Say the words “supply chain disruptions,” and things like natural disasters, delivery delays, or part shortages are first come to mind.
But, have you thought about how emerging technologies such as intelligent robotics, 3D printing, and open-source electronics will cause a different wave of disruptions?
In the long run, we could expect that there will be massive benefits from increased distribution center automation, products made from digital models, and robot-run assembly operations. However, the initial changeovers will require a parallel strategic supply chain and distribution rethink, and will surely influence the next-phase evolution of sourcing, procurement, inventory-holding, manufacturing, and delivery practices.
Rumblings of how these technology changes could shake-up the electronics industry and current supply chain thinking are trickling into mainstream media and reports.
GigaOm's recent article, for instance, leads with this headline and summary: “Today's complex global supply chains are poised to be dismantled. Thanks to the growth of 3D printing, intelligent robots, and open-source hardware, tomorrow's supply chains will be faster, smaller, cheaper, and local.”
GigaOm's article points back to an IBM report about the migration to software-run supply chains and the ongoing adaptability electronics companies will need to manage through these emerging trends, which promise to change the manufacturing game.
“By changing requirements for scale, location and volume, the software-defined supply chain won't just changes costs or manufacturing processes — it will effectively up-end the industry structure as we know it,” IBM predicts.
IBM found that these newer technologies “can produce an average 23 percent unit cost benefit and reduce barriers to enter manufacturing by an astounding 90 percent.” Despite that impressive potential, there is a big “But” — and it's this: Half of IBM's 55-member executive survey sample said they had no manufacturing strategy in place to manage the impact of digitization.
More broadly, IBM suggests that the move to this sort of software-defined supply chain requires electronic companies to understand far-reaching implications. On one front, for example, product design and retailing will be influenced greatly by end-customer interactions, it said. And, while competitive dynamics are expected to change radically, supply chains will become more simple, flexible, and localized, the company noted.
Similarly, Chris Caplice, executive director of MIT's Center for Transportation and Logistics writes, that there are four other trends that will redefine US distribution. They are:
- Densification of product (reducing product size while maintaining or increasing its value);
- Diversification of sales channels (omni-channel retailing is becoming more popular);
- Decentralization of production (3D printing, additive manufacturing, and programmable robotics will shift production strategies and change economies of scale within manufacturing), and lastly,
- Digitization of products (the shift away from physical to information-based products).
Caplice notes that as these trends play out, “there will likely be a period when many different logistics models emerge. The shape of the dominant model is unknown, but it will look very different from the one we follow today.”
As always, change is afoot — again. And, as always, the supply chain will sit right in the middle of it all.