We have been talking about the robustness of digital supply chains (when properly secured and repeatable) for years now. It’s been an education process before COVID, and every time I mentioned supply chain failures like Brexit or trade wars with China, I was always met with a skeptical “that’s a one-time event, it won’t happen again”. My point at the time was that perhaps the failure is different each time and it might even be a singular occurrence but there will be another failure so executives need to be ready for it. Certainly Brexit failures have nothing to do with a ship stuck in the Suez Canal for 6 days and blocking all ships behind it and yet… the results of both incidents were major supply chain failures. Furthermore, these supply chain failures have a ripple effect that causes a chain reaction of failures.
A recent example of a supply chain ripple effect was an outbreak of COVID among dockers in the port of Yantian, China, bringing its operations to only 20% of its full capacity. This caused congestion and delays in Pearl River Delta ports as carriers scrambled for alternatives. They found one in the railway leading from China to Europe along the silk road. But… a 40% YoY spike in volume (and prices!) for this line caused delays and equipment shortages affecting those that chose railways as an alternative to ships as well as those that always use the railway. Logistics companies are complaining of congestion in main rail hubs and delays running between 7 and 10 days in China plus delays of 1 to 2 weeks at the Belarus/Poland border. For now (June 2021) this as far as it got but there is absolutely no guarantee that there won’t be additional ripple effects. If we think back to the initial COVID outbreak in China, its ripples are still happening: container shortages in China, semiconductor (chip) shortages causing shortages in white appliances and other consumer goods, etc are still happening today 18 months after the trigger causing the initial supply chain failures.
Stop the Ripples in Their Tracks
The other thing that was demonstrated in the last 18 months is that digital supply chains can stop the ripples (so long as we avoid the pitfalls that can create their own ripples, of course). The reason is simple: digital assets are not confined to a geographic location or an industry. Therefore, they are not susceptible to the ailments of physical supply chains. In case of failure, switching to a digital supply chain (that was prepared in advance – some forethought is required) can stop the ripple effects and overcome the failure. Sounds like the solution to everything? Not quite… Digital supply chains have their own perils that need to be dealt with to ensure parts are manufactured and supplied consistently and on time. We previously wrote about how to secure your digital supply chain and ensure the additive manufacturing (AM) part of it is repeatable, consistent and tracked (and also certified when needed). It’s still worth considering what kind of ripple effects could still happen with AM and digital supply chains.
First of all, the AM process still created physical parts from a physical raw material and therefore failures can affect the availability of the raw material. The mitigating factor for this risk is that the same raw material can be used to manufacture many parts but that is small consolation if the specific raw material you need is out of stock. The other failure physical supply chains suffer from and affects digital ones as well is a sudden spike in demand for a specific item or a few items. COVID provided just such an example with swabs and PPE – even with many AM service providers lending a hand there was still a shortage. Again, the flexibility of AM mitigates some of this risk when compared with physical supply chains – a service provider can seamlessly change the part it produces with AM but an inventory of parts cannot create a different inventory composition on the fly. In addition, reallocating the AM resources to these in demand applications may create a supply delay for other applications. Since capacity is fixed there is no way around this except to increase capacity (as some hospitals did, for example, during COVID).
When looking at the big picture, though, properly secured, repeatable, digital supply chains and AM mitigate many more failures and ripples than they expose. The most important consideration to notice, though, is that they perform best when they are put in place and tested (and certified, if needed) in advance, rather than ex post when a failure has occurred and is rippling away… That requires planning and some investments but the payoff is being able to retain your customers when they appreciate it most: in case of crisis when other companies around you are failing miserably. With proper security and consistency this is more than possible.
For more insights and information follow us on LinkedIn or subscribe to our newsletter for weekly updates. Photos: top and bottom ripple photos by Tessa Blokland taken at the ForwardAM (BASF) booth at FormNext 2019; middle photo is COVID swabs produced on Carbon 3D printers.