Internet of Things

What is the Internet of things (IoT) ?

Simply put this is the concept of basically connecting any device with an on and off switch to the Internet (and/or to each other). This includes everything from cell phones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of.  This also applies to components of machines, for example a jet engine of an airplane or the drill of an oil rig. The analyst firm Gartner says that by 2020 there will be over 26 billion connected devices…that’s a lot of connections (some even estimate this number to be much higher, over 100 billion).  The IoT is a giant network of connected “things” (which also includes people).  The relationship will be between people-people, people-things, and things-things.

Conversations about the IoT are (and have been for several years) taking place all over the world as we seek to understand how this will impact our lives.  We are also trying to understand what the many opportunities and challenges are going to be as more and more devices start to join the IoT

IOT

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THE IMPACT OF 3D PRINTING ON SUPPLY CHAIN AND OPERATIONS

Disruptive innovation

Innovation is the key to success of any business. It enhances their ability to stay longer in the market. But a wave, popularly known as disruptive innovation has always threatened the way in which an industry works and as a result many companies have been forced to either adapt or fizzle out. The wave strikes frequently creating a new market, with a different and unique set of values. From a low cost mass produced Ford Model T, which revolutionized the transportation business to digital photography, disruptive innovation has made its presence felt at unknowing times.

We are currently living in an era where technology is changing at a rapid pace. Many companies doing business by the traditional methods are living in the fear of being outpaced and outmatched by companies that readily accept and incorporate such disruptive innovation in their business. 3D printing is yet another classic example of disruptive innovation that has garnered much attention lately. Though used for prototyping in early stages, it has now gained acceptance in the daily business operations. As this technology gains momentum and because of its simpler, smaller and more convenient nature, many industries will be forced to rethink their business strategy and realign with the change.1

The impact of 3D printing can be felt in different industries at different levels, biggest being on the supply chain of any industry. IBM has identified 3D printing as one of the leading disruptive innovation which in conjugation with intelligent robots and open source electronics have the ability to transform the global supply chain.

A typical supply chain consists of manufacturing, assembly line, distribution, warehouse and retail. All these departments work in sync with each other to help the product reach its final destination i.e. end customer. Currently, the challenge for the industries is to keep the average costs down while the maintaining high volume of production. This puts a lot of pressure on the supply chain of the company which becomes complex and operates at various levels. Also there are suppliers and sub-contractors that take on different roles of raw materials supplier, manufacturer, assembler etc. The production itself is very scattered and distributed. We have factories in different parts of the world with China being the hot favorite at the moment. The traditional methods have been benefitting all those involved in the process and the economies on the whole. But as seen in the past, new technology demands new rules to be laid down thus changing the economics of the market.

2

With 3D printing a product can directly move from ideation/conceptualization stage to end user bypassing all the intermediate steps as shown in the above diagram. This will change the foundations of a traditional supply chain management. The current model has its roots deeply embedded in standardization, modularization and digitization. Each of these processes has helped productivity reach new heights. Standardization has reduced the production time of a good, modularization has produced assembly of integrated modules and digitization has made the processes simpler. Together these three have impacted global trade, investment opportunities and changed the employment scenario. Standardization has made supply chain big because it supports economies of scale and as each company today wants low cost, efficient products supply chain has truly turned global.3

3D printing has more or less reversed the standardization approach as companies will again turn to customization instead of mass production. Goods can be tailor made to suit personal and demographic needs and need not to be made at an isolated location. 3D printers accustomed with software defined designs have started to redefine the old age hardware driven approach. Listed below are some of the key impacts of 3D printing that will alter the landscape of supply chain management and open new retail opportunities in the coming future.

  • Economies of Scale : Low volume, batches of one , low cost, low carbon footprint
  • Customization
  • On demand production
  • Localization(Consumption and Production at one place)
  • Shortened Development Cycle
  • Change in Manufacturer-Wholesaler-Retailer relationship

Economies of Scale

The economies of scale is very evident as use of 3D printing can help manufactures produce lower volume of goods suited to the needs of particular demography. Though the cost of 3D machines is higher it can be compensated with reduction in transportation costs, cheaper cost of finished goods in that particular area, improved efficiency in production and elimination of other in between processes. The era of small and simple has already begun. As per IBM, the standout result of using the software defined supply chain will be lowering of costs and that too an extent of 23% in ten years. 4

Customization

A 3D printing machine has the capability to produce different models and it will be a big blow to the traditional methods of manufacturing where an assembly line is setup to produce one type of models. Altering the assembly line means long term investments and also stopping the production thus lowering the productivity. But now with a small change in software and computer programs, machine will be able to produce different products on the go.

Localization

Today’s globalization will lead to tomorrow’s localization. Off shoring models of business are under huge threat as 3D printing expands its wings. Today in a traditional supply chain, point of consumption is geographically isolated form point of manufacturing. This leads to large transportation costs and increased lead time. Any change in the consumers buying pattern generally leads to alteration of the product to reflect the latest trends. In traditional methods a lot of time is wasted in transit which may also lead to spoilage of some products. But with 3D printing as production and consumption takes place at the same place, companies will be in a better position to distribute the goods and serve the customers. The distribution channel will be very short and will involve minimum movement of goods and that too directly to the consumers.

Shortened development cycle

Big companies usually have various assembly lines for their different products which require huge manpower to operate. 3D printing will eliminate this phase altogether and thus reduce the labor costs and the lead time of new products. New products would be built at a much faster pace. A recent experiment by Akaishi, a Japanese manufacturer who used 3D printing to make footwear and massage devices reported reduction in almost 90% of the production time as opposed to normal methods. 3D printing will also help in reducing redundancy that is present in the supply chain to dispatch some parts in very short span and get machines working again. These expenditures can be avoided by just clicking and downloading the design of that part from internet.

Change in Manufacturer-Wholesaler-Retailer relationship

3D printing involves process called additive manufacturing, which essentially builds solid objects by depositing a layer over the other one at a time. This is a shift from modern day manufacturing which is based on tearing and cutting to make the product. This will lead to less stock of raw materials in the warehouse and also printing will be done on the basis of demand (made to order). Ideally products will be directly made in the buyer’s house saving huge costs on supply chain. Combing these advantages we will be able to remove the need to have warehousing altogether and stocks of inventories will be a thing of past. Manufactures will save money on storage, handling and distribution. In addition to lesser inventory and warehousing cost, the scrap generated by this method of manufacturing will be negligible and companies will be able earn higher profits due to lesser wastage.5

As 3D printing gains momentum, build to order strategies will be employed by all the manufacturers. This will eliminate the need to have retailers in some sections or they will turn into shop windows for manufacturers. Orders will be directly delivered from manufacture to consumer. These cost benefits will make companies commit for the switch in their approach.

Industries Example

10 years from now and we will see our markets be flooded with goods made from 3D printers. Consumer Products, transport, fashion, food, medical, defence, auto and all other industries that rely heavily on supply chain management to carry out their business in an efficient manner need to rethink their strategies.

Auto Spare parts: The automotive spare part industry is large and growing. There are many organized big as well as small players that have built their business in this domain. As 3D printing comes of age, manufactures and end consumers will directly print the parts needed to replace existing ones rather than buying it from these vendors. The after sales service provided by these players will also go down as the accuracy and durability of printed parts improve. This industry which is close to 2.7 Lakh Crores will definitely take a hit and many players will be force to adapt quickly.

Defence Industry: Defence Industry is riddled with products like guns, tanks, missiles that have been built using an extensive and very complex manufacturing process. If the machine breaks down in the middle of a training exercise or battlefield, instead of discarding the machine altogether or ordering the part from the manufacturer, it will be possible to replace the defunct part by printing the new one then and there. The time and cost gained by using this technology can prove to be the difference between winning and losing.

Food Industry: Though 3D printing started with plastics it has now expanded its portfolio by producing materials like human tissue and food. Many attempts have been by researchers in Universities like Cornell and Exter to produce different food items like chocolates and cheese. This will drastically impact the food supply chain where farm inputs form a major component of the nation’s GDP. Food shops or the points of consumption will find it difficult to stay in the market. People will start printing food items in their homes. Though the health benefit and ethical issues can been debated at large, the impact will be big nonetheless.

Fashion/Garment Industry: 3D printing will have a huge impact in the fashion industry where the product life cycle is low and customization is the key. Artists and designers will be able to work together to make infinite models and come up with a new fashion every other day. The designers will be the new manufactures and distributors. They can then send the design to the customer at a given price who can in turn produce the output at his home. The entire traditional supply chain of manufacturing, planning, inspecting at different levels, quality control, wholesaler, retailer can be wiped out at an instant.

Conclusion

3D printing as seen above is a new wave in engineering. The traditional hardware based design of products is taking a backseat and is slowly giving way to new software based model. A new model of logistics and supply chain will emerge that will feed raw material directly to 3D printers. These printers can be at a manufacture’s place or consumers home.

As the prices of 3D printers fall, and they become more affordable, extensive training is required to make people aware of this technologies full potential. Today companies are reluctant to absorb this technology because of the costs and lack of knowledge. At least 70% of leading supply chain leaders today are yet to assess the impact of 3D printing on their business. But latest data suggest that the big shift is already in place. The costs are reducing, accuracy of the printers are improving i.e. build quality of products is improving and supported materials are increasing in variety. Though at present, printing very large objects is a concern, It’s just a matter of time when this transition picks up pace.

– Shaurya Gulati & Vivek Jajodia, XIMB

Paradigm Shift in Automobile Manufacturing

“Handling auto waste is emerging as a big issue and the automotive industry should create a ‘disposal chain’, similar to supply chain, so that vehicles that ultimately turn into scrap bundles can be effectively disposed of,” says Principal Scientific Advisor to the Government of India, R. Chidambaram.[1]

He envisions this to happen in the future for Indian automobile sector.

The automobile manufacturing industry in India is one of the largest in the world. Annually producing more than 3.9 million units in 2011[2], India’s commercial vehicle and passenger car manufacturing industry is the sixth largest in the world.

The pollution caused by manufacturing of one car can be imagined by the fact that it involves extraction of iron ore, bauxite, petroleum, copper, lead, and a variety of other raw material to process steel, aluminum, plastics, glass, rubber, etc. The material necessary to construct automobiles consumes generous amounts of resources, uses extravagant amounts of energy, and has somber environmental repercussions.

Auto waste can be classified as:

  1. Raw material waste
  2. This constitutes raw material wasted from the process, work-in progress (WIP), bought out items, finished goods inventory and goods in transit.
  3. Manufacturing aids waste
  4. This constitutes the material for indirect use in the manufacturing process, aids, maintenance spares, servicing spare parts, fuels for boilers, generators, etc. This category also constitutes the machine lubricants and coolants, aqueous and solvent cleaning systems, paint and plastics.
  5. Office waste
  6. Office and warehousing wastes, such as paper, printer cartridges, pallets, packaging materials, organic wastes, wastes from food materials for employees, etc add to the waste generated.

Paradigm Shift

Within rapidly growing economies, the demand for resources and the disposal and handling of growing volumes of waste streams have started taking its toll on a constrained and already polluted environment. But, the last decade has witnessed a paradigm shift from waste management to waste prevention.

Manufacturing companies are increasingly realizing that the way forward is through use of a green assembly line in a factory that does not belch out black smoke and create thousands of tons of landfill; not to mention that greener vehicles are in demand among the environmentally aware consumers.

Automakers lately have been aware and are making attempts at improving their factories these days, with low waste plans, use of solar power, source reduction to reduce the amount of hazardous waste that is generated, and recycling of the waste that cannot be prevented within the production process.

It becomes all the more important when the cars themselves get cleaner–like the latest wave of electric and hybrid vehicles, Toyota Prius being the latest one on our home roads.

Contribution to the Bottom Line

For automakers, moving toward electric cars is a very expensive process, with expected payoffs and profits far into the future. But making production facilities greener also makes them more efficient and greater efficiency reduces costs. Manufacturing at large scale stands little chance of becoming truly green, but snowballing improvements could put the auto manufacturing industry right at the forefront of greener production.

Sustainable growth is a primary goal for auto manufacturers. It not only helps build the brand image of car manufacturing, but most automakers are finding that it helps save capital and hence contributes to the bottom line.

At Ford, they plan to cut their energy usage at manufacturing plants by 20 percent by 2016, and cut down their use of water and its wastage by 30 percent by 2015. Water savings for Ford in 2012 alone amounted to $3 million.[4]

Recovery, Recycle, Reuse

Automobile manufacturers today have moved from being manufacturers to assemblers with a vast majority of components being sourced from vendors at different tiers. This model has matured to a point today where 2nd tier vendors sometimes having minimal interaction with the OEM and Tier 1 Suppliers directly delivering sub-assembly. But any benefits drawn along this value chain only stands to benefit OEMs and vendors in the long run and this fact is being increasingly acknowledged by manufacturers globally.

Among the variety of wastes generated by various players in the Automobile value chain many have the potential to be subjected to the “Recover-Reuse-Recycle” process to yield significant gains.

Raw materials:

  • Aluminium body stamping trimmings can be directly recycled as they already have the necessary metallurgical components and properties.
  • Aluminium casting flash, machining chips and process rejections are all readily recyclable and fetch a good price.
  • Plastics trim processing waste, rubber processing waste and foam components are also easy to recycle.

Manufacturing consumables:

  • Sand used in casting, coolants used in machining, paint primers and solvents are reusable and with minor capital investments, facilities can be developed for easy and extremely profitable reuse of these consumables.
  • Water with additives used as a coolant in forgings, sometimes in metallurgical processes and as a cleaning agent before surface treatment processes can be processed and reused continuously.
  • The plastic caps and fixtures to protect critical parts from dust and damage, also the packaging plastics and paper can be cleaned and reused. If damaged they can be easily recycled as well.

Office waste:

Organic wastes in the form of paper, food products, canteen residues, plant trimmings can be used as feedstock in low capacity organic gasifiers developed by companies like GE. This technology recently developed by GE uses organic materials and using combustion in an oxygen deficient atmosphere to develop producer gas extremely efficiently to be fed into highly efficient gas turbines to generate power.

Energy recovery at many places along the processing is possible with many efficient systems developed today for these purposes. These include:

  • Waste heat recovery in casting
  • Waste heat recovery in forging process
  • Waste heat recovery in heat treatment of components
  • Paint booth baking heat recovery

The recovered heat can be used for interior space heating in colder regions and also in case of feasible quantities can be used for processes like drying jet heating etc. Several of these possibilities have already been explored and successfully implemented in some companies.

To site an example, Honda’s North American plants recently claimed to have reduced the proportion of manufacturing waste sent to landfills as just 0.5 to 1% of the total waste generated. Due to the initiative, waste sent to landfills reduced dramatically at Honda auto plants throughout North America–from 62.8 pounds in the fiscal year 2001, to an estimated 1.8 pounds of industrial waste per automobile produced in the fiscal year 2012[4]. Remaining waste product is reused, recycled or used for energy recovery.

Focusing on minimization of waste helps organizations address high raw material costs, rising hazardous waste treatment and disposal charges, and pressure to increase the sustainability of their operations but whether ecologically sustainable business practices enhance the financial position of a company strongly influences their promotion and adoption.

Future in Automotive design and Green manufacturing

Mercedes has recently launched the new S-Class which has been awarded the TUV Environmental certification. The breakthrough from Mercedes in its latest model of S class takes into account the environmental compatibility of the vehicle across its entire life cycle- from production through its long years of service to end-of-life recycling. This analysis far exceeds the legal requirements. TUV Nord awards vehicles like Mercedes S-class with the environment certificate based on variety of factors other than just emissions like impact of sourcing of materials on environment, recyclability of components, percentage of recycled materials used and overall lifecycle environmental impact.

Concepts like Design for recovery are taking root in Europe where regulations encourage the manufacturers to design and develop products with one or more of the following objectives in mind:

  • Easy selective removal of recyclable materials
  • Meeting a certain minimum recycle rate for materials used
  • Prohibition of harmful substances
  • Increased recycled material content

Manufacturers in the future are more and more likely to work on these lines. This is acknowledgement of the fact that a manufacturer has the responsibility of not just the product in its inception and production but also throughout its lifecycle.

Vivek Acharya & Deepali Singhal, NMIMS – Mumbai