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Posts Tagged ‘future of supply chain’

About twenty years ago American manufacturers began changing the face of the supply chain when they began “offshoring” — moving production to cheaper sources in foreign nations, expanding a national supply chain into a global one.  Fast forward 15 years or so, and a fair portion of that production has been seen returning home once again due largely to quality issues, but also to the increasing cost of much of that foreign manufacturing, once things like travel, shipping, duty fees, vendor due diligence, theft and piracy and a host of other issues are factored in.

Today, the opportunities and challenges afforded by 3D printing are beginning to create still another new form of “reshoring” that is poised to challenge everything we know about manufacturing.  Since its first patent was issued over 30 years ago, 3D printing is quickly becoming ubiquitous.  Its capabilities are now way beyond the prototype state, and the variety of materials that can be used has grown exponentially, notes John Collins, an APICS CFPIM, and Erick Jack dean of the Collat School of Business in a recent article for APICS Magazine.

Then there’s the recent article in The Economist (“A Third Industrial Revolution”), noting that the digitization of manufacturing is as significant as the mechanization of the textile industry and the introduction of mass production in the automotive sector.  “The ability to produce smaller batches of items tailored to specific customer needs at significantly lower costs could make the factory of the future look more like the weaver’s cottage than Ford’s assembly line.”  And that’s not to mention what this development implies for the changing skill sets of today factory workers as design and programming grow in emphasis.

Some are predicting that global logistics efforts will be reduced as manufacturers shift more of the capabilities and production back to their home shores to take advantage of customer and market proximity.  According to the PLS Logistics Blog, “part of the supply chain will become superfluous.”

When you think about, it makes sense if manufacturers can deliver small batches of customized products and prototypes.  It makes for leaner inventories, for one.  It increases the ability to respond more quickly to customer requests.  Manufacturers may be able to respond to orders directly from factories, thus eliminating some distribution elements.  Locations of stock might be consolidated, and transportation routes are likely to contract as smaller manufacturing locations provide more local 3D printing.

Collins and Jack ask whether it “might even be possible that 3D printing will supersede the concepts of nearshoring and reshoring.  After all,” they state, “where a manufacturing facility is located won’t matter much if customers can ‘deliver’ the products they purchase at home via a personal 3D printer.”

The supply chain of manufacturing has long been all about “speed, cost, quality and flexibility.”  3D printing provides both challenges and opportunities in all these.  Creating ways to incorporate new technologies like 3D printing into our processes provides plenty of both – including the opportunity to be an innovator while remaining competitive in a changing supply chain landscape.

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As we began in our prior post to look at a new technology called “blockchain,” we posed the question: What if you could document and preserve all the data associated with a product’s life cycle from the origin of the raw materials to the final sale of the finished good as it travels along the supply chain, with 100% certainty?

In today’s concluding post, we start with a supply chain counterpoint: Even if you could, is it worth it?

An analyst at Aberdeen Group, Bryan Hall, is quoted in a recent article in the Mar/Apr 2017 issue of APICS Magazine pointing out that supply chains are full of unexpected events and disruptions, ranging from damaged goods to carrier capacity issues, not to mention customs delays, clogged ports, theft and other issues.  The key to adjusting and correcting often lies in what Hall calls the “occasional heroics” that keep plans on track – and none of these actions are possible without visibility.

According to Aberdeen, fewer than 60% of companies had online visibility into in-transit shipment status.  The percentages were even lower for visibility into data to make decisions, or to view supplier quality and manufacturing processes – in other words, traceability.

Other studies have generally confirmed that most companies lack full visibility into their supply chains, and most experience supply chain disruptions periodically.  Often, the source is not even analyzed, and all come at a cost.

And as Business Insider reports, according to APICS, the growth of IoT (Internet of Things – i.e., internet connected devices and machines) will generate yet more massive amounts of data.  Writes Crandall, “Blockchains have the potential to provide security and accountability that traditional databases don’t.”

As examples he cites IBM using a blockchain in the diamond industry… PwC using blockchain to deliver on-stop solution for financial service firms… Wal-Mart testing blockchain’s abilities to track the flow of certain food items to quickly identify items that may be tainted and subject to recall.  The downstream implications of that one – the ability to possibly prevent foodborne illnesses which cause 3,000 people per year and hospitalize more than 100,000 – quickly become clear.

TechCrunch contributor Ben Dickson has written of how blockchains will “enable companies to register information about a product transfer and the product’s price, location, quality and any other information that is relevant to managing it.”

And by its very nature, a public blockchain will ensure that all users have equal and common visibility into everyone’s supply chain.  The decentralized and open nature of blockchains inherently restricts withholding or manipulating information to gain advantage, while built-in encryption will help to ensure data integrity.

In the end, blockchains in the supply chain will eventually assure better regulation compliance, product integrity, customer satisfaction and confidence in product knowledge and movement for the entire family of producers, distributors and consumers.  According to APICS, The World Economic Forum has said that 10 percent of all global domestic product will be stored in a blockchain by 2025.

While still in its infancy, this new technology will present supply chain professionals with both opportunities and challenges.  But as noted business guru Peter Drucker observed long ago, the best executives focus on opportunities, not problems.

 

In our next post, we’ll take one final look (for now) at the newest wrinkle in blockchain, called Ethereum.  A lot of very big companies are getting on board with it as you’ll see.  We’ll tell you more in our very next post.  Stay tuned…

 

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