Today’s world has transformed into a more agile and on-demand environment, with new technology and supply chains altering manufacturing lines and processes that were more specialized to ones with the potential to be much more flexible.
Two trends are largely responsible for this development: global supply chains and agile or additive manufacturing strategies. Eric Hiller, the founder and managing partner of Hiller Associates, discusses each of these factors in great detail and determines how companies can suitably adapt to the extensive changes.
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Additive Manufacturing And Global Supply Chains
Previously, manufacturing revolved around machining (removing material from a block of something), fabrication (cutting and bending standard stock, while also assembling pieces into complex parts), and net form processes (where metals and plastic were poured into a molten state or shaped into a mold).
“Additive manufacturing processes” were introduced decades ago capable of growing parts from the ground up. Eric Arno Hiller says that initially these processes were perceived as being expensive and limited in the material properties that they could achieve. Therefore, these processes were substantially relegated to non-functional prototypes.
Every day now, new AM processes and materials are now appearing that are greatly expanding the field of additive manufacturing. Meanwhile, global supply chains have given companies options that sometimes make products much cheaper to manufacture overseas, even considering total cost of acquisition trade-offs.
The Rebound To Nearshore And Domestic Production
As the Coronavirus has made painfully clear, one should not overestimate the stability of extended supply chains or be blinded by the dollar signs without considering risk. However, even before Corona, people were started to realize that with increasingly flexible and automated processes, nearshore or domestic production can be extremely cost-effective, Eric Hiller points out, particularly at lower volumes or when time is of the essence.
This need for flexibility to minimize Risk and the Total Cost of Acquisition has driven new manufacturing models, such as on-demand online manufacturing platforms. Competitors in this space include Xometry, Fast Radius, Protolabs, Fictiv, and others. Most of these on-demand manufacturing platform cover multiple processes, such as machining, injection molding, urethane casting, and several advanced additive manufacturing processes. They do vary in the processes that are covered and the source of their manufacturing parts, as some opt to do it internally while others utilize a network of suppliers.
Despite any differences, these strategies offer an intriguing value proposition to product companies, in that they will assist you with finding the ideal process for your parts that matches your material prerequisites, all at a notably lower cost and faster delivery time than the traditional means.
Online On-Demand Manufacturing Platforms Drive A Whole New Sourcing Workflow And Interaction
For these on-demand manufacturing companies to profitably serve their customers, they have developed innovative online sourcing interactions, Eric A. Hiller claims, a substitute for the customary in-person or on the phone alternative.
Sourcing is a complicated task, made more difficult when dealing with a set of ever-improving processes and the interaction is mainly being accomplished online in a self-serve manner. Therefore, the competitors within this space have constructed online platforms that are quite advanced. Eric Hiller says the goal of the online experience is to give whoever is sourcing a part fast and easy guidance into the following areas
- Fulfillment timing – what are the options that are fastest to make the part and to ship it , and how does timing differ depending on the process selected and the materials specified in the part
- Design for manufacturability (DFM) guidance — what features in a part are likely going to cause problems in a manufacturing process either making it more expensive or causing quality problems or perhaps, even precluding the use of certain processes?
- Cost/quote guidance — what will this part cost to manufacture and ship?
These are complex questions, and in the traditional sourcing process, they are answered by technically savvy salespeople backed up with a set of application engineers to deal with the more technical questions. In the new online and on-demand world of manufacturing, these questions are now being answered with complex analytical software, running on the on-demand manufacturer’s servers in the cloud. These platforms analyze a 3D solid CAD model that is provided by the customer.
Online On-Demand Sourcing Changes Who Is Involved In Sourcing And How They Interact
Relying on the person sourcing to interact so deeply with analytical online software drives a very different dynamic in the sourcing process. Specifically, the product development or engineering team needs to be much more involved, and the sourcing team needs to be much more technically savvy. For example, most purchasing agents do not know how to interpret complex design / DFM guidance on a part. Even if they do understand the feedback, they certainly do not have the authority to change the underlying design in the 3D CAD model. On the other hand, the product development and engineering team does not have the authority or the experience, typically, to sign off on what could be a very expensive spend.
What Will Allow The Competitors In The Online On-demand Manufacturing Space To Succeed?
Given these challenges, Eric Arno Hiller recommends the following to the online on-demand manufacturing platforms:
- Invest in technology for alerts, notification, communication, workflow, and role-based authorization security, assuming that multiple customer functions will be interacting with the platform.
- Provide interactive viewers to help the customer understand design guidance.
- Create highly graphical and easy to understand reports that explain to the customer which processes are capable of making their parts, what are the tradeoffs are among them in cost and timing, and what constraints or specifications on the part are prohibiting other possibly more cost-effective processes from being used.
- Always provide the customer a lifeline to punch out of the process to a human. There is nothing more frustrating in an on-demand world than companies trying to force customers into a low-touch buying model before they are ready. The customers will eventually get there, but the technology platforms also have a lot of work to do first. Until then, make it easy, seamless, and safe for the customer to get to a human who can lead them to the process.
Purchasing Departments Will Have To Change To Leverage The World Of On-Demand Online Sourcing
Eric Hiller believes that online on-demand manufacturing is a game-changing new way to source and manufacture. However, it will not be easy for many purchasing departments to gain value from it, unless they are willing to change their cultures and processes. To the profit and loss executives, VPs of Engineering, and Chief Procurement Officers at companies who are buying parts, Eric Arno Hiller recommends the following:
- First, get educated on the new field of on demand and additive manufacturing and up to speed on its latest capabilities. If you do not, be assured that your competitors will.
- Start to seriously rethink and grow the skill sets that your product development team and purchasing team need to have to engage an online on-demand additive manufacturing world. If not, neither product development nor purchasing will be able to effectively use these powerful new sourcing platforms.
- Start lowering the cultural barriers and strife that often exist between the product development team and the sourcing team. This is a long-term and latent problem in many companies, but it will cause even more problems in the world of on-demand manufacturing, where customers not only are expected to self-serve, but also can speed up the sourcing process and reduce cost by doing so.
- Get comfortable buying parts in a lower-touch, high-tech, automated online way. For example, Amazon seemed strange at first to consumers, but who today would rather order something from a catalog over the phone, rather than using the friendly and fast online Amazon interface that offers almost anything you want in your personal life at lightning speed?
- Start thinking in functional requirements rather than specifying a material or a process. One of the great benefits of on-demand manufacturing and networks of suppliers is that there are many options for both materials and processes. Most engineers today specify a material to begin with and the sourcing team will assume a supplier or process. However, this explicit definition of material and/or process and/or supplier will often rule out many alternatives that could be faster, higher quality, and cheaper. It is far more flexible to define the product’s functional attributes (e.g. strength requirements, thermal properties, etc.) and the sourcing parameters (timing, delivery frequency, volumes, yield needed, etc.) that matter. If the product development and sourcing team can learn to think in an attribute-based way to frame requirements, the new on-demand online manufacturing platforms will often be able to offer them multiple processes or materials that will meet the requirements.
Get Ready Not Only For An Internet Of Things But For An Internet Of Suppliers And Processes
Manufacturing is being redefined by on-demand online networks of suppliers and additive manufacturing processes. This does not mean that traditional processes and sourcing interactions are going away. In the short and even medium-term, they will always be the preferred way to manufacture large volumes of parts with a stable design.
However, like all disruptive technology, additive manufacturing, and online manufacturing will continue to eat at the bottom of the use case stack for manufacturing. These new ways of manufacturing will become more and more viable every year and unless your company embraces them and changes its way of working, you will be disrupted.
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