In 2016, HPE created an EMEA supply-chain Industry 4.0 initiative that implemented different proof of concepts for manufacturing and logistics processes using a range of technologies including 3D printing, cloud computing, data visualization, and the Internet of Things (IoT). Several companies in various industries such as automotive, pharmaceutical, and electronics have also ventured into this digital transformation.
Digital transformation involves the strategic transformation of business activities, processes, competencies, and models to fully utilize the opportunities of digital technologies. Two of the various digital technologies being leveraged by companies today are IoT and 3D printing. These two technologies are continuously changing the landscape in manufacturing and the logistics network of companies.
By linking network of physical goods with sensors and software, IoT allows manufacturers to freely exchange data between their products and their internal systems. Analysts expect that IoT will become the world’s biggest driver of productivity and growth over the next decade. By 2020, 20.8 billion connected devices are predicted to be in use globally, with over half of major new business processes and systems incorporating some element of this technology.
Meanwhile, 3D printing, which is now often referred to as additive manufacturing, continues to prove promising particularly for use in prototyping, design iteration, and small scale production, among others. According to a 2016 report, the additive manufacturing industry grew nearly 30% to US $5.165B in 2015. Currently, an estimated 71.1% of U.S. manufacturers are already involved in this technology. A research firm also predicts that 6.7 million units of 3D printers are expected to be shipped worldwide by 2020. The impact of this technology could also prove monumental on parts inventory levels, warehouse needs, as well as logistics.
Implications on Manufacturing and the Supply Chain
While the IoT and 3D printing are still emerging trends among business models of companies, they are becoming increasingly significant particularly in the manufacturing process.
Some of the more important uses of IoT include manufacturing monitoring, asset/inventory tracking, shipment tracking and fleet management, and re-ordering. With the use of IoT, companies are able to monitor the manufacturing process, particularly for production that uses devices measuring temperature, humidity, air pressure, etc. Inventory accuracy through this technology also allows companies to track inventories by giving real-time information where products are within the factory. As packages/products move from one stage to another, tracking information during shipment also mitigates issues on logistics such as potential damages in products. Aside from the actual products, the use of cloud computing and data analytics also give real-time updates on the location of trucks or shipping containers as well as inform predictive models on delivery information.
Meanwhile, 3D printing creates less inventory for companies as well as less downtime in manufacturing when switching between products. Unlike traditional manufacturing, 3D printing takes raw materials and turns them into products based on the company or client’s needs. This saves room and space in warehouses as manufacturing inventory is now stored virtually. A 3D printer can also make thousands of objects, which allows for fewer raw materials and better responsiveness especially when customers request very specific parts for a very specific piece of equipment. The use of 3D printing can also improve research and development. Such benefits will, in the long run, save money, lead to more investments, and generate more profits for companies.
Digital Supply Chains
A global supply chain survey conducted in 2016 among 300 individuals from across more than 30 industries revealed that the respondents attributed low levels of importance to the IoT, 3D printing, robotics, and the like. While the hesitance may be due to the tendency of companies to plan for technological shifts only when such technology is ready to replace existing processes, analysts say that these technologies could also bring in certain challenges such as complexity or magnitude.
One of the possible solutions, analysts suggest, is mind-set. Supply chain managers should incorporate a mindset of transformation to help balance short-term and long-term supply chain change. The global supply chain survey report identified three key activities regarding this. First is to implement supply chain best practices and improve supply chain performance. The next key is to have a strategy for an increasingly connected and digital world. And lastly, supply chain leaders must be ready for big technology shifts to improve product/service offerings and to reduce costs. Essentially, supply chain management needs to embrace a holistic approach that aligns people, processes and structures within the supply chain to the challenges in the digital age and the rapidly changing environments.
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