Advancing Manufacturing to New Frontiers: Increasing Opportunities for Society

Manufacturing is on the verge of entering a new frontier that has the potential to revolutionize every facet of society as we know it. Innovative processes, trends, and technologies are transforming the core of manufacturing, and lowering the walls between manufacturing and other sectors of the economy, especially the services sector. Due to the expected impact of this transformation, policymakers, business leaders, and society as a whole will have to adjust their image of manufacturing to this new reality.

In this article, we build on our recent investigations into this transformation and provide insights into the future of manufacturing and its impact on policy, business, and society.¹ Our starting premise is that policymakers and business leaders must come to terms with two developments. The first is that the factory floor—traditionally considered the essence of the manufacturing sector—is an increasingly smaller and more integrated piece of a larger manufacturing enterprise that comprises other traditionally distinct sectors, such as research and development (R&D) in industry and academia, design, consulting services, sales, and marketing. The second development is that, because of this integration, manufacturing can no longer be treated as an expendable, stand-alone puzzle piece that can be cut out and exported as needed. Nor can the manufacturing challenge be addressed without considering other business or economic factors, as many current initiatives are attempting to do.

The transformation of manufacturing has been underway for decades. Early signs included the migration of firms toward a combination of manufacturing and support services that integrated manufacturing into the tangible and intangible economies. Decades ago, firms like IBM and Xerox bundled their manufactured products with support services to differentiate their products, build strong relationships with consumers, and increase profit margins. Most recently, Apple blurred the manufacturing/services distinction with the integration of their iPad, iPod, and iPhone products with online services. As manufacturers have moved into services, the service industry has moved toward manufacturing: Microsoft, a software company, also offers computer peripherals such as trackballs and keyboards; Amazon, originally an online bookseller, also builds and sells the Kindle electronic reader; and the British firm Riversimple plans to manufacture hydrogen fuel cell cars and lease them on a per-use basis.

This trend has moved beyond linking support services with manufactured products and is now fully integrating services with products, such that the two become inseparable. Even medicine, the most craft-like of professions, is becoming a blend of human medical skill and manufactured technology. Hardware- and software-based medical tools are used in routine diagnostics and patient care, and increasingly in complex surgery. Innovations in wireless sensing technology—a stronghold of the manufacturing sector—have great potential in the field of personalized medicine. Future advances in tissue engineering could make it possible to grow organs using three-dimensional printing technologies, which would significantly change the boundaries between traditional manufacturing and biotechnology. By creating opportunities for entrepreneurs and companies of all sizes in all sectors of the economy, such advances in manufacturing have the potential to broadly distribute, rather than to concentrate, economic opportunity.

Traditional factories were designed to efficiently produce thousands of identical widgets—what MIT’s Sanjay Sarma has called “the tyranny of bulk.” Today’s advanced manufacturing facilities produce low-cost goods with the efficiency of mass production and the flexibility of custom manufacturing, which allows companies to respond quickly to changes in quantity, quality, and customer demands, thus giving consumers the speed, flexibility, and customization they increasingly expect. Moreover, these advances increasingly generate spillover into sustainability and lower use of resources, which serves the common good while adding to the company’s bottom line.

In this policy perspective, we examine the advanced manufacturing enterprise of the future through a lens of four cross-cutting technology areas. We identify converging trends, where the ubiquitous use of information technologies, modeling and simulation, and supply-chain innovations are leading to nearly full automation of the factory floor, and where smart factories are being created that have the...