November 19, 2011

The Problem With Solutions

Let's consider a problem addressed in a design class from several years ago. An enormous multinational corporation (you use or know their products) makes a water-purifying sachet. It works quite well as far as I know, but the difficult part--and the focus of the project--is how best to move these sachets from the area they're manufactured to the area that they're needed.

Now this is a solution I support
Economies of scale will lead to the cheapest manufacturing costs when the items are manufactured in an automated factory. Only relatively developed countries can offer the services necessary to operate such a facility (i.e. electricity, skilled labor). While this route results in the cheapest manufacturing costs, those savings quickly evaporate when tasked with delivering the product to the end-user. First, there's the issue of moving the product from the factory to the country that needs it. This cost is typically not a deal breaker, but these sachets do not generate significant revenue since pricing must match means of the users. Second, recipients reside exclusively in third world countries, which lack the basic infrastructure required to efficiently move anything. Furthermore, those residents that really need them tend to exist in the most remote areas, where it can truly be impossible to deliver these items on a regular basis. Clearly, this approach does not qualify as sustainable.

So the other exterme option is to manufacture the sachets in the larger cities of the countries that need them. This route takes great steps toward solving the transportation issue, but the decentralization of manufacturing eliminates savings due to econmies of scale. Automated factories will not operate efficiently due to a lack of consistent electricity and skilled labor, requiring manual production of the sachets. In order to produce an appropriate quantity, a large amount of individuals must be employed.  Once again, a non-sustainable solution in terms of revenue generation.

One could conceive of a hybrid approach, doing a certain amount of manufacturing in a factory and letting the final manufacture occur in the end-use country. Depending on the costs of manufacturing individual components, this approach could be optimized and may produce the least expensive route. Nonetheless, as of today, the company continues to produce these sachets on non-profit basis and sell them at cost (which is pennies). I applaud their decision to do so--it's a wonderful example of corporate social responsibility.

The real issue in terms of creating a self-sustaining solution is the attempt at developing a panacea. The sachets require materials not locally available, which leads to the manufacturing and transportation problems described above. Furthermore, it would still require the company to exist, operate profitably and to choose to allocate resources to producing the necessary materials and providing appropriate training. Now imagine a product that requires only materials local to the affected area, can be produced by the native population with little to no specialized knowledge, and is cheap enough that the locals can actually afford it without subsidy. Whether or not you believe this solution can exist or not (I'm optimistic), one thing is certain: it's form will vary depending on the geographical location. Sub-Saharan Africa will use different materials in a different process than southeast Asia.

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