One of LEO Lane’s management top predictions for additive manufacturing (AM) in 2019 relates to the supply chain. We believe that this year logistics and the supply chain will play an even bigger role in the adoption of AM, and simultaneously AM will enhance the capabilities of the supply chain. According to Alan Amling, VP of UPS Ventures, on-demand additive manufacturing is a logistics solution. So what are the needs of the AM ecosystem in terms of the supply chain? What is needed in order to bring the 2019 predictions to actuality? Part of our #AMNeeds series.
The Needs of any Supply Chain
In many aspects, the AM supply chain isn’t that different from the non-AM supply chain so many of the needs are the same. The logistics world is buzzing with words such as digital transformation, cloud architecture, Blockchain, Big Data, Industry 4.0, IoT, Machine Learning, Artificial Intelligence, Digital Twins etc. While the supply chain and supply chain systems are on one hand very established practices, with well-working systems in place, on the other hand, with changes in manufacturing and consumer culture there is always a need for improvement – and today’s technology is doing just that. There is a wave of recognition of the importance of the supply chain and the influence a smooth operation has on the company’s bottom line and the customer’s satisfaction. “The role of chief supply chain officers (CSCO) will become critical to a company’s success, as organizations move toward being digitally-enabled, intelligent enterprises,” says SAP’s Richard Howells, “Historically, the CSCO has been viewed as a supporting character within the greater c-suite landscape, and wrongly so. In reality, CSCOs have the greatest insight into how to create competitive differentiation within their organizations, especially in light of current tariff wars. This has proven true for many different companies, including Apple, General Motors and Intel”.
What constitutes a successful supply chain? The main goal of any supply chain is to come as close as possible to matching supply and demand in real-time. And what are the challenges that stand in the way?
Demand is uncertain, one of the biggest challenges in the supply chain is accurately forecasting demand. Inaccurate prediction of demand, in simple terms, means producing too much of a product that isn’t wanted and not enough of a product that is wanted. This is followed by keeping more inventory in storage for longer or cutting sale prices. Another example is inaccurate distribution – demand can unexpectedly differ between locations, in this case, a company can conduct inventory rebalancing between locations yet the additional shipping costs between locations raises overall costs. One attempt to address uncertainty is using big data analytics: data collected up and down the supply chain, and analyzed in order to reach more reliable predictions regarding demand but also outside events such as how would an expected snowstorm affect sales? Here AM really shines, AM enables on-demand manufacturing that limits the problem of excess inventory and also limits the need for rebalancing. However, in the AM case, the inventory (and supply) that needs to be managed is that of raw materials and it needs to be managed in more locations than when manufacturing was central, so predictive aids still have their usage.
Reaching an Equilibrium
The production process itself can also influence the coveted equilibrium between supply and demand. For example, a machine breaking down on the production floor can result in not being able to supply demand on time, which in turn leads to paying fines for missing deadlines, customers looking elsewhere, and higher costs of production – as always time is money! Here again, AM can mitigate some of this need. Scott Burk, President of PSMI talked about how AM can answer a supply chain need: “We have a void in our supply chain and we really see additive manufacturing helping to fill that void,” he goes on saying, “Today’s process for finding a legacy part is going into an archive to try to find the part information. Then, we make sure that part information is correct and reverse engineer it with a tool and die shop because the company that made the machine and its spare part are long gone,” said Scott. “With a QR code embedded within the 3D printed part, I can scan that part and know every little detail, what iteration it is, when the last time we made it was, etc. All of that can be easily put on that QR code. Now, that information is never lost” (below Rize, PSMI and Azoth 3D printed fixture part). However, when we move to on-demand with AM, a break down of an AM manufacturing line is more urgent and serious since there is no inventory to fall back on – a delay in on-demand manufacturing is the same delay that the customer experiences. Therefore keeping the manufacturing line up is a more acute need in AM. A separate topic for our #AMNeeds series.
Lack of visibility throughout the supply chain is also a challenge, a big part of the supply chain actually occurs outside of the company – if it’s the procurement of materials on one hand or buyers, distributors and the end customers on the other. Not knowing what is happening throughout the supply chain can lead to unforeseen problems, or curtail the ability to tend to them in time. The need for insight into the entire supply chain of an item can be answered by solutions such as the digital twin, and embedding data into the physical item’s material. For example, both NEC and HP are developing systems where the way a part is additively manufactured creates a unique “fingerprint”. This “fingerprint” enables connecting the physical item with its digital predecessor this way you can track the physical product, when and where it was produced, and its entire digital workflow thus verifying quality and authenticity (below NEC fingerprint of things).
The needs listed above can be addressed by integrating additive manufacturing into the supply chain, yet there are new needs that arise with the use of AM.
Keeping it Virtual
Many supply chains include the following steps: procurement from (multiple) suppliers of raw materials > manufacturing (potentially in multiple locations) > assembly > inventory (warehouse) > distribution center > shipping > wholesaler > retailer > end customer. The actual data from various steps such as purchases by the end customer are then translated back to predict demand and plan material procurement and manufacturing.
When it comes to virtual goods such as apps the supply chain is simplified, there is no need to physically produce anything, there is no need to oversee the flow from material supplier to end-customer. The product is ready and exists in virtual form, once it’s purchased it’s delivered via email or download – this applies for documents pictures, apps, and software. And then there is the AM supply chain which is a hybrid of physical and virtual, while the product begins in virtual form (as a file or an entry in a database) it aims to stay virtual for as long as possible in the supply chain. In the end, it becomes a physical item (below a Whirlpool 3D printed spare part which originated in virtual inventory). Maintaining the item in its virtual form throughout most of the supply chain results in minimizing the supply chain and lowering its costs: “As manufacturing moves closer to the edge, think about how that will impact logistics companies,” says Gil Perez of SAP (up top virtual and physical – the SAP Digital Twin). This creates a need for management software that can handle virtual inventory ending in physical items (as opposed to virtual inventory of virtual goods).
Time is of the Essence
Matching supply and demand with on-demand manufacturing calls for agility and speed – time is of the essence in a supply chain. On-demand additive manufacturing requires a distributed supply chain, with multiple locations producing physical items and providing them to customers. In order to maintain the item in virtual form as long as possible manufacturing needs to take place close to demand in terms of time as well as geographical proximity. In 2018 Fedex launched their Forward Depot, aiming at shortening the distance between manufacturing and delivery to the end-customer. For small and midsize companies having manufacturing facilities across the globe will probably not be cost effective, instead, they can use partners. Logistics partners and trusted service providers can provide additive manufacturing services (including post-processing and assembly) as well as last-mile shipping – providing a possible solution for on-demand AM supply.
Securing the Chain
When it comes to digital assets the need for security immediately arises. A distributed supply chain needs to enable a trusted flow of information, especially at the point of transformation from virtual to physical. Basic needs must be fulfilled answering questions such as: How many parts are produced from a single file? Where are they produced? Are they produced in a manner that upholds the quality and consistency standards of the company? The collaboration between LEO Lane, SAP, and Materialise (depiction below, courtesy of Materialise) looks at the AM supply chain as a whole and answers these questions. The result is a holistic end-to-end solution combining the expertise of all three companies.
Building on the Existing
There are already management systems at work on the corporate level: strong file management systems, efficient supply chain systems, etc. These form a strong basis to build upon. Instead of reinventing the wheel, the AM supply chain needs to add on to these systems so as to create minimal disruption to existing processes and procedures. That means adding the missing “plug-ins” and tying them all together to a complete supply chain. In a recent Forbes article by Steve Banker, he notes that while DHL Supply Chain invested $300 million in new technologies to improve their operations, a big part of the need is building on and improving management software systems that are already being used. There is a need for tailor-made solutions: while supply chains are similar in nature, each caters to a different company and industry. Integrating AM into a supply chain should take into account the strengths of the existing chain, the working patterns, build on it, and create specific solutions for its weak points.
What are the unmet needs you see in the additive manufacturing ecosystem? Tell us about your #AMneeds. For more insights and information follow us on LinkedIn or subscribe to our newsletter for weekly updates.