Two disruptive changes affecting manufacturers are speed in the supply chain and personalization of products, according to SAP’s Hans Thalbauer. Mastering them both will be critical to business success, but organizations can’t go it alone.
“We need to be able to deliver within one hour, maybe even within 30 minutes… [so] I need to have a very clear understanding of the demand picture,” Thalbauer, senior vice president, IoT & Digital Supply Chain, SAP Leonardo, said at SAP Leonardo Live last month. “It’s not only statistical forecasting; I use machine learning in the supply chain, [and] I use predictive analytics.”
The rise of demand-driven supply networks is forcing organizations to think differently about their processes—using all kinds of data from across an expanding network—in order to more quickly meet increasingly specific customer demands. Thalbauer predicts that the personalization of products will force organizations to contend with three major trends in manufacturing:
- Moving from outsourcing to distributed manufacturing
- Shifting from mass production to mass customization
- Building a network
1. Distributed manufacturing
“We are not talking about outsourcing anymore,” Thalbauer said. “We are talking about distributed manufacturing, [which] means I produce as close as possible to the end customer.”
3D printing, or additive manufacturing (AM), is a good way to achieve distributed manufacturing for industries—as well as Hollywood and university theatre—because it can quickly produce architecturally complex items of varying scale, all with dramatically reduced risk of injury. And it’s on the rise, as evidenced by Belgian AM pioneer Materialise NV reporting Tuesday a surge in 3D printing for end part manufacturing.
“Different from traditional manufacturing methods like CNC machining, which removes material from a solid block using rotating tools or cutters, 3D printing is a rapid production method with minimal waste material,” The Engineer stated Thursday. “Its design flexibility means users can manufacture bespoke objects for a low cost.”
2. Mass customization
The next trend is mass customization (a.k.a. mass configuration), which offers the flexibility and personalization of custom goods and services—at high-volume/mass-produced prices. Look for intelligent manufacturing cells—as opposed to assembly lines—in consumer industries and pretty much everywhere else, according to SAP’s Thalbauer.
“Manufacturing is dramatically changing into a very, very flexible environment,” Thalbauer said. “We need to have an automation like never before in order to be fast—and also to be flexible in delivering the demands from the customers.”
On-demand retailers can produce custom-made shoes within days an Internet order—at a comparable price to their off-the-shelf competitors. And subscription box companies tailor each of their crates to individual consumers. But mass customization could soon move beyond what even customers think they want.
“For example, Google and Ivyrevel’s Data Dress … uses an app to track a user’s activities, lifestyle and environment to create a custom dress,” Maya Mikhailov, co-founder of mobile marketing firm GPShopper, said on CNBC last month. “It is the beginning of a concept where mass customization would no longer even need user inputs, but instead make product suggestions for what the consumer needs based on tracked activity.”
3. Building a network
“We need to intelligently connect the things with the people and the processes,” SAP’s Thalbauer said. “From the equipment manufacturer to the logistics service providers, all of these partners need to be connected in one network … in order to really achieve a much more efficient supply chain.”
A single network can increase efficiency and lower costs, as with the recent calls by Australia’s container transport for an integrated supply chain network that better links sea, rail and other methods for moving goods. And Alibaba just established a network of small- and medium-sized U.S. suppliers; this gives the Chinese e-commerce company reliable partners, while suppliers gain access to more customers.
“You have a system of record with an in-memory computing platform, which is really focusing on the operation … and you have a business network,” Thalbauer said. “Finally you add an intelligent system to it, and then you have a picture that allows you to be highly innovative and really drive the system.”
It takes a village
It’s a big world of part manufacturers, and not all of them can do the right thing with a client’s CAD file—so online networks help the right parties find each other. And a new community built in part on a cloud platform has helped create “a new open space for digital innovation in supply chain planning,” according to Josef Packowski, CEO of longtime SAP partner CAMELOT Management Consultants AG.
“Customers are already reporting great results,” such as reducing inventory by 50 percent, and slashing lead times by 80 percent, Packowski said at SAP Leonardo Live. “This is, from my point of view, the biggest move we’ve seen in the last 20 years of co-innovation together.”