Essay, 2011, 9 Pages
List of abbreviations
List of figures
2. Impact of Direct Digital Manufacturing on Supply Chains
2.2. Impact of DDM on lean concepts
2.3. Impact of DDM on agile concepts
2.4. Impact of DDM on leagile and postponement concepts
List of references
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Figure 1-Supply chain structure and the decoupling-points
Figure 2-Supply chain structure with DDM as order decoupling-point
Companies that will be leaders in futures business are those companies that achieved cost leadership and service leadership (Christopher, 2011: p9). Therefore companies are looking for supply chain solutions that help to increase the value to the customer while reducing costs (Walter, Holmström and Yrjöla, 2004: pp9-12) in order to get competitive advantages. One solution could be the technology of DDM, where customized products can be printed at the point of demand. DDM has “the power to change business radically and have significant positive or negative effects for an industry or single company” (Gracht, 2008: p228).
At first this report will illustrate the impact of DDM on supply chains by using supply chain concepts. After that approaches to gain competitive advantage for a global logistics company will be advised before ending with a conclusion.
The design of a supply chain depends on the nature of the demand of a product, i.e. functional or innovative (Fisher, 1997). Different supply-chain-concepts have been created in order to cope with the nature of demand and products which include: Lean, Agile, and Postponement (Naylor, Naim and Berry, 1999).
As DDM will frees manufacturing from the constraints of traditional manufacturing processes (Excell and Nathan, 2010) it will affect the lean concept, which concentrates on the elimination of waste and increasing throughput (Sehgal, 2011: p107).
Manufacturing close to the consumer using DDM will increase throughput due to eliminating many stages of traditional supply chain, which affects logistics costs, lead-times, inventories etc (Reeves, 2008). Stock for finished products is not longer needed because products can be made whenever is needed (Reeves, 2008) at the point of consume. Due to the fact that DDM does only need no value-added raw-material (Tuck, Hague and Burns, 2007) in form of powder and data to produce it will drastically reduce the need for transportation, warehousing and logistics activities (Reeves, 2008). Furthermore different items can be produced without costly and time-consuming retooling (The Economist, 2011) which do not add value to the product and therefore reduces waste.
Agile refers to the ability of reacting and adapting changes in demand and supply very quick (Sehgal, 2011). Making products with DDM to order when and as needed (Reeves, 2008) located close to the consumer is a clear ability to be responsive for changes in demand. The time of reaction with DDM will be minimized. Small and medium-sized components can be “printed” in hours or days, where traditional manufacturing would take weeks (The Economist, 2011).
The leagile concept is used where lead-time is long and demand is unpredictable. Using manufacturing postponement, the basic product can be manufactured using lean principles and the final configure will be carried out when demand is present using agile principles (Mangan, Lalwani and Butcher, 2008). Both processes are connected with a decoupling-point, where a product order becomes customer specific (Weele, 2010: p258).
As shown in above sections, DDM will contribute to supply chains to be lean while increasing the responsiveness at the same time. The ability of lean production and manufacturing products on demand at the point-of-consume makes the appliance of leagile concepts needless (Tuck, Hague and Burns, 2007). Furthermore DDM will become the new decoupling-point (Tuck, Hague and Burns, 2007) where orders are pulled directly from the customer. This obtains to the manufacturing-postponement and to the geographical-postponement concept: On the one hand products can be created individually (The Economist, 2011), which is a move towards mass customisation, and on the other hand products can be manufactured close to the location of demand.
Below figure shows the current appliance of the decoupling-point.
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Figure 1-Supply chain structure and the decoupling-points (Source: VNL, n.d.)
Depending on the nature of product and demand the decoupling-point is applied respectively.
Below figure shows the theory of the decoupling-point when DDM is used to manufacture products in the configuration requested at the place of costumer.
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