Category Archives: Managerial Econ

Posts relevant to Managerial Economics.

Manufacturing’s next act

Posted on June 20, 2015 by | Leave a comment

I had never heard the term Manufacturing 4.0.  This McKinsey paper (from their blog) presents a good case for radical transformations in manufacturing.

McKinsey LogoManufacturing’s next act | McKinsey & Company.

Some of these transformations are genuine business structure innovations, such as the software alliance that performs consulting for major companies.  Some are not so new: auction marketplaces for outsourcing parts manufacture was tried in about 2000 by CommerceOne, and only became established in one or two indiutries (specialty chemicals and certain automotive and airplane parts).  (The company failed.)  Auction based purchasing and supply are only feasible when the suppliers have quite variable capacity they need to fill, and there is no differentiation among sources.

It also makes sense for production managers in any firm to become totally aware of the new technologies and processes, including those that are information based, that could impact their business.  Firms will need to jump onto a technology fast when it reaches their industry, leaving no time for indecision.

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Posted in Managerial Econ, Production Operations

House passes 2-month transportation funding bill

Posted on May 20, 2015 by | Leave a comment

Well, what’s new?  I just talked yesterday (at Hult International School of Buisness in San Frasncisco) about the locks and dams as well as bridge and road deficiencies, and the inability of our government reps to make a decision on how to pay for necessary infrastructure work.

Let’s get on with it. Money spent on infrastructure repays many times over, by increasing facility in trading goods.  Competitive advantage and the related theories tell us that opening connections increase the pie for all.

American Shipper

House passes 2-month transportation funding bill | AS Daily Newsletter | AS Daily | American Shipper.

I’m worried that people will give up on providing any funding at all if we can’t show the leadership to take some action.   If we have to fall back on specific local measures there will be wholesale resistance from voters.  I’ve heard it in the streets from friends.  People can’t back large investments piecemeal if they don’t see an overarching plan for how the whole problem will be attacked.  Only the federal government can do that– not states, not localities.

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Posted in Managerial Econ, Microeconomics, Strategy, Supply Chains

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Brightening the black box of R&D

Posted on April 16, 2015 by | Leave a comment

McKinsey’s take on measuring productivity of R&D.  This is a very contentious area, and many have criticized companies for spending too much or too little on R&D.  It’s largely based on hypotheticals however, because it is hard to guess what a project is going to contribute.  And it’s worse at small innovative enterprises, which are mostly R&D, because there is little info on what the impact of new products will be. The formula would seem to work well at Clayton Christensen’s large stable companies which are simply innovating to please a large group of present and demanding customers, rather than disrupt through spectacular new innovation to gather new customers.  Still, it’s good reading and extends the thinking in this area.

Brightening the black box of R&D | McKinsey & Company.

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Posted in Advanced Computing, Managerial Econ, Production Operations

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