True story: about 20 years ago, I bought my mother a mobile phone for the first time. Even though she is a well known scientist with over 100 papers to her name, she was wary of the contraption and kept it turned off (so the battery wouldn’t go empty) in a drawer at home. My siblings and I kept trying to come up with reasons why she should carry it in her purse with the power on. We thought we landed on a great reason when we were expecting a baby: “what if there’s an emergency?”. My mom immediately replied: “if there’s an emergency, let me know and I’ll turn it on and put it in my purse” and continued to keep it in the drawer. As amusing as this anecdote is (at least within the Nelson family…), it was no joke when this happened to many supply chains in the first wave of COVID-19: no one told them an emergency was coming, they were ill prepared, and so they failed. The thing is that COVID-19 isn’t the first emergency that caused supply chain failures, even if it is the severest to date, and it won’t be the last. More pandemic waves have been forecast and other crises and emergencies can and will affect supply chains (just in the last couple of years, we had trade wars with China and Brexit, to name a few). Measures can be put in place in advance for emergencies, to be triggered as needed, especially when emergencies are statistically and undeniably anticipated to happen. As Murphy famously said: “If something can go wrong, it wil…”
The Institute of Supply Management surveys captured the expectation changes as they unfolded during this crisis. In early March about 80% of respondents believed COVID-19 will cause supply chain disruptions for their business. By early April this number rose to 95% and by the end of May it was 97%. Supply chain disruptions are a widely expected (and recurring) emergency – the mobile should come out of the drawer now! So, what can companies do to prepare in advance for this unavoidable eventuality?
ISM’s May report shows that 81% of respondents adjusted inventory levels with the vast majority holding more inventory than “usual”. Hoarding is nice for a rainy day but it comes at a cost both from money tied up in parts and from the cost of inventory and logistics associated with higher inventory levels. Eventually there will also be an obsolescence cost when some of this excess inventory becomes obsolete. Money down the drain and a drain on the environment to boot. The advantage of this approach is that if you have enough cash reserves you can execute this plan immediately and so long as you don’t need to expand storage facilities or upgrade any other processes to accommodate the larger volume, it can also be completed quickly.
A (Local) Friend in Need
While the March ISM report concentrated on supply chain failures from China, as the virus spread over time failures and longer lead times expanded to Europe and the US as well. There was some mitigation of the problem because of reduced demand (81% reported reduced demand for their products) but the failures were still the deciding factor. In some countries the government went local and encouraged local manufacturers to switch to manufacturing PPE and emergency medical supplies. In Israel, government officials solved a lack a chemicals for testing this way (test swabs from Carbon up top) and in the US the president ordered car manufacturers to switch to producing medical parts. GM credits Additive Manufacturing (AM) as crucial in shortening the time it took to switch to ventilator valves. In Italy, famously, critical ventilator valves that were out of inventory were reverse engineered within a few days and were produced with Additive Manufacturing (AM), saving people’s lives and keeping ventilators going under extreme pressure and high demand (photo above). Initially, the hospitals asked the equipment manufacturer to provide 3D printable (or CAD) files for the parts but it was unable or unwilling to do so. Had the manufacturer prepared for such an eventuality, they would have been able to help (and do business) – we’ll talk about that in a minute. If you are not a government that can strong arm local production to switch manufacturing at will, fostering relationships with local manufacturers will help you switch over to them in supply chain failure situations. The time to foster these relationships is in quiet (non-emergency) times and it is a good idea to have such relationships in each of the major geographies the company is actively selling to.
Let’s go back to the ventilator part example in Italy. The equipment manufacturer either did not have CAD files or did not want to release them. This is understandably since once the emergency is over you cannot un-release blue prints you’ve given, and these additively manufactured, unauthorized, parts can permanently eat into your spare part business. In the case of ventilator parts that last 10 hours, like these, it is almost a consumable business and probably key to the business of the equipment manufacturers. So what can be done going forward? The equipment manufacturer can take the time and effort to prepare in advance with an emergency plan: create and test 3D printable files for the part(s), secure them so they can control the quality and quantity produced even if they are produced elsewhere (all you need for that is a lane of security from LEO Lane). In the future these parts can also be certified (again, LEO Lane can help in tracking compliance to certification). Now, if an emergency happens when all the ingredients are in place (a few more are needed, see below) the emergency plan can be triggered and rather than failing its customers the manufacturer can continue to supply and sell spare parts even with supply chain failures. Emergency spare parts can be different than regular parts in terms of their longevity or other parameters but they do provide a stop gap measure when there is trouble (e.g., hands free door handle add-on from Materialise above). Like the donut-like spare tire that is not as robust as a regular tire but gets the job done when you have a flat tire. This can be an added source of income for companies in crisis times and does not need to replace regular spare parts which would probably have better characteristics. If the AM part turns out to be compatible with (or better than) regular spare parts in terms of performance, it can be added to the year round line up of spare parts – even better!
While AM can move the majority of the supply chain to the digital realm, there is still the issue of getting raw material for manufacturing, the same as any manufacturing method (well, almost the same). Doesn’t this render all the supply chain failure fixes moot? If we can’t get raw materials nothing can be produced and then it doesn’t matter if the supply chain of parts fails or not, the failure happens earlier in the supply chain. This is undeniably correct – without raw material nothing can be made. This can be where the hoarding can come into play – increase the inventory of raw materials. But, we said above, hoarding is very costly and causes obsolescence, inventory and logistics costs etc. This is true but mainly for final parts because, typically, a car part cannot turn into a ventilator part. On the other hand, nylon powder sourced to produce a car part can easily be used to produce a ventilator part. Similarly for metal powder (EOS powder above). It is the versatility of material that allows for its use in different applications at different times. The fact that AM can be used for such a wide variety of parts and industries using the same raw material allows for the consolidation of raw material sourcing. Therefore, this is an easier problem to solve in emergency and allows for re-prioritization of what the material is used for.
Batten Down the Hatches
A company that has prepared for an emergency, and is prioritizing parts when it happens is essentially moving to a digital supply chain in emergency. While securing this supply chain is a no-brainer, it’s also important to tighten the tracking and consistency during such times, and this may be done in challenging conditions where people are away from their desks/machines and in a remote location. For this a ubiquitous, secure, cloud, platform is needed allowing companies to stay in control in extreme times . The recent pandemic has highlighted the importance of cloud and remote control but this is true of most emergencies, as well as regular times – staying in control can be crucial.
Once everything is in place, activating the alternative digital and secure supply chain is easy and potentially seamless. With Additive Manufacturing, companies can react better to future failures and emergencies and serve their customers better for higher customer loyalty and appreciation.