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Manufacturing Trends Revolutionize Procurement

Originally posted by Tam Harbert on http://www.ebnonline.com

Experts say that the industry is in the midst of a new industrial revolution. If they’re right, then supply chain professionals should brace themselves for substantial changes in their jobs.

A raft of new technologies is leading to a renaissance in manufacturing. The advent of cloud computing, ubiquitous connectivity, mobile devices, big-data, and 3D printing, as well as the explosion of embedded sensors and microcontrollers, enable the creation of smarter, leaner, and more nimble factories.

To quote the thoughts of Michael Idelchik, who directs advanced technologies at GE’s global research lab, in a recent Wall Street Journal article:

 

Manufacturing is undergoing a change that is every bit as significant as the introduction of interchangeable parts or the production line, maybe even more so. The future is not going to be about stretched-out global supply chains connected to a web of distant giant factories. It’s about small, nimble manufacturing operations using highly sophisticated new tools and new materials.

 

With embedded processors and new robotics technologies, these factories will require less, or virtually no, human labor. If something goes wrong, the sensors will notify a plant manager, whether he is on the floor working or at home sleeping. He can likely correct any problems remotely.

That means the factory can be anywhere — either in the United States to be close to research and development expertise, in Germany to be close to European end markets, or in another part of the world to save energy costs. For electronics, the removal of the cost of human labor may lead component manufacturing and assembly to gravitate from low-cost Asian locations to other parts of the world.

In addition, technologies like 3D printing could change the rules of modern-day manufacturing, causing a shift from an era of high-volume mass production to one geared to small batches of highly customized products. For a supply chain based on moving high volumes of components, such a shift has far-reaching impacts.

According to the Journal article, this “democratization of manufacturing” could mean that bikes, jewelry, and even auto accessories like cup holders can be customized to each person’s needs or tastes. It’s not that much of a stretch to imagine a world in which consumers go to BestBuy.com or Amazon.com to order a custom-made mobile phone or iPad that includes the desired components. A graphic artist, for example, might order the highest-performance graphics processor available.  A high-energy traveling salesperson might want a longer-lasting battery or a different form factor for his phone or tablet.

These technologies could also change how products are designed. In 3D printing, also called additive manufacturing, the entire product design is stored on computer, enabling designers, manufacturing experts, and procurement people to collaborate more closely.

“The big untold story in all of this is the way the digitization of manufacturing compresses everything — from the early design of a product to its final assembly,” says Ping Fu, who is in charge of strategy at 3D Systems, a 3D printer manufacturer. “Everyone can now work together simultaneously. The software makes it possible, and you get much better results than when all of these activities were being done in different silos.”

The Obama Administration is doing what it can to encourage this manufacturing renaissance. Last month, it announced it was launching three innovation institutes on digital manufacturing, lightweight metals manufacturing, and next-generation power sources.

It’s impossible to know exactly how all these technologies and the sea change in manufacturing will impact procurement. However, it’s a pretty safe bet that the supply chain is in for its own revolution.