The New Software Defined Supply Chain

© 2014 IBM Corporation© 2014 IBM Corporation

Thorsten SchroeerIBM Director Electronics Industry Europethorsten.schroeer@de.ibm.com

Wiesbaden, September 2014

People can have the Model T in any

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People can have the Model T in any color – so long as it’s black.

HENRY FORD

Ford Automotive Output, 1901-1914

$5 Daily Wage IntroducedAssembly time down to 1.5 hours

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Shift to moving production line

Model T IntroductionAssembly Time Per Car: 14 Hours

Ford Automotive Output, 1901-1924

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STANDARDIZATION MODULARIZATION DIGITIZATION

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PARTSCUSTOM STANDARD

3 KEY RULESOF PRODUCT DESIGN

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COMPONENTS MODULESASSEMBLY

MECHANICAL DIGITALCONTROLS

3 CHARACTERISTICSOF INDUSTRY STRUCTURE & TRADE

Economies of Scale BIG

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Multi-Tier Supply Chains COMPLEX

Low Cost Supply Chains GLOBAL

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3 NEWTECHNOLOGIES

3D PRINTING OPEN SOURCEINTELLIGENT ROBOTICS

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gettyimage

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STANDARDIZATION

3D PRINTING

NO ECONOMIES OF SCALE

COST PER UNIT VOLUME PRINTED$/CUBIC CM - BLENDED AVERAGE

-

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ON DEMAND MANUFACTURING

LOCATION ELASTIC

-79% -

92%

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© 2014 IBM Corporation

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© 2014 IBM Corporation

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MODULARIZATION

ROBOTICS

HARD AUTOMATION

FLEXIBLE

TYPICAL COST PER ROBOTIC ASSEMBLY STATION

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FLEXIBLE ROBOTICS

INTELLIGENT ROBOTICS

-90%

DIGITIZATION

INTELLIGENCE

MOORE’S LAW

OPEN SOURCE HARDWARE DESIGNS ON THINGIVERSE

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OPEN SOURCE

HARDWARE CONSTRAINED

BUILD A MOLD OR

CAST

HARDWIRE PRODUCTION

LINE

DEVELOP EMBEDDED

CHIP

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SOFTWARE DEFINED

PRINT PARTS DIRECTLY BY SOFTWARE

RECONFIGURE ASSEMBLY THROUGH

SOFTWARE

DIGITAL CONTROLS USING SOFTWARE

SOFTWARE DEFINED

SUPPLY CHAIN

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SUPPLY CHAIN

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Will be most affected by

Strategies should you

Are the best locations to

Will these technologies

Do I need to re-engineer my

▶▶▶▶ WHO ▶▶▶▶ WHAT ▶▶▶▶ WHERE ▶▶▶▶ WHEN ▶▶▶▶ WHY

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these technologies?

adopt to be competitive?

invest going forward?

impact investment decisions?

end-to-end business processes?

4 DIFFERENT PRODUCTS COSTVOLUMESIZECOMPLEXITYPERSONALIZATION

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WASHING MACHINE

INDUSTRIAL DISPLAY

MOBILE PHONE

HEARING AID

EACH PRODUCT INDIVIDUALLY TORN DOWN

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EACH PRODUCT INDIVIDUALLY TORN DOWN

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EACH PRODUCT INDIVIDUALLY TORN DOWN

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EACH PRODUCT INDIVIDUALLY TORN DOWN

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EACH PRODUCT INDIVIDUALLY TORN DOWN

© 2014 IBM Corporation

EACH PRODUCT INDIVIDUALLY TORN DOWN

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5 GLOBAL LEADERS

IBM RESEARCHJohn Cohn

Phil Reeves Leo Bonnanni

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John Cohn

PLANT LOCATION INTERNATIONALDavid Zaharachuk

Mike Watson Alex Scott

1 INTEGRATED MODEL

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PLANT LOCATION INTERNATIONAL

3 AMAZING RESULTS

COST

SCALE

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SCALE

CO2 IMPACT

LOWER COST

23%CHEAPER

AGGREGATE NORMALIZED UNIT COST

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LOWER SCALE

90%LESS VOLUME

REQUIRED

AGGREGATE NORMALIZEDMINIMUM ECONOMIC SCALE

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REQUIRED

NOT NECESSARILY GREENERAGGREGATE NORMALIZED CO2 ANALYSIS

9%HIGHER

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HIGHER

67%LOWER

Centralized

Finished Goods

LocalizedCentralized

Raw MaterialsFinished Goods

Aggregate Unique/IndividualAggregate

IMPACT on Supply Chains

Inventory Management

Demand Management

Procurement/Sourcing

Today Future

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Forecast-Based

Make to Stock

Centralized

Global

Standard Cost

Real-TimeForecast-Based

Engineer to OrderMake to Stock

DistributedCentralized

LocalGlobal

Real (Dynamic) CostStandard Cost

Distribution

Manufacturing

Scheduling & Planning

Logistics

Cost Management

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© 2014 IBM Corporation

SMALL

SIMPLE

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SIMPLE

LOCAL

“Change Is Good! You Go First!”

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“Change Is Good! You Go First!”

RECOMMENDATIONSFOR INDUSTRY

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FULL REPORT & MODEL NOW AVAILABLE ONLINE AND ON YOUR MOBILE DEVICE

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