Hau L. Lee is the Thoma Professor of Operations, Information and Technology at the Stanford Graduate School of Business. His areas of specialization include global value chain innovations, supply chain management, global logistics, inventory modeling, and environmental and social responsibility. Ā He is also the faculty director of the Stanford Institute for Innovations in Developing Economies, and is a co-director of the Stanford Value Chain Innovation Initiative.
Listen to (Part 1 of 3) of our conversation below with Hau Lee on how to accelerate the development of the manufacturing industry in African countries.
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Read the transcript below:
āInformation is crucial in the quantity, timing and mix in manufacturingā
[kpakpakpa.com] How important is the flow of information in the manufacturing industry?
[Hau Lee] The flow of information is key so that you donāt make the wrong thing or you donāt have the wrong timing when making a product. Information allows you to know what the best way to dispose of a product if you are not able to sell it. Information also helps so you donāt bring in too much inventory in the beginning – buying the wrong amount of raw material and so on. So basically, Information is crucial in the quantity, timing and mix in fine-tuning the manufacturing process.
āSo you have to think of a clustering conceptā¦ā¦.to accelerate the development of manufacturingā
[kpakpakpa.com] How important is manufacturing for African development?
[Hau Lee] Manufacturing is what naturally comes after agriculture. Agriculture is always the base – every country starts with agriculture. But agriculture does not give enough value-add to economic development, so you have to migrate to manufacturing. What is needed however, because manufacturing comes in so many varieties – textile, apparel, light vehicles, bicycles – is that no one country should try and do everything. What the Chinese did was to create some economic zones, with each zone focusing on different sectors – technology, apparel and so on. By doing so, it attracts suppliers to come together and this speeds up the process of development. So to speed up the process, you have to think of a ācluster conceptā. For instance silicon valley is the cluster of VCs, Detroit used to be the cluster of automobile and Taiwan is the cluster of semi-conductor.
āEthiopia for instance is very smartā
[kpakpakpa.com] So this cluster concept is a way to accelerate the development of manufacturing?
[Hau Lee] Yes. Ethiopia for instance is very smart, Ethiopia is focusing on apparel. I think the government is doing a good job by saying we have a lot of people and we will focus on textile and apparel with the hope of becoming the center of apparel for Africa.
āThe government needs to do two thingsā¦one is to provide the infrastructureā¦..the second one is to make it easy to get in and out of the country – I think this is very crucialā
[kpakpakpa.com] How important do you think the government is in encouraging the development of the manufacturing industry?
[Hau Lee] The government needs to do at least two things. One is to provide the infrastructure so that when you create a cluster, you have proper infrastructure and also provide good education systems to provide accessibility of good labour. The second one is to make it easy to get goods in and out of the country – I think this is very crucial. Most of the countries that developed through manufacturing like China and some other southeast Asian countries, focused on what to do with the development of the country on the inside forgetting about the fact that if you want to export – which has a greater value-add to commodities, you have to make sure that the ports are efficient – you have to make sure that custom clearance is fast and hassle-free. I think the government plays a big role both of the internal development and getting things out.
Continue the conversation with Hau Lee in second partĀ of our three-part interview.
