Instrumented Interconnecteds Intelligent

Paul Brody, Global Industry Leader, Electronics, IBM

Paul Brody, Global Industry Leader, Electronics, IBM

By Paul Brody

3D printing, intelligent robotics, and open source hardware are three emerging technologies that stand to revolutionize modern-day manufacturing. These disruptive forces will usher in a new manufacturing paradigm that is managed by software and data files – something we call the “software-defined supply chain.”

For more than a year, my colleagues and I have been carefully studying the likely impact and implications of these technologies. We wanted to see if these new technologies could alleviate many of the constraints and the fixed costs of a traditional supply chain, and if so, to what extent? To verify this, we built an integrated supply chain model and then tore apart a series of electronics items – including a mobile phone, a hearing aid, a washing machine, and an industrial display.

In each case, we wanted to know if we could make that product in a new software- defined supply chain model and, if so, what would the economics look like, in the present, as well as in the coming decade, and see if we could forecast the cost and capability path of these technologies.

While we found that a software-defined supply chain model quickly becomes cheaper to operate, that alone was not the most impactful finding. Instead, it was the vast reduction in scale that it enables. On average, by the end of our forecast period, we determined that our products, when made in a software-defined supply chain model, would be 23 percent cheaper, on average, than they are now in traditional manufacturing. Even more importantly, the scale required to achieve a cost-effective result was up to 90 percent lower.

Economies of scale matter because the fixed costs and lead times associated with manufacturing have traditionally been high. Designs can take months to complete and then many objects require dedicated capital equipment like molds, casts and machine tools. Companies work hard to drive component standardization and re-use so they can spread those large investments across the highest possible volume of production to keep costs low. By contrast, software-defined supply chains use 3D printers and open source designs to eliminate or dramatically reduce many of those fixed costs and, in so doing, reduce the need for high product volumes to achieve more competitive pricing.

Out of the four products we tested to understand the benefits of a software-defined supply chain, the levels of median economic scale were shown to be 75 percent lower over a span of five years and up to 90 percent lower over a decade.

Though we did not account for it in our supply chain model, the impact is likely to be understated and open sourcing will also command significant reductions in design cycle-time as companies and consumers increasingly start their projects from proven designs.

For enterprises, the implications of significantly reduced economies of scale should be a mixture of an opportunity and a threat. To start with, things that used to be very difficult – making a final buy of spare parts – may no longer be necessary. Need a part? Print one. No need to keep nearly as much inventory on hand, either.

There are challenges, however, to be aware of. If the typical volumes required to be efficient today imply that 3-5 major companies are serving a particular market, they will in the future suggest that it is possible that as many as 30-50 smaller companies could serve the same market profitably. Industry leaders will have to contend with the risk of significantly increased competition, much of it driven by local sources. 

Companies that are well positioned for the future are the ones that are thinking ahead about how they can re-work their supply chains to profitably serve these smaller niches. 

One IBM client we spoke to currently makes products in volumes of millions of each SKU. In the future, they anticipate that a typical production run may be as little as 5,000 units – and they are restructuring their entire supply chain, product design, and distribution model accordingly. Ultimately, they believe that they must be efficient with a production run of one unit. This defines a snapshot of the future.

___________________________

You can read the full IBM report on the Software Defined Supply Chain here, or on the IBM IBV app available through iTunes and Android.

Bookmark and Share

Previous post

Next post

31 Comments
 
July 26, 2014
11:07 am

Wonderful web site in this article! Also your site a good deal up fast! Precisely what host have you been utilizing? May i are taking your affiliate marketer web page link for your host? When i need my own web page loaded up because quickly because your own property lol.active8.com


Posted by: active8.com
 
July 9, 2014
10:09 pm

you’re in reality a just right webmaster.

The site loading pace is amazing. It sort of feels that you’re doing any distinctive trick.
Also, The contents are masterwork. you have done a wonderful process in this matter!


Posted by: Joie
 
May 6, 2014
11:37 pm

Thanks for magnificent info I was looking for this information for my mission.


Posted by: interiordesignsid.com
 
March 29, 2014
8:08 pm

Perfectly, if Bibi would concur to serve as caddy, Obama might have the option to exchange a number of terms with him between putts.


Posted by: vanboy
 
March 6, 2014
4:22 am

I can see that you are putting a lots of efforts into your blog. Keep posting the good work. Some really helpful information in there. Bookmarked. Nice to see your site. Thanks!


Posted by: Nasi Pecel
 
March 6, 2014
2:48 am

thank you for this article, very help me to clear this case


Posted by: Koran Bagus
 
February 23, 2014
10:52 pm

I am not sure where you are getting your info, but good topic. I need to spend some time learning more or understanding more. Thanks for magnificent info I was looking for this information for my mission.


Posted by: San Diego Office Furniture
 
February 23, 2014
10:47 pm

Thanks for magnificent info I was looking for this information for my mission.


Posted by: Rosina
 
February 10, 2014
9:26 am

I¡¦ve recently started a site, the information you offer on this web site has helped me greatly. Thank you for all of your time & work.


Posted by: free credit report
 
February 6, 2014
1:22 am

its very interesting to know about the impact of the products in future..
Kitchen Carcass


Posted by: Modular kitchens Bangalore
 
December 20, 2013
3:51 am

After I initially commented I clicked the -Notify me when new feedback are added- checkbox and now every time a remark is added I get 4 emails with the identical comment. Is there any way you’ll be able to take away me from that service? Thanks!


Posted by: Cassondra Eddens
 
December 18, 2013
5:28 am

A formidable share, I just given this onto a colleague who was doing slightly analysis on this. And he in reality bought me breakfast as a result of I found it for him.. smile. So let me reword that: Thnx for the treat! But yeah Thnkx for spending the time to discuss this, I feel strongly about it and love reading more on this topic. If possible, as you turn into expertise, would you mind updating your blog with more details? It is highly helpful for me. Big thumb up for this blog post!


Posted by: Edward Yokely
 
November 14, 2013
1:08 am

nice post
Ref: linear displacement transmitter
______________

linear displacement transmitter


Posted by: macky
 
October 3, 2013
12:30 am

Thanks for sharing this blog,very informative and interesting.
Interior designer chennai


Posted by: jackson
 
September 11, 2013
5:04 am

It’s amazing to go to see this website and reading the views of all colleagues about this article, while I
am also keen of getting experience.


Posted by: wentylatory kanałowe
 
September 9, 2013
2:53 am

パリ chanel


Posted by: chanel アウトレット 店舗
 
August 25, 2013
9:08 pm

I’m curious to find out what blog system you’re using? I’m experiencing some small security issues with my latest blog and I would like to find something more secure. Do you have any suggestions?


Posted by: Devin Wertz
 
August 12, 2013
5:44 pm

Great consultation. I did desire to make use of some with the content material on my weblog whether. Your won didactic report implies a whole lot a person like me and further more to my mates. Thank you for wonderful tips.


Posted by: Roster software,
 
August 12, 2013
1:04 pm

Hi ghtghjyy


Posted by: fgrg
 
August 2, 2013
10:35 pm

Thank you for the sensible critique. Me & my neighbor were just preparing to do a little research about this. We got a grab a book from our local library but I think I learned more clear from this post. I’m very glad to see such excellent information being shared freely out there.


Posted by: furniture gardening home
 
August 2, 2013
1:34 am

I will right away grab your rss as I can’t to find your email subscription link or newsletter service. Do you’ve any? Please let me recognise in order that I may subscribe. Thanks.


Posted by: High
 
August 1, 2013
10:05 pm

I wish to show my admiration for your kind-heartedness in support of women who really want assistance with that area. Your personal commitment to getting the solution across has been definitely important and has consistently enabled individuals like me to realize their ambitions. Your personal informative report implies a whole lot a person like me and further more to my mates. Best wishes; from everyone of us.


Posted by: home security interior
 
August 1, 2013
6:01 pm

Hello there, You have done an excellent job. I’ll certainly digg it and personally suggest to my friends. I am sure they will be benefited from this site.


Posted by: security interior design
 
July 31, 2013
4:37 pm

Wow! Thank you! I constantly wanted to write on my site something like that. Can I include a portion of your post to my blog?


Posted by: selling
 
July 31, 2013
3:04 pm

Wow! Thank you! I continuously wanted to write on my website something like that. Can I take a part of your post to my site?


Posted by: Green Energy
 
July 31, 2013
8:00 am

of course like your web-site however you need to check the spelling on several of your posts. Several of them are rife with spelling problems and I find it very troublesome to inform the reality then again I¡¦ll definitely come again again.


Posted by: find attractive photography
 
July 31, 2013
7:55 am

Great weblog right here! Also your website a lot up fast! What host are you using? Can I am getting your affiliate hyperlink to your host? I desire my site loaded up as quickly as yours lol


Posted by: ways to acquire
 
July 29, 2013
11:39 am

Hiya! I just would like to give a huge thumbs up for the great info you’ve got here on this post. I will be coming back to your blog for more soon.


Posted by: Anibal Mullarkey
 
July 27, 2013
5:12 pm

Good post. I study one thing tougher on totally different blogs everyday. It can all the time be stimulating to learn content material from different writers and observe just a little one thing from their store. I�d desire to make use of some with the content material on my weblog whether or not you don�t mind. Natually I�ll offer you a hyperlink in your net blog. Thanks for sharing.


Posted by: Nicholas Crown
 
July 23, 2013
2:28 pm

Can I just say what a relief to find someone who actually knows what theyre talking about on the internet. You definitely know the way to bring an issue to light and make it important. More people need to read this and understand this side of the story. I cant believe youre not more widespread because you definitely have the gift.


Posted by: Melvin Dunsford
 
July 19, 2013
3:08 am

Once I originally commented I clicked the -Notify me when new comments are added- checkbox and now each time a comment is added I get four emails with the same comment. Is there any method you can remove me from that service? Thanks!


Posted by: Jonas Wagster
 
6 Trackbacks
 
August 22, 2013
9:04 pm

[...] ※ 当ブログは、A Smarter Planet Blog – Small Scale, Big Impact: Testing the Powers of a Software-Defined Supp…の抄訳です。 [...]


Posted by: 生産量の少量化で、大きな衝撃-ソフトウェアに定義される新しいサプライチェーンの力を検証 | A Smarter Planet (Japan)
 
June 26, 2013
8:35 am

[...] (A Smarter Planet) IBM recently completed a year-long study of the “software-defined supply chain,” a new manufacturing paradigm that is managed by software and data files.  (Click here for instructions on how to download the complete study from iTunes.) [...]


Posted by: Testing the Powers of a Software-Defined Supply Chain - 3D Printing Insider
 
June 24, 2013
4:07 pm

[...] This post originally appeared on IBM’s A Smarter Planet blog. [...]


Posted by: Your Current Supply Chain Is Toast, But Its Replacement Will Be Awesome | Ngọc Đồng Hải Ngoại
 
June 24, 2013
2:41 pm

[...] This post originally appeared on IBM’s A Smarter Planet blog. [...]


Posted by: Silicon Survival | The New Manufacturing Paradigm: Software Defined Supply Chains
 
June 24, 2013
9:25 am

[...] This post originally appeared on IBM’s A Smarter Planet blog. [...]


Posted by: Your Current Supply Chain Is Toast, But Its Replacement Will Be Awesome | BEMBA.COM
 
June 24, 2013
8:47 am

[...] Small Scale, Big Impact: Testing the Powers of a Software-Defined Supply Chain @ IBM’s Smarter…. [...]


Posted by: Software-Defined Supply Chain #makerbusiness « adafruit industries blog
 
Post a Comment