Byte Your Inventory and Beat the System

Editor’s Note: Lee-Bath Nelson is Co-Founder and VP Business at LEO Lane, an Israel-based business that empowers industrial manufacturers to securely and consistently manage additive manufacturing, anywhere anytime, using the company's cloud-based SaaS solution. She can be reached at [email protected].

In a previous column, I discussed the basic advantages and challenges of additive manufacturing (AM, a.k.a. 3D printing) when it comes to the supply chain. We centered around the main characteristics of AM technology, namely production one layer at a time, on demand, and with a minimum batch size of just one. One of the main game changers that AM enables is virtual inventory and this piece will delve a bit deeper into this aspect as well as its implications in today's complex and volatile geopolitical climate.

In traditional supply chains the parts are kept physically in inventory after they have been manufactured and passed QA. The costs and issues surrounding storing large amounts of physical inventory are very familiar to supply chain managers. Conversely, with virtual inventory, items are kept digitally until they are ordered. When an order arrives, the item is retrieved from the virtual inventory and additively manufactured. Then, the resulting (physical) item can join the existing logistics set up and be delivered to its final destination, as with the physical inventory case. Holding your inventory in digital files rather than physical items and producing them on demand, close to the demand, using AM, has been called Distributed Additive Manufacturing (DAM) and it presents many benefits.

From Virtual to Reality – Securely

By using virtual inventory, you can bypass physical borders, tariffs, trade issues and a whole other host of potential landmines. Clearly this saves both time and money. So long as you have an Internet connection, you have immediate access to the digital version of the part from everywhere, at no additional cost. If your company uses a security and consistency solution with its AM, it will also know that only authorized locations, machines, and people will produce the parts in the authorized amounts. In addition, even if there aren't experts in each location, the company's expertise will be applied and enforced every time the part is 3D printed, so parts come out correctly and consistently –very important for brand reputation!

By avoiding physical inventory, you enjoy huge and immediate cost savings. Avoiding tariffs and trade restrictions only makes the parts more affordable compared with physical parts that were transported through physical borders. This sounds too good to be true but at the moment it is the case. Experts expect regulators to address this issue at some point but this will require strict oversight by regulatory bodies, or alternatively, they will require companies to disclose detailed reporting and tracking information. Not a fun prospect, but probably a necessity in 10-20 years.

Meanwhile, early adopters of virtual inventories can reap the extended benefits of it including avoiding costly trade problems or lines at border crossings. The other aspect of border control and tariffs is the added delay they tack on to deliveries. Sometimes a difficult to predict delay. Being sure that parts will always be there on time (e.g., for an assembly plant) is yet another headache of supply chain managers that can be avoided with DAM smart production. To the lay person this might seem like a small thing but, as supply chain managers know very well, it really isn't.

Recently, the CEO of Jaguar Land Rover, Dr Ralf Speth, warned of the consequences should the UK crash out of the EU with a ‘no deal' Brexit. Speth predicted that such an eventuality would cause his company severe problems and that delays in the supply of the 25 million parts used across production lines on a daily basis in the UK alone would shatter their just in time production operations. Speth went on to say that supply bottlenecks resulting from a ‘no deal' Brexit could bring production to a halt and cost $73.5 million a day.

For Jaguar Land Rover, and others like them, this is a golden opportunity to determine which of this huge number of parts can be additively manufactured locally in the UK and avoid this problem, at least for those parts. Another by-product of the virtual inventory concept is localized production. In an era that prioritizes local manufacturing and production and minimizing carbon footprint, this is very much in vogue in the geopolitical climate.

Localized manufacturing stands to get a boost from AM production, shifting manufacturing back to areas that have left that industry decades ago. AM centers are cropping up everywhere, and this is very good news for their local economy, creating jobs and allowing citizens to spend money locally. All music to the ears of local leadership and companies.

The key enabler to all this goodness is secure and consistent additive manufacturing. With it you can go ahead and turn your inventory into bytes and say goodbye to the hassles of moving stuff – and the associated cost of doing so. Indeed, US companies spent a Record $1.5 trillion on shipping costs in 2017 as demand and prices for logistics services continues to increase. Globally this is predicted to reach $10.6 trillion by next year, with transportation costs accounting for 70%. Needless to say, AM – specifically via virtual inventories and localized manufacturing – is just one solution that is transforming delivery models, thereby exemplifying another benefit of the technology.

All in all, if you're a supply chain manager not already harnessing the benefits of AM, then it's worth taking a closer look at what the technology can do for you. You might be pleasantly surprised by what you find.

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