Looking back at news articles from the second quarter of 2020, many items were about supply chain failures and their ripple effects and sometimes catastrophic results. In many of these cases additive manufacturing (AM) stepped in as a stop gap measure, often in an ad hoc and far from ideal way. Most famously perhaps, Italy was hard hit by COVID-19 and had a shortage of crucial ventilator parts – those same ventilators that at the time were keeping people alive. The missing part was reverse engineered and 3D printed, saving lives. This begs the question: could the company that produced the ventilators offer 3D printable parts (or digital assets that are 3D printable) every day or only at times of emergency without compromising its future business of selling parts? These consumable parts are like the blades for razors so endangering their future sale is no small matter. The answer is: yes, but only with some forethought and preparation. This is why these days many companies are looking into and starting to implement digital supply chains with AM as their main supply chain or an alternative one for emergencies. A good reason to take a long hard look at digital supply chains, what they can do for your business, and what to watch out for when implementing them.
In 2019 (seems like such a long time ago – but it’s just over a year ago), I spoke with many people about supply chain failures. There were many examples: Brexit, trade wars with China, etc. The most common response I heard was: that’s a one time event, it won’t happen again. Savvy analysts recognized already then that this was not the case: supply chain failures kept happening, for whatever reason. It was true that in many cases months and even years could pass without a failure in a particular product – back then. Enter COVID-19… The magnitude and frequency of supply chain failures shot up and it became clear just how vulnerable supply chains are. Even now with COVID-19 being handled to some extent, shortages in supply (e.g., of white appliance) persist well beyond the initial failures. On top of that, additional failures happen all the time: manufacturing is halted due to closure, regions run out of containers due to ripple effects, airports are shut down due to an outbreak or even due to 1 variant-carrying person, as was the case in New Zealand. These days, many things are much harder to predict but it seems that predicting that there will be some kind of supply chain disruptions is an easy one to make and is also uniformly accepted. So… what can we do to prepare for these anticipated problems? The key to the answer is noting what has been the most ubiquitous robust aspect during the past year: all things digital.
Because digital and cloud technologies have shown the most robustness and flexibility they are the best bet for mitigating supply chain problems. Simply put, a digital supply chain is one where the item being supplied is kept and transferred in its digital form for as long as possible, eventually being manufactured on-demand (usually using additive manufacturing) close to the customer and delivered to him. There are some obvious advantages to digital supply chains, the biggest of them is that storing and moving bytes is vastly cheaper and simpler than storing and moving physical items. In addition, because we don’t manufacture to inventory we don’t have any obsolete parts to get rid off, balancing inventory is a thing of the past and items can instantaneously move from one geography to another. Another advantage of on demand manufacturing is that we are always producing the latest and greatest part – the customer gets the best part possible. All of this translates to supply chain cost savings that can be very significant and increased customer loyalty. By nature, digital supply chains are agile, flexible, robust to failures (incorporating redundancy is straightforward), and cost effective. Not only that, but having these capabilities set up in an organization for some parts allows the organization to switch over to digital when other parts’ supply chains fail. In emergencies the alternative cost (of not supplying the part) is much higher and being able to provide an emergency spare part, even at a premium, is important to customers and brands.
The Fly (or 2) in the Ointment
With all these amazing advantages why doesn’t everyone use digital supply chains with AM all the time? The reason is that digital supply chains coupled with the AM process also have some worrisome vulnerabilities that, if not addressed, make it prohibitively risky to use them. There are 2 main vulnerabilities. The first is repeatability and consistency. The great thing about physical inventory is that it includes parts that are all the same and have all already passed quality checks before entering inventory (companies don’t want to waste resources on storing faulty parts in inventory). In contrast, in a digital supply chain manufacturing happens on demand and consistency has to be enforced through digital (or manual) means in order to ensure repeatability: the same part with the same characteristics must be produced each and every time in each and every location. This is a challenge but it can be addressed through SaaS solutions that enforce consistency whenever a secured digital asset is 3D printed. The 2nd vulnerability is actual shared by physical and digital inventories: theft. Seems that if it’s a shared concern it shouldn’t be a deal breaker but… there is a big difference in magnitude! When an item is stolen from physical inventory the company lost the economic value of that 1 item. When an unsecured digital asset is stolen (can even “only” be copied, not taken) the thief can produce as many parts as he’d like from it. This can be an enormous economic loss for the company. This kind of IP leakage keeps CEOs, CFOs, CIOs and CSOs up at night. To mitigate this risk, IP protection (through SaaS solutions) must be put in place to control how many items are produced and by whom. Consistency enforcement and IP protection can be combined and coupled with tracking (as in the LEO Lane solution) so that the digital supply chain is tracked from beginning to end and managers know when, where, and how each item was produced.
With robust, secured, digital supply chains companies can not only avoid failures but also shine in times of emergency offering solutions when competitors are faltering. Manufacturing and Supply Chain Managers can collaborate to put this in place in conjunction with additive manufacturing and exhibit leadership and forward strategic thinking in the new environment we are all facing in 2021 and beyond.