Distributed Production is the New Supply Chain

Additive manufacturing and digital inventory are a powerful combination for enabling onshoring, insourcing and regional production.

EOS has sponsored this post.

When it comes to revolutionary strategies in manufacturing, there are few examples better than Henry Ford. In the late 1920’s, Ford was frustrated with the shortcomings of his supply chain. He struggled with production delays and excessive inventory costs. So, he took an infamous and radical step in controlling his supply chain by vertically integrating everything from the ore leaving the earth to the car leaving the factory.

At the Ford River Rouge plant each morning, ore would arrive on Ford freighter ships from Ford mines, along with rubber, glass, timber and other materials, all via operations owned and run by the Ford Motor Company. Twenty-eight hours later, after these materials passed through Ford foundry molds, stamping mills and assembly lines, a new Model T would roll off the assembly line.

(Image courtesy of EOS.)

(Image courtesy of EOS.)

This production model was effective for making Model Ts a hundred years ago, but today’s manufacturing landscape serves a very different market and competes in a very different environment. The supply chain is global, and consumers expect instant online ordering, two-day shipping and customized products. How are modern manufacturers—from multi-billion-dollar automotive OEMs all the way to small, niche enterprises—taking advantage of today’s technology to solve the problem of efficient manufacturing in new ways?

One answer is distributed production. To learn more about what this means, Engineering.com interviewed Dr. Marius Lakomiec, team manager of Digital Additive Manufacturing Solutions at EOS. Dr. Lakomiec pulls no punches when discussing the place of advanced technology in this space:

“The typical way of manufacturing is to centralize production in certain locations, such as China, India or Detroit. But today, we strongly believe that a distributed way of manufacturing is more interesting,” said Dr. Lakomiec. “We believe that when you take additive manufacturing (AM), add automation and new software solutions, this enables you to dramatically lower your costs. This is why we believe that global supply chains will be different in the near future.”

Many of Henry Ford’s manufacturing challenges were predicated on economies of scale. Vertical integration was an answer, but a complex one. Today’s manufacturers have different problems. When the diversity of products increases, and the product lifecycle shortens, it becomes more and more difficult to achieve economies of scale.

Manufacturing today demands flexibility. The effects of the pandemic have brought this into sharp relief, as well as the potential impacts of environmental policy, complex political and regulatory changes and unexpected economic disruptions. Distributed production is one possible solution to these problems.

What is Distributed Production?

Distributed production situates a network of smaller production facilities close to each regional market. To make these smaller facilities work, new technologies such as additive manufacturing, digital inventory and automation are employed. Critical data, from raw materials inventory to finished goods shipping schedules, are not strictly bound to local production assets, but the ability to react quickly when production stays close to the end user.

A great visual interactive demonstration of the concept of distributed production is available on the EOS website.

“With distributed manufacturing, all the digital models of all your parts are saved in a software storage environment within your company and approved supplier network. Your IP is safe from cyber security threats. You can schedule on a machine in your network, in your company or with the companies that are connected to your network,” explained Dr. Lakomiec. “You can schedule a time on an available machine if you want. Then, you can start your production running. It’s very flexible and on-demand. There is no longer a need to have something planned months or even years in advance like in today’s automotive industry. Also, you  now need warehouses full of spare parts that may never be used and have to be transported all around the world.”

(Image courtesy of EOS.)

(Image courtesy of EOS.)

Applications of Distributed Production

Fast-Moving Industries, Such as Fashion

According to Dr. Lakomiec, distributed production has applications in the fashion industry because of the time challenges faced when manufacturing has to race against fickle and quickly changing fashion trends. In this industry, the faster a product can go to market, the better.

“With distributed production enabled by AM, you have the possibility to react very, very quickly to fashion trend changes. For example, today’s fashion industry may be guided by viral trends on Instagram. Someone is promoting a new style, and consumers want to have it right now. Then the trend is over, or your size is not available anymore,” said Dr. Lakomiec. “Speaking about supply chain issues such as flexibility, traditionally you first have the raw materials. Then you have to machine it, or you have to cast it. You have to then stamp, mold, finish it or perform other processes. With additive, only the design is key.”

One example of how distributed manufacturing could be used is in the production of designer sunglasses. Traditionally, the new product style would be designed, then production would start, and lastly inventory would be shipped to markets around the world. This product lifecycle typically takes months or years to complete. With distributed production, the design would be created, then the digital print data would be transmitted to print facilities distributed around the globe that are located geographically near key markets. This method skips several steps compared to the traditional strategy. All that’s left is finishing, assembly, packaging and local shipping.

Customized Parts, Such as Medical Implants

Custom medical implants are a favorite example of a win for AM. Dr. Lakomiec also highlighted how distributed production could be used to streamline production of custom products, such as custom orthotic insoles, dental devices or surgical implants. Traditionally, these parts are made by a skilled worker as one-off jobs in local facilities, at high cost.

“With a 3D printer, on one build job you can produce hundreds of unique implants, and a barcode or other identifier can be printed on each part. With additive, there is not a big difference in cost per part for one, one hundred or one million parts,” said Dr. Lakomiec. “EOS has developed an end-to-end software solution for AM that starts with the design authoring process and supports the distributed production model.”

Reducing Inventory Costs with Digital Inventory

Back in 1927, one of the factors that led Henry Ford to pursue a revolutionary manufacturing strategy was his struggle with inventory. At the time, parts and materials were shipped in by local suppliers in the Michigan area. Maintaining a supply of parts for production presented a rock-and-hard-place problem: a delay of one shipment of one single part would stop the line, but when Ford stocked enough inventory of parts to create a buffer against these delays, his capital tied up in inventory rose too high. This remains a challenge in many industries to this day.

To that end, another valuable application for distributed production is to reduce inventory costs by replacing a physical inventory with a digital inventory of parts which can be additively manufactured on demand in (potentially) various locations.

This concept has significant value to the aerospace industry. Airlines must maintain maximum uptime and reliability of engines and aircraft, but maintaining an inventory of spare parts is expensive. Australian airline Qantas, for example, has even carried spare engines externally under the wings of their aircraft in order to make sure that they could move engines where they need them to be for replacement purposes.

Earlier in his career, Dr. Lakomiec worked for a prominent German aerospace manufacturer. “At just one production site, I had spare parts stored in a warehouse with a value of $2 billion euros,” he said. “I think a high percentage of these types of spare parts can be made using distributed production and on demand.” he explained. Digital inventory enabled by distributed AM facilities and traced by blockchain, can reduce the total operational cost.

“In quality-intensive industries with high margins, such as aerospace, the key element is IP. These industries are very, very keen to secure their IP. Spare parts are a high portion of the maintenance cost, because no one in the world has the ability to certify the part besides the OEM or other official authorities. That’s what makes this a challenge for aerospace. However, I think distributed production can be the answer to this challenge,” Dr. Lakomiec added.

What Does Distributed Production Mean for Design Engineers?

To close our interview with Dr. Lakomiec, we asked how distributed production would affect the demand for manufacturing and design engineers. Some futurists may predict that in a perfect world there are no engineers, because the customer designs the product since they know what they want, and it is ultimately made and distributed using this new production paradigm.

“Look at the first industrial automotive production from Henry Ford,” said Dr. Lakomiec. “His approach to customization was, ‘Any customer can have a car painted any color that he wants, so long as it is black.’ So, Henry Ford defined the color of his vehicle and the T model made an industrial revolution for the whole world of automotive. I think now, 100 years later, this industry is in an innovative change process. Just have a look at Tesla, for example, with the electric car. The electric vehicle was also available 100 years ago from Daimler. They already had their first car driving electrically, but its use did not grow until many years later.” 

“Today, the customer drives innovation on social media, using Instagram, Facebook and others. Some people share what they like, and others also want to have it because they see it there.  So, there is a need to give your customer the ability and the flexibility to satisfy their fast-changing demands,” Dr. Lakomiec added.

“Just take a look at the conventional production started by Henry Ford who said, ‘In the future we are going to build only one model and that the model was going to be ‘Model T’.’ I don’t know how many hundreds of models Ford now has in their portfolio, because they aim to solve the specific needs of each customer group. That’s why I think we will see growth in manufacturing and design engineering to support distributed production.”

For more on distributed production, visit the EOS website.