Part II The Modular Motorcycle Gang

China’s Motorcycle Industry China’s motorcycle industry illustrates peer collaboration and production at its finest Their collaboration has led to competitive advantages by means of efficiency and quality control Motor cycle production has tripled since the mid 1990s in China

History Yin Mingshan set up a motorcycle repair shop with 14 employees in Chongqing That was over 14 years ago. Today, his company, Lifan, has 9,000 employees Lifan produces over 700,000 motorcycles a year in 112 countries

Future of Lifan Lifan plans to double its workforce to 20,000 in five years Lifan wants to be a worldwide brand Hopes to be instrumental in building up China’s automobile industry Makes mid-size cars in Asia, Middle East, and Caribbean The Lifan 520 has leather seats, air bags, a spacious trunk, and a DVD system for $9,700

Peer Production Current thinking: Peer production can only be utilized to make information-based goods (composed of bits, inexpensive to make, and easily subdivided). More people are beginning to believe that peer production can be applied to the production of actual products

Modular If products are made to be modular then, like Wikipedia, producers should be able to add to and modify product components and designs Modular means consisting of interchangeable parts that can be swapped without hindering the performance of the product

Collaboration Chinese motorcycle producers collaborate on manufacturing and designs (hundreds of companies) In less than ten years, Honda, Suzuki, and Yamaha have lost 40% of their market to Chinese firms This seems to be proof that peer collaboration and production has been a successful approach for the Chinese Motorcycle industry

Other Reasons for Success in China China’s transition from communist central planning to a market economy Long history of making Japanese products Some argue that there is no real innovation in China; they knocked off the Japanese's design China has made reverse engineering more collaborative and organized

China’s Approach Loosely defined specifications to amend and improve performance (this is usually achieved through collaboration with other suppliers) Exchange of knowledge and skills among firms Face-to-face interaction encourages trust, and problem solving Increased specialization This is referred to localized modularization

Risks to this Approach Gap in supply and demand caused by a lack of coordination between suppliers and producers when gauging the market Mismatched Parts- This can arise from a lack of integration

The Lego Block Airplane

Boeing’s Approach Planes are composed of “Lego” parts made from many different manufacturers Economic factors, including 9/11, caused Boeing to have to change the way it does business New approach, mass collaboration, to control costs and get new planes to market more quickly

Boeing Continued Participants design and build the aircraft in ways similar to those who built the Linux operating system From this process came the 787 Dreamliner, IMPORTANT FOR THE COMPANY’S SUCCESS Built among hundreds of suppliers in six different countries Boeing’s new model treats suppliers as partners and peers, and their involvement in the process begins much earlier Future passengers were also involved in the design process The final assembly process cut from days to as few as three days

Collaboration System Boeing created a collaboration system called Global Collaborative Environment Allows for collaboration in respect to design and product life-cycle management Engineer drawings and other important data can be accessed, reviewed, and revised using the system by all partners all over the world. There is also a sophisticated virtual design program, so suppliers can see how their parts will act together in real situations (at this stage benefits and problems can be seen)

Risks Some worry that Boeing’s sharing of intellectual knowledge will cause them to lose its engineering edge “Leaky knowledge” Micromanage