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Kicking Production into Gear with Technology

By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE | 0 | 0 | July 11, 2014

Tuesday’s World Cup match may have left Brazil’s players and fans reeling, but soccer (football) enthusiasts around the world will huddle up around televisions Sunday for the World Cup final match between Germany and Argentina. All the hype has made me a soccer fan, but as a supply chain professional I started to wonder: Where do these soccer balls come from? Sialkot, Pakistan, it turns out, is where 40 percent of the world’s soccer balls are produced.

A recent article in the Atlantic reports that more than 100 companies manufacture soccer balls in Sialkot, a city of 1.6 million residents. Researchers from Yale, Columbia, and Lahore School of Economics looked to these soccer ball producers to study technology adoption, specifically via worker acceptance of a new process that would change the arrangement of pentagons on the sheets of artificial leather to reduce waste.

“They introduced it to a control group of firms,” Joe Pinsker writes. “They waited. But after 15 months, only 5 of the 35 factories in the control group adopted the technology—a rate the working paper calls ‘puzzlingly low.’”

When the researchers further examined the situation, they found one company that adopted the technology paid its workers by the hour, while many other companies paid workers by the piece. “The researchers hypothesized that a worker paid per ball might be resistant to trying out a new technology because, in the short run, as they were learning to use it, it would slow down their productivity and decrease their earnings.”

To encourage adoption, the firms offered workers one month of extra wages if they agreed to learn and use the new cutting technology. By offering this relatively inexpensive incentive, researchers saw the adoption rate jump from 16 percent to 48 percent. They emphasize that it’s not as simple as paying workers hourly versus by the piece. Instead, “the general lesson is that workers have to share in the gains for innovation to be successful,” says Eric Verhoogen, a Columbia professor and an author of the study, in the Atlantic article. “There’s a ton of knowledge out there that’s being wasted because workers don’t have any incentive to share it.”

Boosting innovation

While supply chain and operations management professionals might be far from the types of workers described in the Atlantic article, the idea of encouraging innovation can extend up and down the organizational chart and value chain.

For example, consider what former Apple designer and user-experience evangelist Mark Kawano describes in the July/August issue of Fast Company. He says the first myth about the company is that it has the best designers. “It’s actually the engineering culture and the way the organization is structured to appreciate and support design,” Kawano says. “Everybody there is thinking about it. And that’s what makes everything about the products so much better.” In short: The culture ensures that designers don’t have to fight to be heard.

Innovation, and more specifically supply chain innovation, is something I write about often in Supply Chain Management Now. Here we are taking a few steps back to consider business innovation as a whole. Now think about how the examples presented here can apply to your business unit. Have you fostered an environment that is open to new, innovative ideas? If not, where do you start?

APICS is the leading professional association for supply chain and operations management and the premier provider of research, education, and certification programs in the field. From one-day seminars and workshops all the way through APICS Certified in Production and Inventory Management and Certified Supply Chain Professional designations, APICS has the resources you need to build knowledge that fosters innovation. Visit today to see how APICS can help you.

All comments will be published pending approval. Read the APICS Comment Policy.


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