For decades, our entrepreneurial and political actions have been primarily determined by principles such as the division of labor, concentration on core competencies and the outsourcing of all other activities. Profit maximization as a maxim for action favours cost-oriented decision-making and the global allocation of partial services. However, this favors long, transport-intensive, globally distributed and unfortunately also vulnerable value chains.

One indicator of our economic activity is vertical integration. During the last crisis in Germany, this increased from less than 54% to almost 62% in 2008. Has there been a fundamental rethink in the design of value chains or was it "only" a matter of employing our own people in the short term? The subsequent fall to around 56% would seem to suggest the latter.

We will have to scrutinize the principles and business practices we have developed over the last few decades, such as concentrating on core competencies and global sourcing.

The decisive question in the maxim of profit maximization is the period under consideration. Short-term profit maximization in months or quarters may produce questionable results in the long term. Profit maximization over several years or decades produces different decisions.

I therefore advocate giving preference to the long-term action horizon and replacing profit maximization with the ability to survive as a maxim for action, as proposed in the systemic-evolutionary world view.

Viable units or production facilities can be formed according to the PPRL model (product, process, resource, control). From a product perspective, a plant should not manufacture individual parts or components, but products that can be sold and used. This could mean that we do not, as is currently the case in a plant in Germany, manufacture components with complex machines, drive the individual parts to Tunisia for pre-assembly and then to Romania for final assembly. The problem with this approach is that the production network is extremely vulnerable. If a plant comes to a standstill or the transport chain is interrupted, the entire network will soon be down as well. However, if each plant were viable in its own right and covered the entire production process, from prefabrication to pre-assembly to final assembly, we would save a lot of transportation. If one plant were to fail, the other two would still be operational.

Using the fractal model, the question could then be asked for the region, the state or even the European economic area as to which products need to be produced locally in order to actually be viable.

The question can then also be played out for resources. Which resources do we need to have access to as a company or as a region? Which energy, which raw materials and which production technologies are essential for our production location?

Finally, the steering dimension deals with how we keep individual units capable of making decisions and taking action. What knowledge, budgets and powers must be available locally in order to be able to make decentralized, fast and agile decisions in line with a central strategy.

Once these boundary conditions have been defined, the processes can also be optimized to meet these boundary conditions. The key to the production network of the future lies in both the digitalization of the value chain and the consistent reorganization of production according to lean principles.

The author

Dr. Markus Schneider is Professor of Logistics, Materials and Manufacturing Management at Landshut University of Applied Sciences and Scientific Director of the Technology Centre for Production and Logistics Systems (TZ PULS) in Dingolfing with its 900^m2 learning and model factory. He is also the founder and managing director of PuLL Beratung GmbH and is responsible for several research projects relating to factory planning, process optimization and Industry 4.0.