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Manufacturing Trends Revolutionize Procurement

Experts say that the industry is in the midst of a new industrial revolution. If they're right, then supply chain professionals should brace themselves for substantial changes in their jobs.

A raft of new technologies is leading to a renaissance in manufacturing. The advent of cloud computing, ubiquitous connectivity, mobile devices, big-data, and 3D printing, as well as the explosion of embedded sensors and microcontrollers, enable the creation of smarter, leaner, and more nimble factories.

To quote the thoughts of Michael Idelchik, who directs advanced technologies at GE's global research lab, in a recent Wall Street Journal article:

Manufacturing is undergoing a change that is every bit as significant as the introduction of interchangeable parts or the production line, maybe even more so. The future is not going to be about stretched-out global supply chains connected to a web of distant giant factories. It's about small, nimble manufacturing operations using highly sophisticated new tools and new materials.

With embedded processors and new robotics technologies, these factories will require less, or virtually no, human labor. If something goes wrong, the sensors will notify a plant manager, whether he is on the floor working or at home sleeping. He can likely correct any problems remotely.

That means the factory can be anywhere — either in the United States to be close to research and development expertise, in Germany to be close to European end markets, or in another part of the world to save energy costs. For electronics, the removal of the cost of human labor may lead component manufacturing and assembly to gravitate from low-cost Asian locations to other parts of the world.

In addition, technologies like 3D printing could change the rules of modern-day manufacturing, causing a shift from an era of high-volume mass production to one geared to small batches of highly customized products. For a supply chain based on moving high volumes of components, such a shift has far-reaching impacts.

According to the Journal article, this “democratization of manufacturing” could mean that bikes, jewelry, and even auto accessories like cup holders can be customized to each person's needs or tastes. It's not that much of a stretch to imagine a world in which consumers go to BestBuy.com or Amazon.com to order a custom-made mobile phone or iPad that includes the desired components. A graphic artist, for example, might order the highest-performance graphics processor available.  A high-energy traveling salesperson might want a longer-lasting battery or a different form factor for his phone or tablet.

These technologies could also change how products are designed. In 3D printing, also called additive manufacturing, the entire product design is stored on computer, enabling designers, manufacturing experts, and procurement people to collaborate more closely.

“The big untold story in all of this is the way the digitization of manufacturing compresses everything — from the early design of a product to its final assembly,” says Ping Fu, who is in charge of strategy at 3D Systems, a 3D printer manufacturer. “Everyone can now work together simultaneously. The software makes it possible, and you get much better results than when all of these activities were being done in different silos.”

The Obama Administration is doing what it can to encourage this manufacturing renaissance. Last month, it announced it was launching three innovation institutes on digital manufacturing, lightweight metals manufacturing, and next-generation power sources.

It's impossible to know exactly how all these technologies and the sea change in manufacturing will impact procurement. However, it's a pretty safe bet that the supply chain is in for its own revolution.

17 comments on “Manufacturing Trends Revolutionize Procurement

  1. prabhakar_deosthali
    June 26, 2013

    In my opinion if the 3D printing really picks up, the manufacturing will get totally decentralized and will become virtual.  The component libraries, the PCB layouts, the processor and memories, the sensors and actuators , all will be available as software components using which anybody can build and produce a product at home using 3D printing technology.

    So tomorrows manufacturing will be same as taking an email printout!

     

    The supply chain's days are numbered!!

  2. Tom Murphy
    June 26, 2013

    As I get older, and fewer of the past promises of technology come true, I find I am much more skeptical of claims like manufacturing is undergoing a level of change unseen since the assembly line.  What I do understand is that there is continuing change that is accelerating.  But I don't expect my next car to come from a 3D printer.  Heck, I'd be happy if they finally finish the Information Superhighway that I heard so much about 18 years ago.  It's about 16 years overdue now.

  3. Hailey Lynne McKeefry
    June 26, 2013

    Whether this is innovation or renovation remains to be seen. To Tom's point, stuff always takes too long. I don't think the supply chain is going anywhere but i do believe that the landscape is going to shift. That's the modern reality. The other reality is that predicting what direction it might go is incredibly difficult!

  4. Taimoor Zubar
    June 27, 2013

    @Tom: I agree. Future speculations seem very exciting but you're right that very few of them come to life. The interesting part is people generally forget these speculations and are not able to validate the claim when they're meant to be due. Information Superhighway is a classic example of it.

  5. Taimoor Zubar
    June 27, 2013

    In my opinion if the 3D printing really picks up, the manufacturing will get totally decentralized and will become virtual.”

    @Prabhakar: I think this claim might be far-fetched. 3D printing will certainly make prototyping much quicker and cheaper but I don't think 3D printers can be used commercially for manufacturing in large volumes.

  6. hash.era
    June 27, 2013

    @Taimoor: Yes it does revolutionize but not only the trends, also how well and effectively you use it. In the end, the results will be the measuring factor.  

  7. Himanshugupta
    June 27, 2013

    @Tom, one gets wiser as one gets old :-)…but i agree with you that the futuristic scenarios may not always come true. There are many examples where industries tend to hold back and resist change as much as possible especially in manufacturing, unless there are paradigm shifts, as the cost of transition is high. The best example is semiconductor industry where we are still using decade old techniques to manufacture and drive today's electronics innovation.

  8. SP
    June 27, 2013

    Very much agree to the point that soon it would be possible that user can customize their smartphones becuase level of expectations are different. A software engineer, graphic designer and other techie guys expects much more from their phones. They even would be interested to customize the processor used, LCD, user interface etc. This all will definitely affect supply chain.

  9. Himanshugupta
    June 27, 2013

    @Prabhakar, even after 3D printer become household machine still manufacturing will survive as the cost of large scale production will still be required as it will be cheaper. I can forsee a time where people can design their own hardware but manufacturing will still be cheaper at commercial places rather than at home.

  10. elctrnx_lyf
    June 28, 2013

    With the latest innovations across the world in the area of manufacturing, supply chain professionals will be encouraged to understand more about the new technolgies and new services. The companies that you work with will be changing or improving their manufacturing capabilities which has effect on the quality and cost of the subsystems that suppliers build for you. Overall the technology innovation will impact the supply chain people very fast than the actuall business itself.

  11. _hm
    June 29, 2013

    New trends are very encouraging. However, it has big cost tag attached to it. To keep organization alive and nimble, first things is to preserve your capital and employ it only if there is better return on it and you really really need it.

    Some time it is prudent to employ KISS – keep it simle and stupid, until you see huge market potential very keen to spend money on your product and that you are unable to meet this demand. One needs to have patience and wait for technology to mature before spending too much of time or money.

     

  12. Susan Fourtané
    June 29, 2013

    _hm 

    I thought KISS stands for Keep It Short and Simple. 😀 

    “One needs to have patience and wait for technology to mature before spending too much of time or money.”

    Oh, but about that, don't you think that sitting pretty, and patiently, sipping your tea slowly, while waiting for the fast technology to mature you will finally miss the train? :/

    I believe that could be the case, and I believe you wouldn't like to see your competitor collecting the rewards for having been fast in invest some early time and money first thing in the morning when the new technology was just a baby. 🙂 

    The ones who win in business are always the ones who take risks.

    -Susan 

     

  13. Susan Fourtané
    June 29, 2013

    Hailey, 

    I believe yesterday, in the chat, we briefly discussed where the supply chain is going. There is no other way to go than following the current trend of new technologies, incorporating as much as possible in the shortest possible time in order to keep up with the change. 

    -Susan

  14. _hm
    June 29, 2013

    @Susan: Oops I did it again. Thanks. It was 1:20 am and little tired after finishing my office design work for five hours.

    You do not need to adept all new technologies. Preserving cash for rainy is much more improtant.

  15. Susan Fourtané
    June 30, 2013

    _hm, 

    Oh, yes. I know well how it goes when your mind is so tired, and you still want to function properly. 🙁  

    Well, yes, I have to agree that saving some cash for the rainy days is important, too. Also, of course you will adopt only the technologies that serve your business well, not just adopting everything for the sake of it, right? 😀

    -Susan 

  16. prabhakar_deosthali
    June 30, 2013

    One of the important consideration while adopting new technologies for supply chain is to see whether those technologies are synchronized with the operations of the other back end functions such as manufacturing, inward and outward inspection, testing, warehousing and so on. A very efficient and modern supply chain system will fail to deliver value to the company if this is not done.

  17. Anand
    August 2, 2013

    The dependence of the supply chain on the computing base for data transfer and handling, would create new job prospects for computer engineers, programmers, designers alike. The human element in handling data is prone to making costly mistakes, which can be snubbed by using softwares. However, entire dependency is not good, for example: the data that is being transferred is stored in storage registers, or data banks. Failure of one such data bank would cause a meltdown in the supply chain.

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