Software-Defined Supply Chain: The Next Industrial Revolution

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Presentation of the Software-Defined Supply Chain that provides a point of view on the transformative potential of 3D printing, advanced robotics, and open source electronics hardware on manufacturing and supply chain as we know it today. This presentation was delivered to the CSCMP (Council of Supply Chain Management Professionals) on September 17, 2013.

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  • Other industries that have been digitized and disrupted are:Travel – Travel agencies have had to transform themselves. Online players such as Priceline.com and Expedia.com dominate the travel industry.Retail – Amazon is one of the largest retailers.
  • That’s a little about my background. Now to the topic du jour. We at IBM believe that a major industrial paradigm shift that we at IBM believe is about to happen. This transformation has already started and is poised to change the hardware-constrained, “analog” way that we design and manufacture products today.We see that three technology trends are reaching their tipping points, converging and making possible, new, digital, software-driven possibilities in designing and making products. These trends are 3D printing, intelligent or advanced robotics, and open source electronic hardware. Imagine, products that can be printed on demand, intelligent shop floors that can be dynamically reconfigured to produce a wide range of products, and digital products that are controlled by multi-purpose electronic components that are configured and controlled by software. What does this mean for the customer? Products where and when you want them!
  • Let’s explore these three technologies starting off with 3D printing. You have probably heard a great deal about 3D printing in the media and the press.Believe it or not, 3D printing has been around for 20 years. 3D printing went relatively unnoticed in the first “Jurrassic Park” movie. That was 1993. Only recently has 3D printing come into the spotlight. What makes 3D printing so transformative in the industrial context?Firstly, it is the ability that 3D printing provides to manufacture products on the fly without the constraints of traditional manufacturing methods.Secondly, the digital nature of 3D printing allows a single printer to fabricate a tremendous variety of objects without the need to retool your shop floor or change your manufacturing process, thus affording you tremendous economy of scope. Thirdly, most forms of 3D printing reduce material waste given that it is an additive method of fabrication. You only use as much as you need to create the object. Finally, 3D printers are getting cheaper very fast. 5 years ago, a 3D printer would have cost you at least $15K. Today you can buy a desktop 3D printer from Makerbot for only $300.
  • Not only can you design amazing structures with 3D printing, you can fabricate assembled products straight off the 3D printer.Here is an example of a hand cranked fan that is available for print on Shapeways.com.No assembly required at all. The 3D printing of integrated chips is just a few years away. Imagine being able to 3D print a complete, assembled electronics device. Amazing!
  • The possibilities are truly endless. Even today, 3D printing is being used to produce a wide range of things including:Body parts and organsFootwareFoodFashionThis is just the beginning. I could go on all day, but this should give you an idea of the possibilities with 3D printing.
  • Next, we have advanced robotics. Robotics has made some important advancements that make robots such as Baxter by Rethink Robotics a viable and economical alternative to human labor, especially for repetitive, unskilled tasks.The robots of today such as Baxter are intelligent and have the ability to learn with the guidance of a human trainer. These robots are also can be used to perform a variety of tasks and purposes based on context, allowing them to be multi-purpose tools on the shop floor. Baxter and some of the new generation of industrial robots are able to sense their environment and can operate safely in the proximity of people. Now automation through robotics is an economic possibility for more than just the biggest companies.Finally, these robots are getting cheaper. Baxter costs only $20,000!
  • About a week ago, Volkswagen announced that they are now using collaborative robots from the Danish manufacturer Universal Robots, which can operate next to people without guards, to build engines. This is happening today, not tomorrow. Today.
  • Finally, we have open source electronic hardware. The two popular camps for open source electronics hardware are Netduino and Arduino.Being open source means that the standards are evolving with the communities that support these platforms. They are easily programmable electronics components that can be programmed.Because they are programmable, these electronics platforms can be used for a wide variety of purposes, unlike embedded electronics. The designs for these platforms are free, though you might need to invest in the components to put together your own board.
  • Hex is offering a 3D printed, copter that you can control using your smartphone. The circuit board of this device is based on Arduino. People can easily print and program their own devices from a growing body of open source, free designs.
  • These technologies continue to advance at a rapid pace, and they are becoming cheaper and more accessible to a wide audience.
  • Their convergence is giving rise to the Software-Defined Supply Chain.
  • What does all this mean?We believe that an industrial era dominated by the principle of mass production will be supplanted by an era of right-sized, bespoke production of commercial and consumer goods.
  • Over the last 100 years, we have gone from building products made of custom parts to standardized products made of standard, interchangeable parts. We have gone from designing and assembling products from the component level to modular designs and modular modes of assembly. We have gone from mechanically complex products to digitally simple products. The evolution of the automobile is a great case in point in what I’m talking about.
  • As a result, firms have pursued economy of scale to gain the most financial leverage out of the mass production of standardized products. Increasing modularization of product design has given rise to multi-tiered supply chains. And, firms have gone global in the search of the lowest cost suppliers and labor forces to maximize their margins and price competitiveness. It’s no surprise that the supply chains of today are big, complex and global.
  • Well, the Software-Defined Supply Chain is going to change all that.We believe that 3D manufacturing will move the dial from standard products made from standard parts back to personalized products made of custom parts, but without compromising economy of scale.We believe that advanced robotics will make the assembly of bespoke products economical, hence reversing the trend of modular design.We see that as products become smarter and connected in the emerging Internet of Things, the digitization of products will accelerate driven thanks to open source electronics hardware.
  • As a result of these new trends in manufacturing,Firms will begin to leverage the efficiencies and ability to right-fit and personalize products provided by economies of scope. Supply chains will become flatter and leaner as firms license designs, or create their own designs, and produce their own parts for their products.And firms will start too look for suppliers and labor closest to where the demand for their products are.In summary, supply chains will become more flexible, simple and local.
  • We at IBM asked the same question. Last year, Paul Brody, IBM’s Global Electronics Leader for GBS, and VeenaPureswaran of IBM’s IBV, launched a study to come up with some answers. They assembled a team of industry and academic leaders within and outside of IBM to answer the question of what the benefits of SDSC would be, and when we could expect to see benefits.Econolyst - Phil ReevesSourcemap – Leo BonnanniIBM Research – John CohnIBM Plant Location International – David ZaharachukNorthwestern University – Mike WatsonPenn State University – Alex Scott
  • They team conducted the study around four product use cases. These products were a washing machine, industrial display, mobile phone and a hearing aid.And, yes, we did break them down. These products were chosen for their differing characteristics from the perspectives of: size, complexity, production volume, level of personalization, and cost of manufacture.
  • Our friends from Econolyst and Source map helped us analyze the four products to come up with a baseline BOM as well as gather supply chain data such as cost of components and manufacturing.Our academic partners from the Penn State and Northwestern developed analytical models to measure the impact 3D printing, intelligent robotics and open source electronics on the manufacturing of these four products. IBM’s Plant Location International provided plant location related data to support the SDSC analysis. Team then created a linear programming model in ILOG, entered in the BOM, supply chain and plant location data, and the results were remarkable!created a first of a kind analytical model
  • The modeling indicates that cross the 4 product scenarios, the average cost of manufacturing is forecasted to become 23% cheaper 10 years years from now.What was even more impressive was that in 10 years the minimum economic scale in the production of these products could be achieved with 90 percent less volume!
  • Furthermore, the study indicates that the manufacturing of products such as the hearing aid would undergo drastic localization by 2017.
  • Now that we know that we can anticipate some big changes in the future, IBM is now exploring how the SDSC will express itself in the context of manufacturing and service operations by working with our clients and monitoring trends across industries.
  • We anticipate that the outcome of SDSC will be significant disintermediation, a common pattern seen in almost every digital revolution.Imagine thousands, millions of local, certified contract manufacturers who specialize in fabricating, assembling, and programming smart devices? How about local toy contract manufacturers?
  • Let’s examine the three SDSC transformation scenarios. The first scenario is the manufacturing scenario. How is the typical manufacturing operations laid out for a products company today?Supply and Demand Optimization is very difficult and requires complex planning.
  • Because you are manufacturing so close to your customer, you know how much to produce of what. You don’t need to invest in retooling or deal with long set up times to introduce new products.We envision a future where manufacturing is distributed around the world. And if we were to take the notion that many product brands will outsource their manufacturing, what would the software-defined factory look like.Let’s assume, in order to maximize the utilization of capital investment, the SD factory will need to handle as much demand as possible. That would mean that the factory would need to be able to handle as broad of a palette of products as possible.
  • Well, some of my friends at IBM’s Academy of Technology and I came up with a concept of what the SD factory would look like. SD factory is likely going to receive order for a
  • We conceptualized how SDSC technologies would be used in a Software-Define Repair Depot. Again, we used a simple process model to guide our thinking.
  • We believe that the impact of SDSC will be profound and will change the way we manage supply chains for the three scenarios we covered.
  • In 2012, the US Military started to deploy mobile fabrication labs that use 3D printers to print parts for equipment used in the theatre of war such as drones and demolition robots.
  • TechShop is creating a new culture of hardware design and development using 3d printers and other technologies and equipment that they rent to inventors and product designers.
  • “3D Printing is about to do to product manufacturing what the internet did to music distribution, we’re here to facilitate this revolution,” said Brian Garret, CTO and co-founder, 3D Hubs.
  • UPS has recently started a pilot of a 3D printing service that they are providing entrepreneurs.
  • Software-Defined Supply Chain: The Next Industrial Revolution

    1. 1. © 2013 IBM Corporation Software-Defined Supply Chain The Next Industrial Revolution September 17, 2013
    2. 2. © 2013 IBM Corporation2 10/6/2013 The future is here. What are you going to do about it? The impact of digitization on traditional industries is known and proven across many industry case studies. A digital revolution in manufacturing is underway. Are you ready for it? Digitization Digitization Digitization Music, Movies & Video Manufacturing & Supply Chain Books, Newspapers & Magazines
    3. 3. © 2013 IBM Corporation3 10/6/2013 A major industrial paradigm shift is about to happen Three technology trends are fast reaching their tipping points and converging. The confluence of these trends will create new frontiers of possibilities for how things are made, and where. Products WHERE and WHEN you want them! Hardware Constrained Software Defined
    4. 4. © 2013 IBM Corporation4 3D Printing – The prime catalyst Of the three technology trends poised to drive the next industrial paradigm shift, 3D printing is the most catalytic and profound. 10/6/2013 Unconstrained Fabrication Reduced Waste $300 Desktop 3D Printers! Economy of Scope Image: Stratasys.com
    5. 5. © 2013 IBM Corporation5 10/6/2013 3D Printing - Engineering & creativity unleashed As 3D printing continues to evolve, our assumptions for what is possible to design and manufacture will change, as will our assumptions for how they will be manufactured. “[With 3D printing,] we can actually create structures that are more intricate than any other manufacturing technology — or, in fact, are impossible to build in any other way. – Lisa Harouni: “A primer on 3D printing” Images: Shapeways.com
    6. 6. © 2013 IBM Corporation6 10/6/2013 3D Printing - Engineering & creativity unleashed As 3D printing continues to evolve, our assumptions for what is possible to design and manufacture will change, as will our assumptions for how they will be manufactured. “[With 3D printing,] we can actually create structures that are more intricate than any other manufacturing technology — or, in fact, are impossible to build in any other way. – Lisa Harouni: “A primer on 3D printing” Fabrication of assembled products! Source: Shapeways.com - design by vertigopolka No assembly required!
    7. 7. © 2013 IBM Corporation7 10/6/2013 3D Printing - Engineering & creativity unleashed As 3D printing continues to evolve, our assumptions for what is possible to design and manufacture will change, as will our assumptions for how they will be manufactured.
    8. 8. © 2013 IBM Corporation8 Advanced Robotics – The flexible shop floor enabled Intelligent, multi-purpose robots such Rethink Robotics’ Baxter can automate the shop floor in a dynamic way that allows the production of multiple products from the same assembly line. 10/6/2013 Intelligent People-Safe Costs only $20K per unit! Multi-Purpose Baxter Image: Rethink Robotics
    9. 9. © 2013 IBM Corporation9 Advanced Robotics – The flexible shop floor enabled Volkswagen has integrated an industrial robotic arm from the Danish manufacturer Universal Robots into mass production at its engine production plant in Salzgitter, Germany. 10/6/2013 This is the first collaborative robot in use at Volkswagen worldwide. Due to its integrated safety mode, the six-axis robotic arm is able to collaborate directly with people without any guards, contributing significantly towards optimizing ergonomic working processes. Source: Robotics.org, Walter Farah 9.12.2013 Source: http://www.universal-robots.com/
    10. 10. © 2013 IBM Corporation10 Open Source Hardware – Digital power for the masses Netduino and Arduino are putting advanced electronics capabilities into the hands of everyone, and are creating a groundswell of open source, crowd-driven, free applications. 10/6/2013 Open Source Multi-Purpose Free!..... Almost Easily Programmable Arduino Netduino
    11. 11. © 2013 IBM Corporation11 Open Source Hardware – Digital power for the masses Hex: an open-source, smartphone-controlled copter for just US$50. The body is 3D printed and the board is Arduino compatible. 10/6/2013 It’s very easy to iterate and update the product just like any modern-day software,” Arnie Bhadury said. “It also allows customization and personalization from the user’s point of view.” Source: Techcrunch, Chris Velazco 9.2.2013 Source:www.kickstarter.com/projects/1387330585/hex-a-copter-that-anyone-can-fly
    12. 12. © 2013 IBM Corporation12 Technology keeps getting cheaper and better Cheaper and better 3D printing, advanced robotics and open source hardware are making their commercial application more accessible and economical. In February 2014, key patents that currently prevent competition in the market for the most advanced and functional 3D printers will expire. 10/6/2013 Images: Stratasys.com. Rethink Robotics
    13. 13. © 2013 IBM Corporation13 10/6/2013 Software-Defined Supply Chain
    14. 14. © 2013 IBM Corporation14 10/6/2013 A century of Fordism is about to be upturned The introduction of the assembly line in 1908 by Henry Ford ushered in a new era of manufacturing and industry; and era of mass production on a scale never seen before. ”…a model of economic expansion and technological progress based on mass production: the manufacture of standardized products in huge volumes using special purpose machinery and unskilled labor." Tolliday, Steven and Zeitlin, Jonathan eds. (1987) The Automobile Industry and Its Workers: Between Fordism and Flexibility Comparative analysis of developments in Europe, Asia, and the United States from the late 19th century to the mid-1980s. Shift to moving production line $5 daily wage introduced Assembly time down to 1.5 hours Model T introduced Assembly time per car: 14 hours Cars produced annually Ford Automotive Output, 1901 to 1929
    15. 15. © 2013 IBM Corporation Digital Modules Standard 15 10/6/2013 The Second Industrial Revolution Three industrial trends have and continue to influence the way products are designed and manufactured, and over the course of 100 years we have gotten very good at it. PartsCustom AssemblyComponents ControlsMechanical
    16. 16. © 2013 IBM Corporation BIG COMPLEX GLOBAL 16 10/6/2013 The characteristics of today’s industry and trade Today, companies are structured and operate to mass produce goods at the lowest aggregate cost possible. This dynamic has given rise to complex, global supply chains. Economies of Scale Multi-tiered Supply Chains Low Cost Suppliers
    17. 17. © 2013 IBM Corporation17 10/6/2013 The Software-Defined Supply Chain will redefine manufacturing… The digitization of manufacturing will make it cost competitive to manufacture bespoke products that meet the personal needs of the customer. 3D Manufacture Standardization Custom Parts Standard Parts Robotics Modularization Components Modules Intelligence Digitization Mechanical Complexity Digital Simplicity
    18. 18. © 2013 IBM Corporation LOCAL SIMPLE FLEXIBLE 18 10/6/2013 …and transform industry, trade and economic models. Companies will no longer need to pursue scale to compete, and they will be able to produce goods closer to their customers in their local markets. Economies of Scope Flat Supply Chains Closest Supplier
    19. 19. © 2013 IBM Corporation19 10/6/2013 So what is the Big Deal?
    20. 20. © 2013 IBM Corporation20 10/6/2013 First of a kind tools for modeling your Software-Defined Supply Chain IBM collaborated with leading academic and industry experts in developing an analytical model to measure and forecast the impact of Software-Defined Supply Chain using ILOG. Paul Brody IBM Vice President Global Electronics Leader Veena Pureswaran IBM Institute of Business Value Global Electronics Industry Lead IBM Plant Location International
    21. 21. © 2013 IBM Corporation21 10/6/2013 We studied four electronic products with different characteristics IBM broke down four electronics products and analyzed the cost, scale and carbon footprint of manufacturing them using software-defined supply chain technologies over the next 10 years. Cost Size Personalization Complexity Volume
    22. 22. © 2013 IBM Corporation22 The Software Define Supply Chain analytical framework At the highest level, our vision was to source data, model changes in the manufacturing process and locations, and then aggregate and scale. The results were remarkable! 10/6/2013 IMPACT OF OPEN SOURCE ELECTRONICS PLANT LOCATION INTERNATIONAL IMPACT OF INTELLIGENT ROBOTICS IMPACT OF 3D PRINTING BASELINE BOM & SUPPLY CHAIN DATA
    23. 23. © 2013 IBM Corporation IBM’s Institute of Business Value (IBV) study findings show that through Software-Defined Supply Chain not only will it be nearly 25% less expensive to manufacture products, economy of scale can be realized by 90% less volume! 23 The tremendous value potential of Software-Defined Supply Chain (SDSC) will drive dramatic industry and business transformation that will redefine supply chain as we know it today… AGGREGATE NORMALIZED UNIT COST AGGREGATE NORMALIZED MINIMUM ECONOMIC SCALE Software-Defined Supply Chain: Breaking the rules 10/6/2013
    24. 24. © 2013 IBM Corporation24 According to IBM’s Institute of Business Value study on Software-Defined Supply Chain, drastic localization of manufacturing of hearing aids will transpire by 2017… Software-Defined Supply Chain: New rules – new game 10/6/2013 Image: www.starkey.com
    25. 25. © 2013 IBM Corporation25 10/6/2013 What does this mean for Supply Chain?
    26. 26. © 2013 IBM Corporation How will Software-Defined Supply Chain change businesses? 26 The democratization of manufacturing, open-source electronics, and crowd-sourced product engineering will pose significant threats to traditional manufacturers, but also present opportunities and competitive advantage for Software-Defined Supply Chain first movers. Flexible, on-demand fabrication and automated assembly will enable new supply chain models and business models that will challenge and eventually disrupt the status quo. Software-Defined Manufacturing Local Manufacturing Site Local Raw Material Supplier Local Retail or Distribu on Raw Materials Raw Materials Finished GoodFinished Good So ware-Defined Supply Chain (Manufacturing Scenario) Assembly Sub-Assembly 3D Printer Raw Material Stock Part Component/ Module Part Finished Product Shop FloorCustomers CustomersCustomers Software-Defined Service Operations Local/Regional Service Center Local Raw Material Supplier Customer Raw Materials Raw Materials Replacement/ Refurbished Product So ware-Defined Supply Chain (Repair Depot Scenario) Repair Process Sub-Assembly 3D Printer Raw Material Stock Part Component/ Module Part Repaired Product Repair Depot Replacement/ Refurbished Product Customer Customer Local Service Depot Local Raw Material Supplier Customer Raw Materials Raw Materials Replacement Parts & Components So ware-Defined Supply Chain (Field Service Scenario) Sub-Assembly 3D Printer Raw Material Stock Replacement Part Replacement Component/ Module Part Service Depot Replacement Parts & Components CustomerCustomer Field ServiceField ServiceField Service Images: www.alpha-soft.com
    27. 27. © 2013 IBM Corporation27 The outcome of disruption: Disintermediation Today, components for electronic devices are sourced across a vast network of suppliers and assembled by contract manufacturers located in regions with low labor cost. Supplier Network Retail Store Retail Store Components • Product Specifications • Orders • Orders Contract Manufacturer OEM Local/Regional CM Local/Regional CM Local/Regional CM Network SDSC B2B Cloud • Product Designs (standard/custom) • Assembly Instructions • Orders/Demand Local/Regional CM OEM Software-Defined Supply ChainToday’s Supply Chain Will local contract manufacturers displace the contract manufacturers and suppliers of today… …and bring about a new supply chain ecosystem model? A new economic model? 10/6/2013
    28. 28. © 2013 IBM Corporation28 Centralized Manufacturing Site Global Supplier Network Global Distribu on Network Customers Customers Finished Parts & Components Finished Parts & Components Finished GoodFinished Good Tradi onal Supply Chain (Manufacturing Scenario) Inventory Assembly Sub-Assembly Part Part Finished Product Shop Floor Parts Components/Modules Component/ Module Module Customers Traditional manufacturing models drive companies to seek the lowest cost labor markets and tax jurisdictions, but with the rising cost of energy supply chain costs are increasing. Significant Logistics Lead Times Centralized Manufacturing Complex Logistics Complex Supplier Management Significant Transportation Costs Complex Tax & Trade/Customs Traditional Manufacturing
    29. 29. © 2013 IBM Corporation Transformation Hypothesis – SDSC Manufacturing 29 Software-Defined Supply Chain has the potential to drastically simplify the logistical complexity and reduce the cost of transportation throughout the supply chain. Minimal Logistics Lead Times Local/Distributed Manufacturing “Last Mile” Logistics Simplified Supplier Management Minimal Transportation Costs Local Tax & Minimal Customs Local Manufacturing Site Local Raw Material Supplier Local Retail or Distribu on Raw Materials Raw Materials Finished GoodFinished Good So ware-Defined Supply Chain (Manufacturing Scenario) Assembly Sub-Assembly 3D Printer Raw Material Stock Part Component/ Module Part Finished Product Shop FloorCustomers CustomersCustomers Images: www.alpha-soft.com
    30. 30. © 2013 IBM Corporation The Software-Defined Factory/Shop Floor 30 10/6/2013 What will custom parts, custom assembly, dynamic routing, dynamic scheduling, and distributed capacity do to the shop floor? Fabrication Bank Raw Materials Parts Queue Order/Schedule Part Specification Routing Robot Assembly Robot Assembly Robot Assembly Queue In lieu of dynamic, intelligent routings that can adjust to schedule and custom demand, robots may need to route parts to the appropriate assembly station where assembly robots put together finished goods. Will assembly lines be the thing of the past? 3D manufactured parts would be staged for distribution to assembly stations or assembly lines. Open source electronics would be programmed before routing. Banks of 3D printers produce parts needed in the assembly of a product based on order, schedule and parts specification. Assembly robots work in isolation or with people to assemble the final product on demand. DistributeAssembleRouteReceiveSourcePlan Images: www.alpha-soft.com
    31. 31. © 2013 IBM Corporation Traditional Repair Depot Operations 31 Centralized/Regional Service Depot Global Supplier Network Regional Distribu on Network Customer Customer Replacement Parts & Components Replacement Parts & Components Replacement/ Refurbished Product Replacement/ Refurbished Product Tradi onal Supply Chain (Repair Depot Scenario) Service Inventory Repair Process Sub-Assembly Replacement Part Part Repaired Product Repair Depot Parts Components/Modules Replacement Component/ Module Replacement Component Customer Drop Ship The key challenge for repair depot operations is balancing service levels provided to the customer with the cost of holding spare parts and refurbished units. Significant Logistics Lead Times Centralized Repair Centers Costly Logistics Stock Out Risk Availability of Discontinued Parts High Cost of Carry (Spares)
    32. 32. © 2013 IBM Corporation Transformation Hypothesis – SDSC Repair Depot Operations 32 Software-Defined Supply Chain has the potential to drastically reduce the complexity of spare parts supply chain while ensuring spare parts are available for service. Reduced Logistics Lead Time Distributed Repair Centers “Last Mile” Logistics No Stock Out Risk Fabricate “Discontinued Parts” Minimal Cost of Carry (Materials) Local/Regional Service Center Local Raw Material Supplier Customer Raw Materials Raw Materials Replacement/ Refurbished Product So ware-Defined Supply Chain (Repair Depot Scenario) Repair Process Sub-Assembly 3D Printer Raw Material Stock Part Component/ Module Part Repaired Product Repair Depot Replacement/ Refurbished Product Customer Customer Images: www.alpha-soft.com
    33. 33. © 2013 IBM Corporation Fabrication Bank The Software-Defined Repair Depot 33 10/6/2013 What will the ability to source spare parts in-house and to automate the repair of defective units do to the repair depot? Raw Materials Parts Queue RMA Part Specification Repair Robot Repair Station Robots route parts to the appropriate repair station where other robots or a person perform repairs on defective units. 3D manufactured parts would be staged for distribution to repair stations. Open source electronics will likely be held in spares inventories. Banks of 3D printers produce parts needed in the repair of defective products based on diagnostic results, schedule and parts specification. Repair robots work in isolation or with people to repair the defective unit on demand. ReturnRepairRouteSourceDiagnoseReceive Defective Unit Spares Inventory Refurbished Unit Routing Robot Spare parts would be fabricated and picked based on diagnostic results. A repair job would be scheduled based on lead time for parts fabrication and availability. The refurbished unit can either be restocked, returned to the customer or picked up by the customer at a local repair depot or 3rd party repair facility. Images: www.alpha-soft.com
    34. 34. © 2013 IBM Corporation Traditional Field Service Operations 34 Regional Service Distribu on Center Global Supplier Network Regional Service Depot Network Customer Replacement Parts & Components Replacement Parts & Components Replacement Parts & Components Tradi onal Supply Chain (Field Service Scenario) Replacement Parts & Components Customer Service Inventory Service Inventory Field ServiceField Service Field Service Customer Stock outs of spare parts can lead to multiple, costly trips to a site to repair a product installed in the field, and stocking special parts across a network of service depots can be costly. Significant Logistics Lead Times Complex Parts Distribution Complex Logistics Complex Inventory Management Multiple Trip Resolution High Cost of Carry (Spares) Images: www.alpha-soft.com
    35. 35. © 2013 IBM Corporation Transformation Hypothesis – SDSC Field Service Operations 35 With a combination of condition monitoring of smart products and predictive analytics, field service organizations can achieve a very high rate of first trip resolution. Minimal Logistics Lead Times Simple, Local Distribution Model “Last Mile” Logistics No Inventory to Manage First Trip Resolution Minimal Cost of Carry (Materials) Local Service Depot Local Raw Material Supplier Customer Raw Materials Raw Materials Replacement Parts & Components So ware-Defined Supply Chain (Field Service Scenario) Sub-Assembly 3D Printer Raw Material Stock Replacement Part Replacement Component/ Module Part Service Depot Replacement Parts & Components CustomerCustomer Field ServiceField ServiceField Service Images: www.alpha-soft.com
    36. 36. © 2013 IBM Corporation Fabrication Bank The Software-Defined Field Service 36 10/6/2013 Will the benefit of SDSC be limited to slow moving, costly spares? Will 3D printers be installed in repair trucks to create the parts needed for field repairs? Raw Materials Field Service Order Part Specification In the world of the Internet of Things, will we be able to predict when and how a product will fail in the field, and what parts will be needed in advance before a repair technician makes a field visit? 3D manufactured spares could be produced at the local service depot or with a 3D printer installed in a service vehicle. Open source electronics will likely be held in spares inventories and programmed in the field or pre- programmed at the depot. The field technician would either pick parts before leaving the depot that have been identified in pre-diagnosis by the intelligent product, or they could opt to fabricate the part in the field (depending on how long it takes to fabricate) after confirmation of the problem. Banks of 3D printers fabricate parts based on information received from intelligent products that monitor their own condition or to manufacture slow moving parts that are costly to carry. RepairSourceDiagnose Spares Inventory Repaired Unit Repair Visit Unit in need of Service Spare parts would be fabricated and picked based on diagnostic information from the product or a customer repair request. A field repair job would be scheduled based on lead time for parts fabrication and availability. A technician makes a site visit and diagnosis an problem or confirms an issue published by the products internal diagnostics. Field Service Technician Images: www.alpha-soft.com
    37. 37. © 2013 IBM Corporation Centralized Finished Goods Forecast-Based Make to Stock Centralized Global Standard Cost LocalizedCentralized Raw MaterialsFinished Goods Real-TimeForecast-Based Engineer to OrderMake to Stock DistributedCentralized LocalGlobal Real (Dynamic) CostStandard Cost Aggregate Unique/IndividualAggregate IMPACT - A new way of looking at supply chain management 37 10/6/2013 The Software-Defined Supply Chain will require firms to look at supply chain functions in new, different ways, and to execute their businesses in a different way. Inventory Management Distribution Demand Management Manufacturing Scheduling & Planning Logistics Cost Management Procurement/Sourcing Today SDSC Future
    38. 38. © 2013 IBM Corporation38 10/6/2013 This is science fiction, right?
    39. 39. © 2013 IBM Corporation39 10/6/2013 Mobile fabrication In 2012, the U.S. Army deployed their first mobile fabrication lab to produce spare parts and in- the-field designs for equipment used in frontline operations and positions! Source: www.army.mil
    40. 40. © 2013 IBM Corporation40 10/6/2013 Manufacturing for rent TechShop provides facilities for entrepreneurs to design, develop and manufacture products at low cost and on-demand using computer-aided design and 3D printers! Source: www.techshop.ws
    41. 41. © 2013 IBM Corporation41 10/6/2013 Social manufacturing & distribution 3D Hubs provides a social platform that allows consumers to access a global network of privately-owned 3D printers to manufacture items for pick up just around the corner! Source: http://www.3dhubs.com
    42. 42. © 2013 IBM Corporation42 10/6/2013 3D print shop UPS is currently piloting a program that provides 3D printing services to customers on a pay- per-use basis. Source: www.engadget.com
    43. 43. © 2013 IBM Corporation43 10/6/2013 How is IBM shaping The future of SDSC?
    44. 44. © 2013 IBM Corporation Shaping the future of Software-Defined Supply Chain 44 IBM is actively researching the trends and exploring the application of Software-Defined Supply Chain related technologies, as well as monitoring the fast-evolving ecosystem forming around 3D printing. Our intent is to shape the future of the Software-Defined Supply Chain and to help our clients become part of the next revolution. IBM Institute of Business Value (IBV) The IBM Institute for Business Value has a worldwide presence and is comprised of more than 50 consultants who conduct research and analysis across multiple industries and functional disciplines. On June 20th, IBV researcher, Veena Pureswaran and Paul Brody, Global Electronics Industry Leader, will publish a study on Software-Defined Supply Chain. Electronics Industry Center of Competency (CoC) The Electronics COC has been instrumental within IBM in driving research and business application of Software-Defined Supply Chain across industries including the electronics industry. . IBM Academy of Technology (AOT) The Academy of Technology is a IBM think tank that is actively monitoring the Software-Defined Supply Chain technology trends. The AOT has recently published its Technology HorizonWatch Report on 3D printing technology that provides a comprehensive overview of the current maturity of 3D printing technology for commercial use, as well as insight into where and how fast the technology is evolving.
    45. 45. © 2013 IBM Corporation 45 Leonard Lee Electronics Industry CoC SDSC Subject Matter Expert Global Business Services (619) 405-8329 leel@us.ibm.com John Constantopoulos Electronics Industry CoC SDSC Subject Matter Expert Global Business Services 61-457-912-679 joconst@au1.ibm.com Veena Pureswaran Global Electronics Industry Lead Institute of Business Value (919) 543-8368 vpures@us.ibm.com Paul Brody Vice President Global Electronics Leader (415) 902-3613 pbrody@us.ibm.com Aslam Hirani Electronics Industry CoC SDSC Subject Matter Expert Global Business Services 91- 9886501065 ashirani@in.ibm.com Global Software-Defined Supply Chain Team We have a global network of IBM subject matter experts and consultants who can get you started on your Software-Defined Supply Chain journey. John Cohn IBM Fellow Academy of Technology Corporate Strategy (802) 578-0985 johncohn@us.ibm.com
    46. 46. © 2013 IBM Corporation46

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