What the Cloud Has Done to Enterprise IT, 3D Printing Will Do to Manufacturing and Supply Chain [Video]

Ian McCullough

Manufacturing and Supply Chain Managers: you didn’t really think that the storm was going to be limited to the Information Technology department, did you?

Making the software and databases that you depend on to make your plants and fulfillment more efficient has been a nice start, but you have been aware that this is just the tip of the iceberg…right?

You’re next

Outsourcing manufacturing to third parties eliminated the need for businesses to run their own factories. The next step is outsourcing manufacturing directly to customers. Factories will be a thing of the past. So will warehouses and inventory. When someone needs a physical object, the notion of “just in time” manufacturing will take on a whole new meaning; they’ll download a design and just make it themselves.

A Popular Mechanics profile of the Fab@Home open source 3D printing project.

Affordable 3D printing is already putting small-scale factories directly into people’s offices and homes. Once everyone has a multipurpose factory in their living room, there’ll be a lot less need for fancy facilities. For a comparison, I think we’re at “personal computing circa 1980″ and I would contend that personal computing didn’t become “mainstream” until circa 1995.  3D printing is probably a minimum of 10-15 years from being really mainstream.

Think, however, about a few of the ways that personal computers have done to the world economy since 1980:

  • They wiped out the need for millions of jobs in clerical functions like administration, filing, accounting, and archiving.
  • They made mathematical modeling way faster. That made it easier to predict things and consequently waste much less.
  • When paired with a modem initially and then later a direct Internet connection, they made written communications instantaneous.

Consider now what cloud computing has done since the turn of the millennium:

  • It has eliminated the need for in-house rack servers.
  • With no capital required for buying hardware, it has greatly reduced barriers-to-entry for Internet-based businesses.

What will 3D printing do in the years to come?

  • It will enable personalization and customization to a previously unimaginable degree. People are already making a stunningly diverse range of things – from cake toppers to human cartilage.
  • It will wipe out the need for millions of logistics and transportation jobs. The only things that will need planes, trains, ships, and trucks will be material gels (the “inks”) and the 3D printers themselves.
  • The current state of the art focuses on solid objects. It will take some time before we get to something resembling Diamond Age-style finished good manufacturing, but it won’t be all that long. Robotic assembly already happens in factories around the world; as technology advances the 3D print head will generate a range of components and small robotic arms and claws built directly into the device will handle multi-part, multi-stage assembly. And it will happen on your coffee table.
  • In the near term, it will make millions of subcomponent manufacturing jobs unnecessary. There are tons of little plastic and metal parts that people take for granted in finished consumer or industrial goods. The ability for 1st party/1st tier manufacturers to bring more of their supply chains in-house at low cost will be huge. Once it becomes faster, 3D printing will put lots of second and third-tier suppliers out of business.
  • Designers will be able to distribute their products directly to consumers for in-home manufacture. As a matter of fact… they already can.  For those who aren’t interested in the full-blown “do it yourself to the point where you build your own 3D printer” ethos of a project like Fab@Home, a clear leader in this emerging market is MakerBot, which has brought the cost of entry-level consumer hardware down to $1749.



  • Just like home inkjets need words and pictures, 3D printers need content too. An important part of MakerBot’s efforts is Thingiverse, an online community where people publish and share the files for their 3D-printable objects. Having paper printers in lots of homes didn’t mean that everyone needed to become a graphic designer; likewise, having ubiquitous 3D printing will not mean that everyone needs to become an industrial designer. Given the way that people buy music these days, it’s easy enough to see us coming full circle and downloading a file from an online store with the instructions to make a vinyl record.
  • It isn’t even necessary for everyone to personally own a 3D printer. Items are now being printed at mall kiosks, retail shops, and facilities like TechShop. Rather than go to a supply store, professional craftspeople will print components for projects as they need them. The key is that these devices dramatically cut the number of intermediate steps, including changes to form and to location, between raw material and ready-to-use. Here’s an example of that taken to an extreme: there’s a team that has made a solar-powered 3D printer that can create glass objects using only sand and sunlight.

Information infrastructure is becoming more consolidated and accessible in the cloud. Manufacturing infrastructure is becoming more distributed and democratized with technologies like 3D printing. Looking towards a time when anyone in the world will be able to make anything that they want – be it software or hardware – you have to wonder just one thing: what need will your business be meeting?

Ian McCullough is an independent project management and operations consultant for consumer-facing businesses. He has successfully deployed cloud-based solutions at the companies he works with, so he is an active practitioner and builder – not just some random theorist. For more information, you can visit his LinkedIn profile.


Why 3D Printed Food Just Transformed Your Supply Chain

Hans Thalbauer

Numerous sectors are experimenting with 3D printing, which has the potential to disrupt many markets. One that’s already making progress is the food industry.

The U.S. Army hopes to use 3D printers to customize food for each soldier. NASA is exploring 3D printing of food in space. The technology could eventually even end hunger around the world.

What does that have to do with your supply chain? Quite a bit — because 3D printing does more than just revolutionize the production process. It also requires a complete realignment of the supply chain.

And the way 3D printing transforms the supply chain holds lessons for how organizations must reinvent themselves in the new era of the extended supply chain.

Supply chain spaghetti junction

The extended supply chain replaces the old linear chain with not just a network, but a network of networks. The need for this network of networks is being driven by four key factors: individualized products, the sharing economy, resource scarcity, and customer-centricity.

To understand these forces, imagine you operate a large restaurant chain, and you’re struggling to differentiate yourself against tough competition. You’ve decided you can stand out by delivering customized entrees. In fact, you’re going to leverage 3D printing to offer personalized pasta.

With 3D printing technology, you can make one-off pasta dishes on the fly. You can give customers a choice of ingredients (gluten-free!), flavors (salted caramel!), and shapes (Leaning Towers of Pisa!). You can offer the personalized pasta in your restaurants, in supermarkets, and on your ecommerce website.

You may think this initiative simply requires you to transform production. But that’s just the beginning. You also need to re-architect research and development, demand signals, asset management, logistics, partner management, and more.

First, you need to develop the matrix of ingredients, flavors, and shapes you’ll offer. As part of that effort, you’ll have to consider health and safety regulations.

Then, you need to shift some of your manufacturing directly into your kitchens. That will also affect packaging requirements. Logistics will change as well, because instead of full truckloads, you’ll be delivering more frequently, with more variety, and in smaller quantities.

Next, you need to perfect demand signals to anticipate which pasta variations in which quantities will come through which channels. You need to manage supply signals source more kinds of raw materials in closer to real time.

Last, the source of your signals will change. Some will continue to come from point of sale. But others, such as supplies replenishment and asset maintenance, can come direct from your 3D printers.

Four key ingredients of the extended supply chain

As with our pasta scenario, the drivers of the extended supply chain require transformation across business models and business processes. First, growing demand for individualized products calls for the same shifts in R&D, asset management, logistics, and more that 3D printed pasta requires.

Second, as with the personalized entrees, the sharing economy integrates a network of partners, from suppliers to equipment makers to outsourced manufacturing, all electronically and transparently interconnected, in real time and all the time.

Third, resource scarcity involves pressures not just on raw materials but also on full-time and contingent labor, with the necessary skills and flexibility to support new business models and processes.

And finally, for personalized pasta sellers and for your own business, it all comes down to customer-centricity. To compete in today’s business environment and to meet current and future customer expectations, all your operations must increasingly revolve around rapidly comprehending and responding to customer demand.

Want to learn more? Check out my recent video on digitalizing the extended supply chain.


Hans Thalbauer

About Hans Thalbauer

Hans Thalbauer is the Senior Vice President, Extended Supply Chain, at SAP. He is responsible for the strategic direction and the Go-To-Market of solutions for Supply Chain, Logistics, Engineering/R&D, Manufacturing, Asset Management and Sustainability at SAP.

How to Design a Flexible, Connected Workspace 

John Hack, Sam Yen, and Elana Varon

SAP_Digital_Workplace_BRIEF_image2400x1600_2The process of designing a new product starts with a question: what problem is the product supposed to solve? To get the right answer, designers prototype more than one solution and refine their ideas based on feedback.

Similarly, the spaces where people work and the tools they use are shaped by the tasks they have to accomplish to execute the business strategy. But when the business strategy and employees’ jobs change, the traditional workspace, with fixed walls and furniture, isn’t so easy to adapt. Companies today, under pressure to innovate quickly and create digital business models, need to develop a more flexible work environment, one in which office employees have the ability to choose how they work.

SAP_Digital_Emotion_BRIEF_image175pxWithin an office building, flexibility may constitute a variety of public and private spaces, geared for collaboration or concentration, explains Amanda Schneider, a consultant and workplace trends blogger. Or, she adds, companies may opt for customizable spaces, with moveable furniture, walls, and lighting that can be adjusted to suit the person using an unassigned desk for the day.

Flexibility may also encompass the amount of physical space the company maintains. Business leaders want to be able to set up operations quickly in new markets or in places where they can attract top talent, without investing heavily in real estate, says Sande Golgart, senior vice president of corporate accounts with Regus.

Thinking about the workspace like a designer elevates decisions about the office environment to a strategic level, Golgart says. “Real estate is beginning to be an integral part of the strategy, whether that strategy is for collaborating and innovating, driving efficiencies, attracting talent, maintaining higher levels of productivity, or just giving people more amenities to create a better, cohesive workplace,” he says. “You will see companies start to distance themselves from their competition because they figured out the role that real estate needs to play within the business strategy.”

The SAP Center for Business Insight program supports the discovery and development of  new research-­based thinking to address the challenges of business and technology executives.


Sam Yen

About Sam Yen

Sam Yen is the Chief Design Officer for SAP and the Managing Director of SAP Labs Silicon Valley. He is focused on driving a renewed commitment to design and user experience at SAP. Under his leadership, SAP further strengthens its mission of listening to customers´ needs leading to tangible results, including SAP Fiori, SAP Screen Personas and SAP´s UX design services.


How 3D Printing Is Transforming The Supply Chain: A Q&A With Hans Thalbauer [VIDEO]

Warren Miller

If you think 3D printing has no bearing on the supply chain, think again. Given the technology’s enormous impact on production processes, organizations today must adapt, completely transforming their existing supply chain operations.

Dan Gilmore, editor at Supply Chain Digest (SCD), recently chatted with Hans Thalbauer, senior vice president of extended supply chain at SAP, to discuss the current state of 3D printing, product customization, and more.

Here are several highlights, edited for length, from the fascinating Q&A:

Dan Gilmore (DG): What’s your assessment of where we’re at with [3D printing]? Is this really something that’s out there in the future, or is it something that’s really starting to gain some critical mass now?

Hans Thalbauer (HT): I see so many companies around the world who adopt 3D printing in their manufacturing process or distributed manufacturing environment. In different industries, of course, 3D printing is being used for different purposes. If you look in aerospace and defense, for example, it’s a part of the manufacturing process. When it comes to retail, it’s about providing a product that’s individualized for an end consumer.

DG: New Balance is using this technology as part of their customization process. I think you have some insight into what they’re doing. What can you share with us today?

HT: Think about getting on a treadmill. You start running. Your feet are being measured, and in the back of the store, a 3D printer is printing the insole for your shoe. That’s an amazing thing. It’s individualized. It’s personalized. All with the goal to provide the perfect shoe for the end consumer.

DG: Does [3D printing] put some different requirements on the capabilities or functionalities a software provider needs to provide?

HT: Absolutely. It’s not good enough anymore to think about the traditional way of producing and delivering goods. We need to have an environment which allows companies to get end-to-end visibility. You need to have an environment which allows you to manage these processes in real time.

Watch the entire segment, part of SCD’s Supply Chain News Makers Video Series, below:

Want more insight on 3D printing? See Why UPS Believes 3D Printing Will Shake Up The Supply Chain.



3D printing

IoT In Discrete Manufacturers: Create A Live Business Operation Around Connected Products

Kai Goerlich

While discrete manufacturing is used in a diverse range of industries, including automotive, aerospace, defense, construction, industrial machinery, and high tech, all of them face common and tough challenges such as higher resource volatility, more competition, increasing customer expectations, and shorter innovation cycles.

According to a study by a Roland Berger (see chart), product complexity has increased dramatically in the past 15 years. Manufacturers have to cope with two overlapping trends: the variety of products is constantly increasing and has more than doubled in the past 15 years, and, in parallel, product lifecycles have gotten about 25% shorter. These factors are putting an increasing pressure on margins, on supply and procurement systems, and on overall business models. According to Roland Berger, managing this complexity could reduce costs by roughly 3% – and certainly digitization can help improve this margin.


The threats and potentials of digitization

Adapting to the age of hyperconnectivity is a matter of life and death for the majority of companies, according to a study by the Economist Intelligence Unit. More than half of enterprises feel very strong competitive pressure from digital offerings by their traditional competition, established companies using digital to enter their market, and digital startups. Certainly, the competition is not waiting, and neither will today’s well-informed digital customers, who want more choice, better customization, and more information around the buying process. While digitization might add another disruptive dimension to an already rising complexity, discrete manufacturers are seeking the benefits of digitization. They are already proactively exploring the use of the IoT to better connect their supply chains, assets, and products, according to an IDC white paper, The Internet of Things and Digital Transformation: A Tale of Four Industries, sponsored by SAP.


Most manufacturers start with less complex projects, such as enhanced visibility or tracking, and progress to more sophisticated processes that require automated or predictive workflows, according to IDC. The findings of the study suggest that companies should start their IoT projects with the overarching goal of a live business operation already in mind. By combining three IoT use cases for manufacturing, i.e. connecting products, creating a connected shop floor with customization, and extending digital business models (see chart), companies will create a competitive business operation that fully exploits the digital opportunities.

Connecting products to improve innovation

Using IoT for innovation is a highly underestimated potential of digitization. A significant percentage of new products fail, and the associated R&D and marketing costs are lost. Customers already expect their products to come with a certain degree of interactivity and this demand will certainly grow in the future. According some estimates on the adoption of connected technology by consumers, the ratio of connected and interactive products will rise to approximately 20% on average by 2020, according to Forbes. This is a conservative estimate, and in some segments the ratio might increase much faster.

By digitizing current products and launching fully digitized ones, manufacturers can significantly reduce the risk of new product failures, as IoT-based products will enable them to monitor the actual use and performance of their products, get live feedback from their customers, and adopt future product innovation. IDC expects that by 2017, 60% of global manufacturers will use IoT to sense data from connected products and analyze that data to optimize the product portfolios, performance, and manufacturing processes. Similarly, the integration of IT assets and information with operational technology in the plant and the supply chain is also on the roadmap, if not already started.

Connecting the shop floor

Digitization offers the possibility to oversee every step in the manufacturing process, from customer demand, through production, and across the complete supply chain. The IDC study identified two IoT use cases – strategic asset management and customer experience – that seem to be very attractive for discrete manufacturing.

1. Strategic asset management

Manufacturers should start to digitize all of their assets in the production process and use IoT-based preventive and predictive maintenance scenarios in the plant and supply chain to reduce downtime and improve utilization. Using the information generated from digitization and IoT, businesses can evaluate use patterns and maintenance routines of their inventory and assets and optimize operations. Fixed assets can account for as much as one-third of all operating costs, so under today’s cost pressures a digital asset management surely matters. To fully use the potential of IoT and the real-time information gathered from assets, devices, and machines, companies need to ramp up their analytical and decision-making capabilities. Anecdotally, companies report that IoT use cases (such as remote maintenance) changed the way they thought about data and got them thinking significantly differently about information and insights.

2. Customization for customer experience

Demand for more choice, flexibility, and customized products is growing fast and estimated to be 15% of all products by 2020, according to MIT Smart Customization Group. Depending on size, material, and complexity, that percentage might be significantly higher. However complex the challenge for manufacturers might be, connected production in real-time is the basis, and it needs the right data from production capabilities, supply, equipment, and workforce, combined with all customer preferences. Getting the customer into the customization and production process is increasingly important for an improved customer experience, so IoT should be used to connect the products and, with it, the customer. This will not only give companies valuable data about user preferences and ideas for product innovation and improvements, but it will allow them to plan the customization of products much more efficiently.

Digitally enhanced business models

Digitization is by now a synonym for disruption. According to a study by the Economist Intelligence Unit, 60% of companies think that digitization is the biggest risk they face. More than half of companies feel competitive pressure from digital offerings by their traditional competition and digital startups. As IDC found, discrete manufacturers are already actively exploring the IoT opportunities, so the change is already underway.

As we pointed out previously, the customer experience of choosing and buying a product is increasingly important, but it does not stop there. IoT-connected products will get the customer into an ongoing interaction with the product vendor and/or retailer, enhancing the buying and use experience. Moreover, companies can use this connection to expand their business models. In its study, IDC mentions a wider range of ideas that manufacturers already explore, such as remote maintenance, refill and replenishment, contracting, product performance, training, and location-based services. While they may not be applicable for all companies, they show the wide range of possibilities and opportunities. Digitization may be a threat for some traditional business models and companies, but it offers huge potentials for those who focus on the customer experience.

Creating a live business operation

The huge potential that IoT offers is less the physical connection of things, machines, and devices, and more the opportunity to create a live business operation based on an advanced data strategy and analytics. While all aspects of IoT have large innovation opportunities on their own, the combination of connected products, customization, and digitally expanded business models promises the biggest benefits for discrete manufacturers. Thus any IoT strategy – wherever it starts – should be created with a larger digitization goal in mind.


  • Connecting products and strategic asset management has big potentials for discrete industries.
  • The combination of connected products, customization, and digitally expanded business models promises the biggest benefits.
  • Companies should create a live business operation with advanced data and analytical skills to use the full potential of IoT.

For more details and information, please read IDC’s IoT whitepaper IoT and Digital Transformation: A Tale of Four Industries and look for future IoT papers that delve deeper into the IDC study’s findings.


Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Idea Director of Thought Leadership at SAP. His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation.