Digital transformation involves the strategic overhaul of business activities, processes, competencies, and models to fully leverage the opportunities made available by new technologies. Two cutting-edge technologies being implemented today are the Internet of Things (IoT) and 3D printing. Now beyond the point of being mere buzzwords, these technologies are actively transforming the landscape of logistics and manufacturing networks across the globe.
State of the Industries
By linking networks 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 into their operations.
Meanwhile, 3D printing, often referred to as additive manufacturing, has increasingly demonstrated its value for the purpose of prototyping, design iteration, and small scale production (especially of rare parts), among others. According to the Wohlers Report 2017, the additive manufacturing industry grew 17.4 percent to US $6.063B in 2016—a significant slowdown from the 30 percent growth experienced the previous year. Currently, an estimated 71.1 percent of U.S. manufacturers are already adopting this technology, however the cost and quality lead adoption barriers remain high. By the estimates of one research firm, 6.7 million units of 3D printers are expected to be shipped worldwide by 2020. The impact of this technology could also prove monumental with regard to 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 disruptive, particularly in the manufacturing process.
Some of the most prevalent uses of IoT include manufacturing oversight, asset and inventory tracking, shipment tracking and fleet management, as well as 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. IoT-enabled inventory accuracy also allows companies to track inventories with real-time insight into where products are within the factory. As packages and products move from one stage to another, tracking information mitigates potential logistics miscommunications. Moreover, the use of cloud computing and data analytics gives live updates on the location of trucks or shipping containers, in addition to providing fodder for predictive models of delivery information.
Meanwhile, 3D printing is cutting down on excess inventory and reducing 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 customer's particular needs. This saves space in warehouses as manufacturing inventory is stored virtually. A 3D printer can also make thousands of objects, which allows for fewer raw materials and better responsiveness especially when customers request custom parts for specific pieces of equipment. In addition to increasing the the flexibility of the overall production process, 3D printing can also improve research and development initiatives. In the long run, such benefits will boost companies' bottom lines, improving operational efficiency and freeing up cash for further innovation.
Digital Supply Chains
A global supply chain survey conducted in 2016 among 300 individuals from more than 30 industries revealed that the respondents attributed relatively low levels of importance to 3D printing in comparison to big data analytics (IoT fell halfway between the two). While this hesitance may be due to the tendency of companies to plan for technological shifts only when such technology is ready to replace existing processes, these technologies could also usher in certain new challenges in relation to complexity and scalability.
One major point of focus, analysts suggest, should be mindset. Supply chain managers should incorporate the transformative mentality into culture and processes to help balance short-term and long-term supply chain change. The global supply chain survey report identified three key activities in relation to this concept. First, implement supply chain best practices and improve supply chain performance. Next, have a long-term strategy to grow and remain relevant in an increasingly connected digital world. And lastly, be prepared to leverage big technology shifts that improve product and service offerings while simultaneously reducing costs.
In other words, supply chain managers need to embrace a holistic approach that aligns people, processes and structures within the supply chain to the challenges in the rapidly-evolving digital age.