What COVID-19 Taught Us About the Supply Chain

2020-06-03

Aya Bentur  

APworks-Bugatti-Exhaust-Finisher-Formnext-2019

Two hot topics that came up during the COVID-19 pandemic are the importance of rethinking current supply chains and the popularity of webinars. LEO Lane co-Founder and VP Business Lee-Bath Nelson was recently invited to speak at a webinar (video here) organized by Bloomberg Intelligence and at the AMFG Additive Manufacturing Landscape Digital Conference (video here), both discussing AM enabled digital supply chains and virtual inventories. It is a current topic so we are sharing some takeaways from these two events.

Rethinking the Supply Chain

The AMFG Additive Manufacturing Landscape Digital Conference showed an overview of perspectives and insights into the current state of the AM industry. One of the key takeaways from the event according to AMFG is that the combination of AM and digitization will encourage industries to rethink their approach to supply chains. The same notion resonated through the Bloomberg Intelligence webinar where Johnson Imode, BI industrial analyst, Andy Langfeld, EMEA region President at Stratasys, and our own Lee-Bath Nelson discussed 3D Printing in Post COVID-19 Supply Chains.

The Additive Manufacturing Landscape 2020 AMFG

The importance of reevaluating current supply chains stems from the inherent differences between traditional manufacturing and additive manufacturing which call for different supply chain solutions. Traditional manufacturing by nature requires a global supply network with physical warehouses and physical shipping/logistics. One of the key characteristics of traditional manufacturing is mass production. The same item is mass-produced in a repeatable fashion, in one batch all items are the same, hence the more you produce the lower the price per part is. This makes centralized production the logical choice, where China is a big beneficiary of this development. Johnson Imode pointed out that the production of intermediate goods in China has grown 10 fold in the past years, and this is where we meet COVID-19 in the early months of 2020.

Failure Upon Failure

Lee-Bath Nelson presented the chain of events that led to supply chain failures during these last few months. The initial outbreak in China (which was relatively contained geographically at the time) combined with China’s increased role in the production of world goods, began the ripple effect of supply chain failures. Factories shut down in China brought some physical inventories to start to deplete. This was the first in a line of challenges. As the virus began to spread, the severity increased, and became a global pandemic. In terms of supply chains, the intention to limit the spread of the virus by limiting travel made it extremely difficult to move goods. The shortage and acute need for parts, especially medical parts, grew because there was a failure upon failure, the vulnerabilities were experienced both in the manufacturing stages, as well as in the logistics in the supply chain.

LEO Lane - Bloomberg webinar May 2020

New Awareness

3D Printed model of a human heart - Avinent

The pandemic has shown that the risks of supply chain disruption are higher when manufacturing is centralized and transportation is widespread. The state of emergency brought awareness to AM as a technology and as an enabler of digital supply chains, but neither the technology nor the business models are new. The geographical and time associated benefits of AM became clear as a result of the way the AM ecosystem came through in times of need. Specifically in the medical field AM is already widely used in pre-operative patient-specific anatomical models (above 3D Printed model of a human heart – Avinent), instruments, jigs, fixtures, aids, labware, maintenance parts, and so on. AM applications are used in the production process, in tooling, localized manufacturing, high-end critical parts as well as maintenance and emergency spare parts, this isn’t news really. Andy Langfeld pointed out an SME Study of 700 companies that placed 3d printing amongst their top investments. What is new is understanding the applicability of digital supply chains, not just as a means of reacting to but also avoiding supply chain failures.

Stratasys and Origin 3D Printed Nasal Swabs

Andy Langfeld discussed how the PPE shortage uncovered the classical risk of the global supply chain today, and the initiatives Stratasys took part in. Examples are the Coalition for Shields which includes 150 companies, partners, and customers, the partnership with Origin in the additive manufacturing of nasal swabs (above) that grew in production from 100k to a million a week, as well as local initiatives powered by cloud software. In AP-HP hospitals in Paris, they helped set up an internal production method, providing 60 3D printers in 48 hours as well as an internal part catalog. Doctors within the hospitals can order these parts from an online store equivalent, all complying with industry regulations. This is an example of how manufacturing is just one part of the supply chain, the way (and the speed) in which a part is ordered, obtained and supplied is critical to an operational supply chain, especially in times of crisis.

Not Just a Pandemic Solution

But again, the situation caused by COVID-19 just shined a light on an existing problem – and solution. There are and there will continue to be other reasons for supply chain failures such as the tariff wars between the USA and China, and Brexit. Therefore, evaluating the effectiveness of the digital supply chain for a company is relevant now and in the near future. When comparing production costs, people tend to look only at manufacturing costs, which makes sense if, and this is a big if, the supply chain is the same for items produced by the compared manufacturing methods. While AM might be more costly per part, it can save significant costs when it comes to the supply chain of a part. Digital supply chains, in general, have much lower costs: a digital supply chain is shorter, simpler, and obviously less physical, cutting the costs related to keeping an inventory, warehouses, overproduction, transportation, and more.

In times of crisis, there still could be difficulties in the digital supply chain but those are restricted mostly to the supply of raw materials. The agility of digital enables quick reactions and changes when needed. As an example, Nelson described a possible scenario where due to a secondary outbreak a certain facility is closed, in such a case while the facility infected is closed manufacturing can easily move to a different facility in the local vicinity. Another advantage is prioritizing production, if there is an immediate demand to a certain part an AM production facility can easily switch to producing the needed part. We have seen over these past months factories repurposing to manufacture medical equipment but in traditional manufacturing the time and costs of such a switchover are significant. In contrast, secured virtual inventories and AM manufacturing can be flexible and nimble essentially hot-swapping one location for another, or one product for another.

Vulnerabilities of a Digital Nature

With all these advantages, why aren’t digital supply chains with AM more popular already? There are vulnerabilities that stem from digital production and digital supply chains that need to be addressed. If traditional production can ensure almost 100% consistency and repeatability in the physical product, because parts are produced en masse, when it comes to digital inventory the main difference is that the part is digital – as in not yet produced. Therefore it is important to keep repeatability across times and locations, whenever or wherever the part will be produced, it will always come out the same. Enforcing repeatability in AM can be done by tracking and controlling the production process using SaaS software, from the machine used to the settings which can lead to different material characteristics. Another vulnerability is theft, this is true for physical and digital but while the economic loss when a physical part stolen is the value of that one part, when a digital part is stolen the economic ramifications are much worse: an unprotected digital part is a blueprint from which as many parts as desired can be produced. Again, there are software solutions that protect your virtual inventory but this is certainly something to take into consideration when setting up a digital supply chain.

In view of COVID-19, it’s likely that we will need to be able to work from everywhere. Using cloud and SaaS solutions can make it easy to integrate with companies’ existing systems and still have access from various locations. AM and digital supply chains offer an alternative, or a parallel alternative to the existing supply chain, in order to self sustain and remain strong against supply chain disruption. It’s an opportunity to mitigate risks or even drive redundancies of certain threats, COVID, or non-COVID related. Whether it’s to supply emergency spare parts or everyday spare parts, digital supply chains are coming to the forefront with many companies.

What have you learned about your supply chain from COVID-19? Tell us about it in the comments below or email us. For more insights and information follow us on LinkedIn or subscribe to our newsletter for weekly updates (up top APworks Bugatti Exhaust Finisher exhibited Formnext 2019, photo by Tessa Blokland).

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