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Improving Supply Chain Efficiencies Through Digital Manufacturing

The rise of digital manufacturing is helping companies large and small reduce risk, get to market faster, trim costs and be more agile.

The rise of digital manufacturing is helping companies large and small reduce risk, get to market faster, trim costs and be more agile.

These improved operational efficiencies through digital manufacturing show how this digitalization is changing the economics of the manufacturing supply chain: One that’s more resilient to market risks, more responsive to opportunities, and more competitive.

Fortune 500 giants as well as savvy startups — in industries such as automotive, aerospace, and medtech — are moving in this direction. Some studies show that nearly a third of more than 2,000 industrial companies have digitized their supply chains and nearly three-quarters are on track to do the same over the next several years. And why not? Reported benefits include more growth, greater profitability, and lower costs.

Reducing Risk

Digital manufacturing companies integrate modern software technology with physical manufacturing—software tells hardware what to do. This automation happens throughout the manufacturing process and is especially key at the front end, during a product’s development phase. This early, conceptual stage is where the manufacturing supply chain truly begins.

A digital, automated approach allows industrial designers to gain almost immediate design feedback and costing analysis, which enables rapid prototyping design iteration and a quicker development cycle. When working with a supplier, for instance, designers submit 3D CAD models of their proposed part or parts directly via a website. Web-based software analyzes the CAD model, writes the model’s build code, and then virtually manufactures the part, giving designers nearly instant feedback on the manufacturability and production costs of their designs. Gaining this design and production-cost analysis can have substantial overall cost benefits further down the supply chain, thereby reducing market risks.

Manufacturing Accelerated: Faster to Market

A second operational efficiency enabled by digital manufacturing is an especially pivotal one: the ability to move more swiftly to market. In most cases, this speed ultimately leads to a faster path to revenue. Design analysis and price quotes can be obtained within hours, which will naturally lead to parts that can be delivered within days. In other words, a reduced design and development cycle means a faster move to production and a quicker path to market and revenue.

For Example, Tervis, a drinkware manufacturer of double-walled insulated tumblers, recently took advantage of accelerated manufacturing services. The company had developed a wine glass that was in great demand. Customers were also requesting a version of the glass that would include a lid, for use outdoors on patios and decks. Tervis turned to my company’s injection molding services for help with rapid prototyping and final-part manufacturing for the lids. Result? The covered wine glasses were an immediate sellout.

This example of how a company, using a digital manufacturing supplier, can be adept and responsive to an unanticipated demand, shows how the digitalization of manufacturing is really about on-demand manufacturing, which provides flexibility by increasing automation, thereby reducing required investments, enabling lower volumes and customization, and getting parts delivered as needed.

Trimming Costs, Getting More Agile

Finally, as a manufacturing professional, you’re well aware that our industry operates in a volatile world, with constantly changing market needs and expectations. Accordingly, when product demand is difficult to predict or anticipate, or in those cases when annual product volumes might be low, incorporating an agile, on-demand production approach into the manufacturing supply chain can be an effective solution.

In contrast, using traditional suppliers becomes challenging in these instances as the company is unable to provide the supplier with an accurate forecast in a timely manner, thus limiting the supplier’s ability to manufacture and deliver on time. This in turn leads to lost opportunity because of product shortage or delayed revenue due to backorders. Conversely, on-demand manufacturing effectively manages unpredictable demand and inventory costs.

Indeed, inventory costs, production costs, labor costs, and other expenses beyond just the purchase price are difficult to forecast. According to the U.S. Commerce Department’s Manufacturing Extension Partnership, companies often underestimate costs by 20 percent. An on-demand supply approach can help mitigate that uncertainty.

Ultimately, the economic benefits and operational efficiencies of a digital and on-demand production approach can be significant. This approach provides a more streamlined and cost-effective manufacturing supply chain, which helps companies speed products to market and strategically manage demand volatility and existing inventory across the entire product life cycle.

Robert Bodor is currently Vice President and General Manager, Americas, at Proto Labs.

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