For survival, automation is a blessing and also a curse. Automation has been a great help to cope up with wage increases and labor shortage. Job simplification out of automation also opened the entry path for developing countries to deploy their low skilled workforce to add value to the value chains. However, further progression of automation has been posing a threat to those low skilled jobs. For some countries, automation is a driver for growth. On the contrary, automation has been threatening the survival of a large number of countries. Hence, survival and growth amid automation have become a daunting challenge.
Job Division, Simplification, and Specialisation is a Precursor to Automation
Automation and robotics have roots in Adam Smith’s doctrine of job division and specialization. Job division divides the whole job in making a product into a series of discrete tasks to be performed in a certain sequence. This exercise clarifies the roles in performing each task. For the purpose of specialization, it also codifies the knowledge and skill needed in executing each of those tasks. The organization of these tasks as a production line brings further discipline and codification of rules. In fact, the specification of roles, the sequence of execution, and the codification of knowledge and skill need started to open the door of automation.
Upon having detailed specifications of tasks, the sequence of their execution, and the need for codified knowledge and skill, scientists and engineers started designing machine capability in playing roles in task execution. In this process, once machines attain a higher comparative advantage in executing certain tasks, then they are delegated to machines. It opened the opportunity of increasing the quality and reducing the cost by developing machine capability to take over roles from the human. Hence, automation and robotics have become an integral component of production. As the market economy demands producers to compete by offering higher quality at a lower cost, automation has been an indispensable competition strategy.
Japan’s quality out of automation
Japan’s manufacturing is known for quality. In fact, some of the quality management practices like total quality management (TQM) have roots in Japan. On top of it, we all know about Dr. Deming’s quality work in Japan. One of the great achievements of Japan’s quality advancement in manufacturing has been in reducing defects, improving precision, and enhancing effectiveness. In addition to rules and procedures, Japan’s aggressively took advantage of automation and robotics in addressing issues pertaining to defects, precision, and effectiveness. Consequentially, they succeeded in reducing variations. As a result, quality assurance through robotics and automation has led to improving the quality and reducing the cost simultaneously.
For example, in pursuit of reducing variation in painting automobiles, Japanese automobile companies embarked on robotics. Subsequently, the painting of automobiles with robots has led to the reduction of defects and reworks and improvement of precision. Hence, to Japanese manufacturing, automation and robotics have been a blessing for driving the growth—out of quality improvement and cost reduction. Moreover, the labor-saving effect of automation has also helped Japan to cope up with rising labor costs.
Globalization of Manufacturing for Sourcing Labor
Automation has been reducing the codified knowledge and skill requirement in manufacturing, requiring mostly innate abilities. Such development has opened the opportunity of engaging the unskilled workforce of developing countries to add value in manufacturing. To take advantage of it, multinational corporations (MNCs) have globalized manufacturing’s value chain. Hence, they have been sourcing innate ability-centric labor from developing countries. As a result, over the last 60 years, many developing countries have become beneficiaries of export-oriented manufacturing jobs. By the way, in the absence of progression of job division, specialization, and automation, the workforce of developing countries would not have qualified for those manufacturing jobs. Therefore, automation has been a driver of bringing export-oriented manufacturing jobs in developing countries.
However, the agenda of global producers have not been limited to simplifying manufacturing jobs for opening the opportunity to developing countries. As mentioned, they have been in the mission of offering higher quality products at a lower cost. To make continued progress in this mission, they have been relentlessly working on job division, simplification, automation, and robotics. At some points, this process has made it feasible for the unskilled workforce of developing countries to add value to the manufacturing value chain created by the MNCs. However, those MNCs will not stop here. They will keep pursuing the mission of increasing roles of robotics and automation. Hence, the scope of adding labor to production will keep falling., Thereby, the role of developing countries in the global value chain will be on the declining path.
Labor supplying countries’ survival and growth amid automation
Many countries, starting from Indonesia to Bangladesh, have uplifted their per capita income due to innate capability centric manufacturing jobs for export. So far, automation has been a blessing for these countries. Automation has let low skilled or unskilled workforce to add value to manufacturing. However, continued progression will lead to reducing the demand for such a labor force. Such reality raises the question of survival for developing countries. Does it mean that these countries should enhance the knowledge and skill level of the existing factory workforce? Will it maintain their relevance to the global value chain?
Unfortunately, there is no scope for such upskilling. In fact, upskilling refers to increasing codified knowledge and skill, which has already been automated. Hence, the progression of automation has been leaving no or limited role of making the existing factory workforce more relevant by offering additional education and training. In this given context, survival and growth amid automation is a major issue.
Lateral Entry in Product Innovation for Survival and Growth Amid Automation
So far, developing countries have been adding value out of innate abilities in replicating products of MNCs. It has created jobs only for the low skilled workforce. Fortunately, the whole value chain requires additional jobs. For example, there has been a need for an R&D workforce for generating ideas and transferring them into product and process features. It also requires jobs for marketing, sales, and service. For creating the survival and growth path, it’s time for developing countries to make a lateral entry into existing products. However, the strategy must not be limited to replicating, making, or manufacturing.
All the major products, starting from automobiles to mobile phones, are not static. They have been evolving. This evolution creates the entry opportunity for new entry out of ideas for offering successive better versions at decreasing cost. Certainly, low skilled workforce who run the risk of losing jobs is not in a position to make such an entry. Fortunately, most of the developing countries have been producing an increasing number of science, engineering, and business graduates.
It’s time for developing countries to deploy their growing number of science and engineering graduates to innovate successive next versions of existing products. This is about making lateral entries. Such a strategy will create an integrated capacity for developing countries to add value to industrial products. It will focus on product innovation, marketing and sales, the advancement of automation and robotics for process innovation, and also manufacturing. Therefore, developing countries must transfer their survival challenge into a growth opportunity. This is through establishing a presence across the whole value chain of existing products.