The New Software Defined Supply Chain: Preparing for the disruptive transformation of Electronics design and manufacturing
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1 The New Software Defined Supply Chain: Preparing for the disruptive transformation of Electronics design and manufacturing The IBM Institute for Business Value Paul Brody Global Business Services Vice President and Global Electronics Industry Lead Veena Pureswaran Institute for Business Value Global Electronics Industry Lead
2 HOW SOON IS NOW?!2
3 People can have the Model T in any color so long as it s black. HENRY FORD!3
4 Ford Automotive Output, Shift to moving production line $5 Daily Wage Introduced Assembly time down to 1.5 hours 400, , ,000 Model T Introduction Assembly Time Per Car: 14 Hours 100, !4
5 Ford Automotive Output, ,500,000 2,625,000 1,750, , !5
6 STANDARDIZATION MODULARIZATION DIGITIZATION 4,000,000 3,000, ,000, ,000, TOTAL COST $!6
7 3 KEY RULES OF PRODUCT DESIGN CUSTOM PARTS STANDARD COMPONENTS ASSEMBLY MODULES MECHANICAL CONTROLS DIGITAL!7
8 3 CHARACTERISTICS OF INDUSTRY STRUCTURE & TRADE Economies of Scale BIG Multi-Tier Supply Chains COMPLEX Low Cost Supply Chains GLOBAL!8
9 !9
10 3 NEW TECHNOLOGIES 3 D P R I N T I N G OPEN SOURCE INTELLIGENT ROBOTICS!10
11 HARDWARE CONSTRAINED BUILD A MOLD OR CAST HARDWIRE PRODUCTION LINE DEVELOP EMBEDDED CHIP SOFTWARE DEFINED PRINT PARTS DIRECTLY BY SOFTWARE RECONFIGURE ASSEMBLY THROUGH SOFTWARE DIGITAL CONTROLS USING SOFTWARE!11
12 SOFTWARE DEFINED SUPPLY CHAIN!12
13 WHEN!13
14 5 GLOBAL LEADERS Phil Reeves Leo Bonnanni IBM RESEARCH! John Cohn PLANT LOCATION INTERNATIONAL! David Zaharachuk Mike Watson Alex Scott!14
15 1 INTEGRATED MODEL PLANT LOCATION INTERNATIONAL!15
16 STANDARDIZATION 3D PRINTING NO ECONOMIES OF SCALE $0.30 $0.23 COST PER UNIT VOLUME PRINTED! $/CUBIC CM - BLENDED AVERAGE ON DEMAND MANUFACTURING $ % -92% LOCATION $0.08 ELASTIC $ !16
17 MODULARIZATION ROBOTICS $300, TYPICAL COST PER ROBOTIC ASSEMBLY STATION HARD AUTOMATION $225, FLEXIBLE $150, % ROBOTICS $75, $ INTELLIGENT ROBOTICS!17
18 DIGITIZATION INTELLIGENCE 30,000 OPEN SOURCE HARDWARE DESIGNS ON THINGIVERSE MOORE S 22,500 LAW 15,000 7,500 OPEN SOURCE 0 11/1/08 4/1/09 9/1/09 2/1/10 7/1/10 12/1/10 5/1/11 10/1/11 3/1/12 8/1/12!18
19 4 DIFFERENT PRODUCTS COST! VOLUME! SIZE! COMPLEXITY! PERSONALIZATION WASHING INDUSTRIAL MOBILE HEARING MACHINE DISPLAY PHONE AID!19
20 EACH PRODUCT INDIVIDUALLY TORN DOWN
21 EACH PRODUCT INDIVIDUALLY TORN DOWN
22 EACH PRODUCT INDIVIDUALLY TORN DOWN
23 EACH PRODUCT INDIVIDUALLY TORN DOWN
24 EACH PRODUCT INDIVIDUALLY TORN DOWN
25 EACH PRODUCT INDIVIDUALLY TORN DOWN
26 3 AMAZING RESULTS COST SCALE CO2 IMPACT!26
27 LOWER COST AGGREGATE NORMALIZED UNIT COST % CHEAPER Traditional 2012 Digital 2017 Digital 2022 Digital!27
28 LOWER SCALE AGGREGATE NORMALIZED! MINIMUM ECONOMIC SCALE % LESS VOLUME REQUIRED Traditional 2017 Digital 2022 Digital 2 3!28
29 NOT NECESSARILY GREENER AGGREGATE NORMALIZED! CO2 ANALYSIS % HIGHER % LOWER Traditional 2017 Digital 2022 Digital!29
30 BIG SMALL COMPLEX SIMPLE GLOBAL LOCAL!30
31 HEARING AID CASE CHEAPER $500 $375 $425 $375 $370 $250 $125 $132 $ BASELINE 2012 DIGITAL 2017 DIGITAL 2022 DIGITAL!31
32 HEARING AID CASE GREENER BASELINE 2012 DIGITAL 2017 DIGITAL 2022 DIGITAL!32
33 HEARING AID CASE LOCAL Traditional Supply Chain Model!33
34 HEARING AID CASE LOCAL Software Defined Supply Chain !34
35 HEARING AID CASE LOCAL Software Defined Supply Chain !35
36 HEARING AID CASE LOCAL Software Defined Supply Chain !36
37 RECOMMENDATIONS FOR INDUSTRY IMPLICATIONS RECOMMENDATIONS Product design and retailing will be influenced greatly by interactions with customers 1 Change how you design and sell products Competitive dynamics of the industry will change radically 2 Prepare for the new competitive landscape Supply Chains will become more simple, flexible and localized 3 Build extraordinary flexibility into your supply chain structure!37
38 ADDITIONAL READING!38
39 FIVE CONSEQUENCES THAT ARE COMING INTO FOCUS 1. HARDWARE RENAISSANCE! 2. MUCH SMARTER DEVICES! 3. EVERY THING GOES ONLINE! 4. DATA AS DESIGN! 5. DESIGN FOR DISRUPTION!39
40 IBM Institute for Business Value FULL REPORT AND MODEL AVAILABLE IN JULY 2013 ibm.com/business/value/software-defined-supply-chain ITUNES OR ANDROID APPSTORE SEARCH IBM IBV!40
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