It may be more economically feasible and efficient for some industries to shift to small, modular, mass-produced units that can be deployed in a single location or distributed across many locations compared with custom-built, large-scale units of production, according to a recent study out of the Columbia Business School.
The study, led by by Garrett van Ryzin, PhD, and the Paul M. Montrone professor of private enterprise at Columbia Business School, Caner Göçmen, PhD candidate at Columbia Business School, and Eric Dahlgren and Klaus S. Lackner of Columbia University’s school of engineering and applied science, showed three driving forces underlying the shift from efficiency of unit size to efficiency in numbers. These factors include high degrees of automation through new computing, sensor and communication technologies at a very low cost, which will largely eliminate labor savings from large units; achieving capital cost savings through mass production of many small, standardized units comparable to or even greater than those achievable through large unit scale; and significant flexibility provided by small-unit scale technology — a benefit that has been largely ignored in the race toward ever-increasing scale and one which can significantly reduce both investment and operating costs.
This trend is resulting in a switch from large to small optimal unit scale, and soon many more industries will learn to “think small,” reaping the benefits of this new paradigm in production, the researchers concluded.
Disclosure: The researchers had no relevant financial disclosures.