » Thu, Apr 05, 2012, 10:00 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…

Out walking today I saw a car with the bumper sticker UNIONS = JOBS. That view is, to put it gently, a little naïve—and it's a huge part of the problem.

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

#179

Post by mhartl » Thu, Apr 05, 2012, 10:07 PM UTC

ap22213 wrote: post #32

The reason why iPads are built in China is because of a thing called Comparative Advantage [1]. Even though the US could reasonably produce iPads _more_ efficiently than China, it doesn't. The reason is that the US is even more efficient at supplying higher-cost services (software, finance, etc.) than China that it would be at producing iPads. Therefore, the US is better off training more of its workforce for higher-…

Unfortunately, the "comparative advantage" in this case results mostly of self-inflicted woulds on the part of USG. For a company with highly productive employees such as Google, the large fixed cost associated with labor-law compliance isn't that big a deal, but for low-wage jobs it can be comparable to the cash compensation. There's no shortage of low-cost laborers in the US; it's just that onerous regulations price them out of the market.

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

#180

Post by Retric » Thu, Apr 05, 2012, 10:14 PM UTC

scott_s wrote: post #175

Retric wrote: post #166

Earlier quoted context omitted.

That was how much extra the labor would cost to manufacture in the US not the total cost. They did mention a low estimate of 10$ but that's still close to a billion a year in lost profits on iPhones. Add iPod's, iPad's, and Mac's and you quickly get back around 5 billion.

You are correct, and I wanted to check what exactly they did say. Luckily, there is a full transcript: http://podcast.thisamericanlife.org/special/TAL_460_Retracti... The discussion on this point starts on page 17. In there is the point I originally wanted to make, voiced by Charles Duhigg: But labor is such an enormously small part of any electronic device, right? Compared to the cost of buying chips or making sure…

Let's put it this way if your adding 5% to the cost of the product adding a 4 week supply components that you sell at 1/2 price every year. Moving iPhone manufacturing to the US would cost Apple significantly more than that. It's true that one of the major problems with a supply chain for computer components is how rapidly they depreciate, but labor costs are insignificant in large part because they are in China.

Honestly, I think he is thinking you assemble an iPhone like you do a car with giant welders and cranes. The reality is much closer to just a table with buckets for components and a small chain of workers that knows all the steps plus some basic quality control. Because, it's mostly just joining components.

The actual chips are created by machines which can be located just about anywhere, just ask Intel. Even boards are often done by machines, because it's so hard to tell if someone did it wrong when soldering by hand. There are robots that can do these same operations, but humans add flexibly and it's easy to see if they messed up. Plus at current Chinese wages they just plane cost less.