How can machine shops take advantage of supply chain shifts and new manufacturing economics?

Dennis Delgado

CHIEF PRODUCT OFFICER

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Shifts in technology, economics, and buyer behavior are changing the landscape for manufacturing supply chains. Where are the big opportunities that machine shops can take advantage of?    

Which changes in consumer behavior can machine shops leverage?

Small machine shops have traditionally struggled to compete against large manufacturers, with clear economies of scale stacked against them. However, shifts in consumer behavior are turning the tables when it comes to supplying certain types of products.

Small machine shops can service the rise in personalized manufacturing 

Consumers increasingly demand personalized products – and this trend is expected to extend into the consumer car market, where blockchain technology will disrupt traditional supply chain processes and increase the economic viability of detailed customization options for mainstream, mass-produced vehicles.

Car manufacturers have offered basic product customization for several decades; with combinations of engine size, paint colour, and seat materials. In recent years, options have increased to include a range of wheels, trim styles, sound systems, and even deletion of external badges. However, these are still just combinations of off-the-shelf parts.

Product customization and personalization is expected to drive consumer demand for physical products in the near-future. A report by PWC predicts that within the next five to 10 years, manufacturers across all industries will be competing to produce highly-customized products in small volume and deliver them directly to customers; more akin to old-fashioned craftsmanship – albeit using 3D-printers and industrial robots.

Manufacturing will become decentralized and use smaller factories that are networked using technology platforms like Syncfab, to assign customer jobs efficiently – which will shorten and simplify supply chains, minimize machine downtime, and increase profitability across the manufacturing network.

PWC predict that car manufacturers like Toyota, Honda, and GM will be forced to adapt to a growing customer demand for truly personalized products, which will be created and delivered using 3D printers and a range of Industry 4.0 processes, systems, and technologies that will allow manufacturers to adapt to individual customer demands and shorten delivery times.

Collaboration between manufacturers will become increasingly important, as demonstrated by the recent Ford/VW partnership to share intellectual property and hardware, and pool investment in innovative technologies that will enable new autonomous and electrical vehicle capabilities.

Small machine shops have a huge opportunity to service the shifting requirements of large manufacturers, which will struggle to adapt their scaled supply chains to the growing consumer demand for personalized products.

However, transparency and component traceability will become major challenges in decentralized supply chains that feature multiple machine shops, manufacturers, and distribution networks.

Blockchain technology will become essential to remove the trust bottleneck; enable the responsiveness that consumers will increasingly demand; and increase manufacturing process margins sufficiently to make detailed customization options on mainstream, mass-produced vehicles economically viable.

Decentralization and manufacturing networks that can build products closer to consumers will also enable manufacturers to sidestep issues like import tariffs and the escalating trade war between American and China – which was recently exemplified in BMW’s consideration of a US-based engine manufacturing facility.

SyncFab’s blockchain-powered platform is an Industry 4.0 solution that enables machine shops to receive vetted RFQs that match their machining capabilities – positioning them to take advantage of the shift towards decentralized manufacturing, without risking investment of budget or time into unpredictable marketing activities.

Small shops can service the rise in personalized manufacturing

Consumers are increasingly demanding personalized, customized, and co-created products – which offers machine shops an exciting opportunity to provide a responsive service.

Personalized and customized products have always appealed to wealthy consumers, but services like ‘Nike ID’ for customizing the footwear giant’s shoes and apparel (launched in 2012) have paved the way for affordable personalized versions of off-the-shelf products.

Social media and internet browsers offer an ideal platform to capture consumer attention and design/order custom products (respectively). In fact, 70% of consumers say that they would be “more loyal” to brands that gave them the ability to customize products.

However, Nike’s supply chain has struggled to keep up with the combined pressures of running the Nike ID personalized service, and a general acceleration in the fashion cycle driven by social media – with customers demonstrating a ‘buy now, wear now’ mentality and wanting products faster.

Manufacturing’s traditional focus on economies of scale and repeatability aren’t suited to this shift in consumer demand – and some big companies will find their supply chains are unable to respond to the demand for personalized products.

In contrast, Liberty Bottleworks in Portland competes with scaled-up Chinese manufacturers by customizing the aluminum drinking bottles they make with artwork submitted by each customer.  Ryan Clark, COO, explains that they produce 70,000 bottles each month and leverage lean manufacturing, just-in-time inventory, and digital technologies to run a tight manufacturing operation and make profits on small batches of bottles.

Machine shops have a clear opportunity to leverage their agility and offer a responsive service that can meet the growing demand for personalized items. However, identifying and leveraging these opportunities can be tough – especially in a business environment with limited marketing budgets.

SyncFab offers a platform for machine shops to receive vetted RFQs that match their machining capabilities – which can help them to win more jobs without risking investment of budget or time into unpredictable marketing activities.

How can lower barriers to entry benefit machine shops?

Manufacturing has traditionally had a high bar to entry – with massive upfront investment required for industrial machinery, and a small number of big players dominating supply chains. But exciting changes in technology and public policy are disrupting the landscape.

Lower capital investments are required for machinery

Manufacturing tools have become smaller and less expensive, which has enabled products to be made more cheaply, quickly, and in smaller batches.

Large industrial machines have affordable alternatives:

  • A Makerbot 3D printer instead of an injection molding machine.
  • A Voltera circuit board printer instead of a PCB factory.
  • An Othermill CNC machine instead of a traditional CNC machine.
  • A uArm industrial mini robot instead of a traditional industrial robot.

Additive manufacturing (3D-printing) continues to drop in price, while software for 3D design becomes more advanced. Combined with a low bar to education delivered by the internet, there are increasing improvements in the price-point, flexibility, and technical capacity that small machine shops can offer to buyers.

Computing power is increasingly affordable

Computing capabilities continue to become more accessible, with services like AWS (Amazon Web Services) offering scalable, affordable, and on-demand processing power for demanding applications – while high-speed fiber internet becomes commonplace. Machine shops can leverage these to scale their computational capabilities in a predictable and affordable way.

Information and education is easy to access

While an engineering degree is still an extremely valuable investment, specific skills like CAD and cloud computing can be taught online. Finding employees who can perform these roles, or supplementing the skill set of an existing employee, are both much more accessible options than they used to be – thanks to the availability of online courses.

3D printing has slashed the cost of tooling and making complex parts

Tooling used to be expensive and time-consuming – generating costs that machine shops had to spread across production runs and pass on to customers.

However, additive manufacturing (3D printing) doesn’t require tooling – and the hardware and manufacturing costs continue to decrease.

Similarly, it takes longer to produce a complex part when using a subtractive process, which increases the cost. Whereas in an additive process, a complex part often uses less material and can, therefore, be quicker and cheaper to make than a solid block – enabling more sophisticated products at lower price-points.

3D printing continues to evolve in terms of its capabilities and price-point, so it’s expected to continue its growth into lower-value and higher-volume products. Finding workers should become easy, as the skills required can be easily learnt at home by young people entering the workforce, who are likely to feel more comfortable with the software-based design processes than many of the older manufacturing demographic, who are retiring.

Trust can be secured and automated with blockchain technology

In an era of globalized supply chains, trust can be a major bottleneck. Manufacturers in distant locations have to be trusted to be honest and diligent, while complex distribution networks have to be trusted not to damage, spoil, or lose goods in transit. Unfortunately, manual trust authentication processes based on paperwork and phone-calls are slow and unreliable.

IIoT (Industrial Internet of Things) devices can capture data throughout a supply chain and offer proactive warnings for containers that reach an unacceptable temperature, or potential failure points in a manufacturing process. However, it remains difficult to capture and store data in a format that every stakeholder can trust.

Blockchain technology can securely store transactions across a supply chain in an immutable distributed ledger that can be shared with every stakeholder. Paperwork and phone calls can be eliminated – slashing procurement time and costs. Smart Contracts can be used to automate processes, like automatically releasing payment when goods arrive safely.

SyncFab’s platform is built on the manufacturing industry’s first blockchain for supply chains – offering machine shops an easy way to leverage the power of blockchain and Industry 4.0 technologies for digital transformation.

How can lower barriers to commercialization benefit machine shops?

Manufacturing technologies might be transformative, but machine shops need a more practical digital infrastructure to help them win and manage jobs securely.

Distributed local manufacturing can shorten the value chain between OEM manufacturers and consumers

Manufacturing shifted to large-scale operations and developing countries in pursuit of economies of scale and low labor costs (respectively) throughout the 20th-century. However, new technologies and collaboration models are enabling a shift back to local manufacturers in the United States.

SyncFab’s platform offers a manufacturing network of American machine shops, which can be leveraged by OEM and supply chain buyers. They can upload RFQs that are vetted and matched to shops that have the required machinery and capabilities – and all transactions are recorded using secure Blockchain technology.

RFQ bidding on SyncFab is incentivized with MFG tokens that can be redeemed against future orders, with MFG-based compensation for unsuccessful bids. No middle-men or marketing budgets are required – so huge savings can be unleashed across the supply chain.

Combined with approaches like lean manufacturing and just-in-time inventory, there is a huge opportunity for networks of small machine shops to leverage Industry 4.0 technologies like 3D printing and IIoT and offer manufacturing services that are more agile and responsive than scaled-up operations can deliver.

However, there is an urgent need for infrastructure that can network machine shops effectively and remove the trust bottleneck, in order to unleash the potential of new supply chain technologies that rely on secure data – like IIoT.

SyncFab’s blockchain-based platform offers these technical capabilities and the opportunity for machine shops to start winning more business today.

Simply visit SyncFab.com, click ‘Become a Supplier’ and enter details for your machine shop and its manufacturing capabilities in order to start receiving vetted RFQs and new business opportunities.

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