The software defined supply chain

The Software Defined Supply Chain:How it will change product design and the competitive landscape in every industry

Siemens PLM Innovation ConferencePhoenix, ArizonaMarch 2013

Global Business Services

1 © 2013 IBM Corporation

© 2013 IBM Corporation2

The Triumph of The Model T

Three Forces At Work

Rewriting The Rules of Product Design & Manufacturing

Strategies for Staying On Top

© 2013 IBM Corporation

The Model T set the rules for modern manufacturing

3

The first mass produced automobile.

The first to use interchangeable parts.

The first to be built on a moving assembly line.

Source: Wikimedia, Wikipedia, IBM Research


Henry Ford unleashed mass production and mass consumption at an entirely new scale

4

0

875,000

1,750,000

2,625,000

3,500,000

1901 1903 1905 1907 1909 1911 1913 1915 1917 1919 1921 1923 1925 1927 1929

Ford Automotive Output, 1901-1929

Model T Introduction

Assembly time per car: 14 hours

Shift to moving production line.

$5 Daily Wage Introduced

Assembly time down to 1.5 hours

Source: Wikipedia, Ford


By the early 1920s, competitors had copied Ford’s mass production model and were gaining share

5

0

750,000

1,500,000

2,250,000

3,000,000

1901 1903 1905 1907 1909 1911 1913 1915 1917 1919 1921 1923 1925 1927 1929

GM TotalFord TotalChrysler Total

• Parts commonality across models and even brands

• Sub-contractors and modularization

“A car for every purse and purpose”

- Alfred P Sloan

Source: Wikipedia, Ford, GM, Chrysler


From custom but interchangeable parts to standardized components in differentiated products

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ComponentsCustom Standard

AssemblyParts Modules

ControlMechanical Complexity

Digital Simplicity


These three design principles govern how we achieve variety and quality without losing scale

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The result: decades of rising productivity and quality with falling costs:

0

1,500

3,000

4,500

6,000

1935 1939 1943 1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007

IncomeAuto CPI

Income Compared to Automotive Pricing, 1935-2010

Source: IBM Institute for Business Value


Today, three technological changes are at work that will transform manufacturing

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3D Printing Intelligent Robotics

Open Source Electronics

Images: MakerBot, IBM


3D Printing is rapidly achieving levels of performance required to be production-ready

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Already used in production for medical devices and aerospace

Performance is improving year on year

At lower volumes, unit costs are competitive with machining and plastic injection molding


More than just a tool, 3D printing is an emerging ecosystem

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Printers

Design Applications

Open Source Designs

Materials Science MakerBot

Thingiverse

TinkerCAD

Kickstarter


We are entering the third era of robotics with the rise of truly intelligent robotics

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Hard Automation

Flexible Robots

Intelligent Robots

•Fixed location and function•Delicate with low

MTBF

• Integrated into production line•Flexible & re-usable

with long lead times

•Easy set-up & move•Work alongside

people•Low cost

Images: IBM, ABB, RobotWelding.com


Intelligent Robots are slower and cheaper but much, much smarter

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Baxter is a new kind of robot.

Baxter is cheap - about $22,000.

Baxter is slow and safe enough to work alongside people.

The key to Baxter is software that allows rapid teaching and understands concepts like conveyor and object.

Source: Rethink Robotics


The final ingredient in our transformation mix is the rise of open-source general purpose computing hardware

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Embedded Electronics

•Cheap but only in volume•Fixed functions•Highly reliable

General Purpose Computing

•Expensive in volume, cheap as single unit•Highly flexible•Complex to manage


We’ve reached the point where general purpose computing power can go anywhere

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The Apple Lightning Digital HDMI adapter for the iPhone.

Full ARM SoC as powerful as many cell phones with 2GB of RAM.

Boots when connected. Runs Mac OS Core (XNU)

Receives MPEG stream and converts it to HDMI output.

Embedded in the connector. Costs $49.

Source: Cult of Mac


All three of these tipping points have something in common: Software

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Build A Mold or Cast

Hard-Wire A Production Line

Develop An Embedded Chip

From Hardware-Driven Production & Design Cycle:

Design & Print On Demand

Easily Reconfigured Assembly

App Development on Standard Systems

To Software-Centered Production & Design Cycle:


Let's come back to three guiding principles that driven product design

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Digital Simplicity


First, the long term migration from customization to standardization will be reversed.

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What product options and choices would we design if there were no volume requirements?

Additive Manufacturing



Second, the shift from parts to modules will be reversed as marginal “labor” becomes free.

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What kind of flexibility does your production line have if you start with simple parts? How many tiers might you eliminate from the supply chain?

Robotic Assembly



Finally, everything product, even your light switch, will become radically smarter.

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If you could the power of an iPhone in your toaster could you finally have a perfect piece of toast every morning?

Radically Smarter


Digital Simplicity


These trends don't just interact with each other, they interact the whole social and digital design ecosystem that already maturing very quickly

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Mobile

Cloud

Social

Local

Apps Everywhere

Apps Everywhere

Public Cloud Based Design

Crowd Sourcing Design


The rate at which open-source design repositories are growing looks a lot like the growth of other social and collaborative online endeavors - which is exponential

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0

17.5

35.0

52.5

70.0

11/1/08 3/1/09 7/1/09 11/1/09 3/1/10 7/1/10 11/1/10 3/1/11 7/1/11 11/1/11 3/1/12 7/1/12 11/1/12

0

7,500

15,000

22,500

30,000

11/1/08 3/1/09 7/1/09 11/1/09 3/1/10 7/1/10 11/1/10 3/1/11 7/1/11 11/1/11 3/1/12 7/1/12 11/1/12

The number of items on Thingiverse is on an exponential upwards path.

The complexity of new items is on a steady upward path.

Number of new items uploaded into Thingiverse each month.

As measured by the most complex new item uploaded each month - in terms of number of parts.

Source: Economist in cooperation with IBM


The future is here now. Consumers are leading the way.

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December 2012:

3D Printed AR-15 Lower Receiver developed on Thingiverse, the open-source 3D printing platform

In testing, the device fails After 15 after just 6 shots.

Thingiverse removes all weapons projects.

Stratasys recalls the printer used for the project.

Source: TechCrunch, Wired


Thanks to social networking and open-source hardware design, the latest versions can easily fire over 1,000 rounds

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By March 2013:

DEFCAD and WikiWeapons enable broad collaboration on open-source, 3D printed weapons.

Version 5 of the 3D printed AR15 Receive succeeds in shooting over 600 rounds without failure.

Creator Cody Wilson tells the press, “I believe in evading and disintermediating the state”

Source: TechCrunch, Wired


Thanks to social crowd-sourcing, you needn’t even own a 3D printer yourself.

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MakeXYZ.com enables people to share and get paid for their 3D printer usage.

Search locally based on postal code.

Transmit design, print and receive the same day.

Corporate buyers actively considering if they really need to buy 3D printers to manufacturing using them.

Source: TechCrunch


The scope and scale of crowd-sourced technology vision is extraordinary

27Source: DIYRockets


Integrating these new technologies, nimble start-ups are able to re-write the traditional end-to-end processes that large enterprises take for granted

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Idea to Market

Market To Order

Order To Cash

The foundation of business process design is end-to-end thinking.

New entrants are leveraging technologies to drive big disruptions in business models

Idea

Kickstarter

CashProduct

Marketing

1

2

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5


From Rip, Mix, Burn to Design, Download, Print.

29Source: Apple


What are the likely consequences of all these changes on enterprises?

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Lower Cost Design Through Open Source

Much Faster Time To Market

Far Less Capital Required

Reduced Scale for Competitive Pricing

Fewer Suppliers & Tiers Required

Lots More Competition


What lessons might we learn from the software business that could apply?

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1 2 3 4 5Supply Chain Innovators

Clients

Services

Product Design


Rethink your suppy chain

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Are your PPE investments consistent with a shift to flexible manufacturing?

The software defined supply chain will be:

Simpler & Shorter

More Flexible

Near Design Centers or Key Markets


Rethink your design process

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Product design is now product marketing.

Treat digital design assets like re-usable software code, and use them in a much greater variety of product.

Embrace and leverage an open-source community around your digital design assets.


Deliver products as a service

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Products are typically sold as transactions. They are the easiest thing to replicate.

Services deliver on-going value aligned to your client’s needs.

Services provide a continuous stream of revenue and a continuous stream of customer insight.


Help, don’t hinder, your clients’ technology transition

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Clients will figure out how use these same technologies. Help them.

Don’t go to war with your clients by loading your products with DRM or preventing their use of new technology.

Shift away from spares as a source of margin and towards higher value support services.


Solicit innovation or face competition

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80% of consumers told IBM in a survey that they are willing to help enterprises develop their products.

Accept their help.

Or see them build your competition on Kickstarter.


In this transition, we want to help

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How should my supply chain look in light of these new models?

What IP should I protect and what should I make open-source?

When should I start making the technology and supplier transitions?

- Strategy

- Execution Support

- Technology Implementation

- Outsourcing


How soon is now?

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How do you find out?

1. Tear down products built by traditional supply chain

2. Estimate new BoM and BoA using a Software-Defined Supply Chain Concepts

3. Enlist world’s top manufacturing experts to build technology roadmap for the Software Defined Supply Chain

4. Feed new BoM and BoA into an iLOG simulation model


Let’s Stay In Touch

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The software defined supply chain

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