What COVID-19 Taught Us About the Supply Chain
One hot topic that has arisen during the COVID-19 pandemic is the importance of rethinking current supply chains and the benefits enabled by both their digitalization and the use of virtual inventories. The combination of additive manufacturing (AM) and digitization will likely encourage industries to rethink their approach to supply chains.
The importance of reevaluating current supply chains stems from the inherent differences between traditional manufacturing and AM solutions. Traditional manufacturing by nature requires a global supply network with physical warehouses and physical shipping/logistics. One of the key characteristics of traditional manufacturing is mass production, where the greater the production quantity, the lower the price per part
During these last few months, a chain of events led to multiple supply chain failures. The initial outbreak in China combined with the country’s increased role in the production of world goods, began a ripple effect of problems. Factory shut-downs in China caused some physical inventories to deplete and as the virus began to spread, it became a global pandemic. In terms of supply chains, the intention to limit the spread of the virus by minimizing travel made it extremely difficult to move goods. The shortage and acute need for parts, especially medical parts, grew and vulnerabilities were experienced both insofar as manufacturing, as well as in supply chain logistics.
The pandemic has shown that the risks of supply chain disruption are higher when manufacturing is centralized and transportation is widespread and the emergency brought awareness of AM as a technology and as an enabler of digital supply chains. But neither the technology nor the business models are new and the geographical and time associated benefits of AM became clear because of the way the AM ecosystem came through in times of need.
Specifically in the medical field, AM is already widely used in pre-operative patient-specific anatomical models, such as surgical guides. Within manufacturing, AM enables localized manufacturing and is used for production tooling and high-end critical parts, as well as for maintenance and emergency spare parts.
A recent industry webinar, in which I participated, also included Stratasys’ EMEA president, Andy Langfeld, who discussed how the PPE shortage during the pandemic uncovered the classical risk of the global supply chain today. He pointed to the AP-HP hospital network in Paris which addressed this through 3D printing and set up an internal production method within just 48 hours. Doctors can order industry-compliant parts from an internal catalog as needed, demonstrating how AM can help overcome supply chain failures.
Not just a pandemic solution
There are other reasons for supply chain failures such as geo-political issues like the tariff wars between the USA and China, and Brexit. Evaluating digital supply chain effectiveness for a company is relevant now and in the future.
When comparing production costs, looking only at those derived from manufacturing makes sense IF the supply chain is the same for items produced by the compared manufacturing methods. While AM might be more costly per part in the manufacturing, it can save significant costs when it comes to the supply of a part. Digital supply chains, in general, have much lower costs: a digital supply chain is shorter, modular, and obviously less physical, cutting the costs related to keeping an inventory, warehouses, overproduction, transportation, and more.
In times of crisis, there still could be difficulties in the digital supply chain but these are restricted mostly to the supply of raw materials. The agility of digital enables quick reactions and changes when needed. We have seen over these past months factories repurposing to manufacture medical equipment, but in traditional manufacturing the time and costs of such a switchover are significant. In contrast, secured virtual inventories and AM can be flexible and nimble essentially hot-swapping one location for another, or one product for another.
Vulnerabilities of a digital nature
With all these advantages, it makes one wonder why digital supply chains with AM aren’t more popular. There are vulnerabilities that stem from digital production and digital supply chains that need to be addressed. Traditional production can ensure almost 100% consistency and repeatability in the physical product because parts are produced en masse. When the part is digital it’s not yet produced. Therefore it is important to keep repeatability across times and locations to ensure 100% consistency – whenever or wherever the part is eventually produced.
Enforcing repeatability in AM can be done by tracking and controlling the production process using SaaS software, such as LEO Lane’s. This ensures the correct machine, and the correct settings are used, thereby accounting for different material characteristics. Another vulnerability for both physical and digital parts is theft. When a physical part is stolen, the economic loss is the value of that one part. However, when a digital part is stolen, the economic ramifications are much worse: an unprotected digital part is a blueprint to output as many parts as desired. Again, this is certainly an important consideration when setting up a digital supply chain, with the same software solutions offering protection of the virtual inventory..
In view of COVID-19, it is likely that we will need to be able to work from any location for some time. Using cloud and SaaS solutions makes it easier to integrate with companies’ existing systems and still have access from different places. AM and digital supply chains offer an alternative, or a parallel alternative to the existing supply chain, in order to self-sustain and remain strong against possible disruptions.
Whether it is to supply spare parts in an emergency oy simply for everyday use, the benefits of digital supply chains are increasingly being embraced and leveraged by many companies.
People Moves: Kuehne+Nagel, Asuccini, Algo
Was: Managing Director, Kuehne+Nagel India
Now: Managing Director, Kuehne+Nagel Singapore and Malaysia
Skilled in freight forwarding, logistics management, and international logistics, Peer Gjeow Rasmussen has worked for almost two decades to make Kuehne+Nagel a global leader in supply chain. With experience in Thailand, China, Denmark, the USA, and India, Rasmussen is poised to excel in the company’s diverse Singapore and Malaysia divisions. Said Jens Drewes, President of Kuehne+Nagel Asia-Pacific: "Peer’s proven leadership will ensure continued strategic growth and success."
Was: SVP Supply Chain, NBC Universal
Now: Chief Customer Success Officer, Algo
Heidi Turk has been named Chief Customer Success Officer at Algo, a leading supply chain intelligence SaaS solutions provider. Prior to joining Algo, Turk spent the 23 years with NBC Universal, most recently as SVP Supply Chain.
Amjad Hussain, Chairman, founder and CEO, said: “Heidi’s deep knowledge of hard-goods manufacturing, distribution and retail channel operations will take Algo's white-glove, customer-centric service and support to the next level."
Now: Vice Chairman, Board of Directors, Asuccini
Jim Vrtis has been elected to the board of directors at Asuccini LLC, the leading international logistics transportation management software company. Vrtis will join as the Vice Chairman, and continue his role as CEO at Artemis ABA Inc.
Vrtis has more than 20 years of industry experience working in transportation and logistics. Ashkan Shamili, Founder & CEO, said: “With the addition of Jim to our Board, we are committed to providing our customers with an innovative customised transportation management system built in the Salesforce cloud and tailored to the way our customers run their business.”