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Will robotics lead to radical insourcing?

Recently some large companies have shifted parts of their production from low wage countries to their home countries. In this post will be explained why robots cause this phenomenon. Will radical insourcing happen in the future?

According to Cowen (2016) robots and 3D printers could create a world of “radical insourcing”. He states that the increasing use of machines, smart software, robots and 3D printing would mean that wage differentials will no longer be a major reason to look abroad or to lower wage countries. Similar goods could be produced at home instead of buying from an exporter and incurring labour and transportation costs. Besides cost benefits, insourcing is also beneficial for companies because it is a less polluting way of producing. Moreover, customers do not have to worry that products are made in sweatshops. Also, companies can become more responsive to demand because products are produced (closer to) home (Financial Times 2016).

There are some companies who started insourcing activities after a long period of outsourcing. For example, Adidas has been outsourcing activities for over three decades. Last year, the former chief executive of Adidas announced that some shoe production would be brought back home for the first time, thanks to the highly automated factory, the “Speedfactory” to be built in Germany. Adidas wants to speed up delivery times to fashion-conscious customers and reduce freight costs (Reuters, 2014). Adidas has already unveiled a 3D printed running shoe sole that can be tailored to a person’s foot.

Other examples of reshoring companies where previously internationalized activities are being returned to inside national borders are Whirlpool Corporation, Caterpillar Inc. and Ford Motor. As more and more companies are insourcing, it may become a trend, especially with the fast technology advances fast. Radical insourcing will have big impact on developing economies. What would be the consequences for developing economies?

 

Cowen, T. (2016). Economic Development in an “Average is Over” World. Available at: https://www.gmu.edu/centers/publicchoice/faculty%20pages/Tyler/Manila.pdf [accessed 27 September 2017].

Dalder, M. (2014) Adidas aimes to open automated shoe factory in Germany in 2016. [online] Reuters. Available at: https://www.reuters.com/article/us-adidas-robots/adidas-aims-to-open-automated-shoe-factory-in-germany-in-2016-idUSKCN0SE1RL20151020 [accessed 27 September 2017].

O Connor, S. (2016) Robots may cut off the path to prosperity in the developing world. [online] The Financial Times. Available at: https://www.ft.com/content/5d0b1206-36f2-11e6-a780-b48ed7b6126f?mhq5j=e5

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In the first week of this month, a train passenger discovered a camera on an advertising pillar at the train station of Amersfoort (NRC, 2017). She posted a photo of it on Twitter and this triggered a big discussion. People are concerned about their privacy. This post is about this recent hot topic.

The advertisement pillar with camera is exploited by Exterion Media. Exterion owns hundreds of pillars with cameras and they are experimenting with this type of advertisement. Due to the high software expenses of the system they use, VidiReports, most of the cameras were still switched off (NOS, 2017).

VidiReports is owned by Quividi and this software combines multiple features. First of all, it analyzes the scene by showing the number of by-passers. Secondly, it provides face detection to count the watchers. Moreover, it measures the attention time of those watchers and the more global dwell time, which includes the moments when they were looking away. Another function of the software is that it can qualify faces by estimating the gender, the age, the face features and the mood of the watchers. The last function is gate crossing, to estimate the number of people who cross a virtual gate, when the camera is set on the ceiling (Quividi, 2017).

All these features can provide valuable insights for advertisers, since they can measure the effectiveness of their advertisements. But following the discussion after the discovery of the cameras on the advertisement pillars, Exterion has decided to switch all cameras off. The promise of not saving any camera images was not enough to stop the discussion. A spokesperson from the authority of personal data states that in general the use of cameras in public spaces for advertisement purposes is prohibited (Volkskrant, 2017).

This is an important topic, since through advanced technologies cameras are more and more used in order to provide valuable insights. Cameras are not only found in advertisement pillars. An increasing number of objects are equipped with cameras like for example public lightning.

What is your opinion about the use of cameras in advertisement pillars or in public spaces in general? Do you see it as an infringement of privacy or do you see it as a great tool to provide customer insights?

To see how VidiReports work, watch this video:

https://www.youtube.com/watch?v=EekdBMSWf_Y

References:

Schellevis, J. (2017) Reclameborden op A’dam CS weten wanneer en hoelang jij kijkt. [online] NOS.nl. Available at:https://nos.nl/artikel/2191341-reclameborden-op-a-dam-cs-weten-wanneer-en-hoelang-jij-kijkt.html [accessed 27 September 2017].

Sondermeijer, V. (2017) Exploitant schakelt cameras in reclamezuilen uit [online] NRC. Available at: https://www.nrc.nl/nieuws/2017/09/11/exploitant-schakelt-cameras-in-reclamezuilen-uit-a1573012 [accessed 27 September 2017].

Verhagen, L. (2017) U wordt gefilmd (en uw emoties gemeten): wat doen die camera’s in billboards op stations? [online] De Volkskrant. Available at: https://www.volkskrant.nl/tech/u-wordt-gefilmd-en-uw-emoties-gemeten-wat-doen-die-camera-s-in-billboards-op-stations~a4514861/ [accessed 27 September 2017].

http://www.quividi.com/products-services/