Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Building small: In many industries, economies of size is shifting to economies of numbers

05.11.2012
For decades, "bigger is better" has been the conventional path to efficiency in industries ranging from transportation to power generation.

Food once grown on small family plots now comes overwhelmingly from factory farms. Vessels that carried 2,000 tons of cargo have been replaced by modern container ships that routinely move 150,000 tons. But now, new research shows, we are on the cusp of a radical shift from building big to building small—a change that has profound implications for both established and emerging industries.

Many industry sectors are nearing or have reached a tipping point in which efficiency of unit size is being replaced by efficiency of numbers, according to a recent study by Garrett van Ryzin, the Paul M. Montrone Professor of Private Enterprise at Columbia Business School, Caner Göçmen, Ph.D. candidate at Columbia Business School, and Eric Dahlgren and Klaus S. Lackner of Columbia University's School of Engineering and Applied Science. Rather than relying on custom-built, large-scale units of production – e.g. massive thermal power plants - industries can benefit from a shift to small, modular, mass-produced units that can be deployed in a single location or distributed across many locations – e.g. photovoltaic (PV) panels mounted on utility poles.

Conventional wisdom holds that capital cost per unit of capacity decline with increasing unit size. Other efficiencies of unit size arise from manufacturers' ability to spread out the fixed-costs components of production, as well as factors such as operator labor and design costs. This alternative approach to infrastructure design offers new possibilities for reducing costs and improving service, the researchers found.

The authors identify three driving forces underlying this shift. First, new computing, sensor, and communication technologies make high degrees of automation possible at a very low cost, largely eliminating the labor savings from large units. Second, mass production of many small, standardized units can achieve capital cost savings comparable to or even greater than those achievable through large unit scale. And third, small-unit scale technology provides significant flexibility—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—observable in nascent form in several industries ranging from small, modular nuclear reactors, chlorine plants, and biomass energy systems to data centers—is resulting in a switch from large to small optimal unit scale, the authors found. The shift mirrors a similar revolution that began thirty years ago in the supercomputer industry. The traditional approach to producing higher capacity and greater speed in computing was to build increasingly powerful, specialized machines with ever-increasing processing power. This came to a halt in the mid-1990s, when it became cheaper to employ mass-produced processors and high-capacity memory from the burgeoning personal computer industry. Soon, the researchers conclude, many more industries will learn to "think small" and thereby reap the benefits of this new paradigm in production.

About Columbia Business School

Led by Dean Glenn Hubbard, the Russell L. Carson Professor of Finance and Economics, Columbia Business School is at the forefront of management education for a rapidly changing world. The school's cutting-edge curriculum bridges academic theory and practice, equipping students with an entrepreneurial mindset to recognize and capture opportunity in a competitive business environment. Beyond academic rigor and teaching excellence, the school offers programs that are designed to give students practical experience making decisions in real-world environments. The school offers MBA and Executive MBA (EMBA) degrees, as well as non-degree Executive Education programs. For more information, visit www.gsb.columbia.edu.

Evan Nowell | EurekAlert!
Further information:
http://www.columbia.edu
http://www.gsb.columbia.edu

More articles from Business and Finance:

nachricht Intelligent transaction tax could help reduce systemic risk in financial networks
11.04.2016 | International Institute for Applied Systems Analysis (IIASA)

nachricht Is there a bubble in the art market?
07.01.2016 | Universität Luxemburg - Université du Luxembourg

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: ORNL researchers discover new state of water molecule

Neutron scattering and computational modeling have revealed unique and unexpected behavior of water molecules under extreme confinement that is unmatched by any known gas, liquid or solid states.

In a paper published in Physical Review Letters, researchers at the Department of Energy's Oak Ridge National Laboratory describe a new tunneling state of...

Im Focus: Bionic Lightweight Design researchers of the Alfred Wegener Institute at Hannover Messe 2016

Honeycomb structures as the basic building block for industrial applications presented using holo pyramid

Researchers of the Alfred Wegener Institute (AWI) will introduce their latest developments in the field of bionic lightweight design at Hannover Messe from 25...

Im Focus: New world record for fullerene-free polymer solar cells

Polymer solar cells can be even cheaper and more reliable thanks to a breakthrough by scientists at Linköping University and the Chinese Academy of Sciences (CAS). This work is about avoiding costly and unstable fullerenes.

Polymer solar cells can be even cheaper and more reliable thanks to a breakthrough by scientists at Linköping University and the Chinese Academy of Sciences...

Im Focus: Ultra-thin glass is up and coming

As one of the leading R&D partners in the development of surface technologies and organic electronics, the Fraunhofer Institute for Organic Electronics, Electron Beam and Plasma Technology FEP will be exhibiting its recent achievements in vacuum coating of ultra-thin glass at SVC TechCon 2016 (Booth 846), taking place in Indianapolis / USA from May 9 – 13.

Fraunhofer FEP is an experienced partner for technological developments, known for testing the limits of new materials and for optimization of those materials...

Im Focus: Measuring the heat capacity of condensed light

Liquid water is a very good heat storage medium – anyone with a Thermos bottle knows that. However, as soon as water boils or freezes, its storage capacity drops precipitously. Physicists at the University of Bonn have now observed very similar behavior in a gas of light particles. Their findings can be used, for example, to produce ultra-precise thermometers. The work appears in the prestigious technical journal "Nature Communications".

Water vapor becomes liquid under 100 degrees Celsius – it condenses. Physicists speak of a phase transition. In this process, certain thermodynamic...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

The “AC21 International Forum 2016” is About to Begin

27.04.2016 | Event News

Soft switching combines efficiency and improved electro-magnetic compatibility

15.04.2016 | Event News

Grid-Supportive Buildings Give Boost to Renewable Energy Integration

12.04.2016 | Event News

 
Latest News

Possible Extragalactic Source of High-Energy Neutrinos

28.04.2016 | Physics and Astronomy

University of Illinois researchers create 1-step graphene patterning method

28.04.2016 | Materials Sciences

Rapid adaptation to a changing environment

28.04.2016 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>