Behind the Learning Curve

Abstract

The learning curve depicts a decrease in production cost per unit as cumulative volume increases. However, a learning curve does not realize even if the history of production translates into an increase of cumulative volume. It is major premises for cost reduction to change technology in expectation of increasing scale of production. For example, new machinery and equipment are installed in preparation for commercial manufacturing, or product designs are modified for mass production. In other words, the first step to realize the learning curve is the management decision to mass-produce without falling victim to ceiling psychology. When building a prototype, you would use the unique building method suitable for it. If you were producing 10 units, you would naturally use a manufacturing method suited for 10 units. Similarly, for 100 units you would use a method for 100 units. For manufacturing 10,000 units, a mass production methodology for efficiently producing 10,000 units is best suited. Only forecasting of gargantuan cumulative volume from the very beginning enables the factory to adopt appropriate methods and technology for mass production. The learning curve could emerge only if the management has an unwavering conviction on a gigantic scale perspective. As a major premise for technological options, management's scale perspective is the secret of the learning curve.

Spurious Correlation between Economies and Scale

“…The mass production of the Model T Ford and the improvement in productivity was not simply because of expansion of production facilities and increased production. In addition, an increase in cumulative number of units produced due to the so-called experience effect does not necessarily imply that there will be an automatic improvement in production efficiency (Abernathy & Wayne, 1974;Akiike, 2013;Takahashi, 2013bTakahashi, , 2013c. Increases in productivity and production volumes were due to appropriate control of the entire production process, that is, the management of flows through standardization.…”

Dynamic Capability as Fashion

“…Blyler and Coff (2003) asserted that social capital has an important influence on the important phases of DC, such as resource acquisition, integration, and disposal. Takahashi (2013) noted the importance of the "manager's scale perspective" in managerial decision making for investment, production volume, and technology selection.…”

Performance Measurement in Product Development Research

“…Concerning product costs, the relationship between learning (or experience) curves and dynamic changes in cost has been analyzed. During and after the 1980s, however, business administrative studies re-interpreted learning curves as no longer being functions of the amount of experience gained (e.g., cumulative production volumes), but that technological and organizational decision making are capable of influencing these curves (Hayes & Clark, 1985;Hayes & Wheelwright, 1984;Takahashi, 2013aTakahashi, , 2013b. Regarding product quality, since the end of the 1980s, multiple indicators including subjective judgment are being used for products that are difficult to evaluate with objective performance indicator 1 (Clark & Fujimoto, 1991;Fujimoto, 1989).…”