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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
From custom but interchangeable parts to standardized components in differentiated products
6
ComponentsCustom Standard
AssemblyParts Modules
ControlMechanical Complexity
Digital Simplicity
© 2013 IBM Corporation
These three design principles govern how we achieve variety and quality without losing scale
7
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
© 2013 IBM Corporation8
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
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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:
© 2013 IBM Corporation17
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
Let's come back to three guiding principles that driven product design
18
ComponentsCustom Standard
AssemblyParts Modules
ControlMechanical Complexity
Digital Simplicity
© 2013 IBM Corporation
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
ComponentsCustom Standard
© 2013 IBM Corporation
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
AssemblyParts Modules
© 2013 IBM Corporation
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
ControlMechanical Complexity
Digital Simplicity
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
23
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
The scope and scale of crowd-sourced technology vision is extraordinary
27Source: DIYRockets
© 2013 IBM Corporation
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
© 2013 IBM Corporation
From Rip, Mix, Burn to Design, Download, Print.
29Source: Apple
© 2013 IBM Corporation30
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
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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.
© 2013 IBM Corporation
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.
© 2013 IBM Corporation
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.
© 2013 IBM Corporation
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.
© 2013 IBM Corporation
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
© 2013 IBM Corporation
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
© 2013 IBM Corporation
Let’s Stay In Touch
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