Post on 23-Apr-2020
transcript
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Evolution of Distributed Manufacturing
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N. ViswanadhamINAE Distinguished Professor
Computer Science and AutomationIndian Institute of Science
INTE
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SG
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Indian Institute of ScienceBangalore- 560012
n.viswanadham@gmail.com
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ContentsContents
History of manufacturingMass production
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xcel Automation: Integrated Manufacturing Networks
RFID and Sensor Networks: IMSNsModularity, Connected Technologies, Outsourcing & Globalization: Global ManufacturingProliferation CMs & 3 PLs: Supply chain Clusters
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Proliferation CMs & 3 PLs: Supply chain ClustersThe Orchestration ModelConclusions
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History of ManufacturingHistory of Manufacturing
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What is Manufacturing ?
Industry that transforms basic materials into products of higher value to the customers. Encompasses great many products and activities
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p g y p– Pin - Aircraft – Concept - Marketing
Economic Importance: Key element in national economy– Produces real wealth for a country– Source of employment – Backbone to the service industry and value add in
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yagriculture.
Productivity & Competitiveness are important elements
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Manufacturing Manufacturing ---- Changing ScenarioChanging ScenarioChanges in Science, Technology & Management – New Materials– New Technologies
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xcel New Technologies
– New Techniques– New Products with Reduced Life Cycles
Globalization of Markets– Uniformization and Customization of Products– Need to meet Global Standards
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– Emergence of New CompetitorsCustomer Demand for low cost, high quality , customized solutions
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History of ManufacturingHistory of Manufacturing
Adam Smith: Division of Labor (1796)Eli Whitney : Interchangeable
(1798)
Management Consulting: StrategyInformation Technology: Business Process Orientation
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xcel parts (1798)
Henry Ford : Transfer Line (1913)MIT : NC Machine (1952)Devol : Robot (1968)Williamson : System 24 (1968)Process Industry: On-line Computer control (1970’s)
International Logistics: container shippingSupply chain networksOn-line Retail, B2C, B2B.Selling solutions: IMSNEconomic IntegrationGlobalization, Strategic alliances,
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Computer control (1970 s)Xerox Corporation : LAN (1970s)Toyota : Lean ProductionSuper Stores: Distribution & Retail
gOutsourcingGlobal Resource managementNational Ecosystems
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Mass ProductionMass Production
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The Assembly Line The Assembly Line Henry Ford (1908) Henry Ford (1908)
Model T introduced in 1908. (Ford’s 20th design)Di i i d S i li i f W kf
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xcel Division and Specialization of Workforce.
– Each worker had only one task to perform. – Industrial engineer order s all parts, production engineer arranges for
delivery. – Indirect- workers such as house keeper, repair man, quality inspector
and rework specialist were all resident on the factory floor.Vertical Integration provided cost advantages and better
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control over external processes.– Owned steel mills, a glass factory, a rubber plantation (in Brazil), iron
mines (in Minnesota), a fleet of ships and a rail road.– He financed all his projects and made all the decisions himself.
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Centralized Command and Control –Alfred Sloan (1920s)
Sloan developed The Mass Production System.
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xcel Applied division of labor to management
Created decentralized divisions under managers who are under a centralized command for – Each car model : Chevrolet, Pontiac, Buick, Oldsmobile
& CadillacC h i d
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– Components such as generators, steering gears and carburetors.
Centralized organization structure
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eLean Manufacturing Lean Manufacturing ----Toyota (1950s)Toyota (1950s)
Japanese customers demand variety (Luxury & small cars, large & small trucks): Mass production did not work Lean is a process innovation to serve disparate customer
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xcel Lean is a process innovation to serve disparate customer
demands at low cost– Quick change-over of dies from 24hrs to 3 minutes thus reducing
the cost of producing small batches. – Process control not Product control– Fault Diagnosis Methodologies.– Kanban and Just-in-Time inventory management strategies.– Team-based work and management culture
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Team-based work and management culture. These innovations resulted in the Lean Manufacturing & make-to-order manufacturing
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Automation: Machines, Systems and Automation: Machines, Systems and NetworksNetworks
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NC Machine Controller Factory Floor Control System
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Distributed Manufacturing System
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eFactory FloorFactory Floor
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WarehouseWarehouse
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eThe Inbound supply chainThe Inbound supply chain
Customers
Inventory
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DistributionCenters
Consolidation
Suppliers
Suppliers
Customers
Customers
Plants
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CustomersPlants
Transportation
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The Outbound supply chainThe Outbound supply chain
Customers
Inventory
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DistributionCenters
Consolidation
Suppliers
Suppliers
Customers
Customers
Plants
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CustomersPlants
Transportation
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Services in Manufacturing NetworksServices in Manufacturing Networks
Service inputs Into the Manufacturing • Quality control• Equipment leasing• Logistics, MRO
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Service inputs into the factory operations
Post-Production Services• Advertising, Distribution• Outbound Logistics, MRO• Customs & Trade Logistics• Client Training
Pre Production Services• Feasibility studies• Finance/VC• R&D, Product design•Market research
S M D R
Manufacturing Network
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• Transport & Communications• Software, Insurance, Finance• Real estate, Security, Cleaning, Catering.
S= SourcingM= ManufacturingD= DistributionR= Retail
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ii ii ii
B2B Logistics Value Chains B2C Logistics Value Chains
Supplier to the Customer
Integrated Integrated Manufacturing SystemManufacturing System
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Customer
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Design Manufacturing Sales
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Machine 1 Machine 2 Machine 3
Fact
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RFID and Sensor NetworksRFID and Sensor Networks
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New Sensing and Tracking TechnologiesNew Sensing and Tracking Technologies
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eRFID tags (5) placed on the inventory periodically signal their locations to access points/readers (4). They in turn, send information, via LAN (1), to the RF controller (3) and locating software (2)
RFID tags In a Warehouse
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Technologies at Various LayersTechnologies at Various Layers
Layer 5: Movement Vehicle Satellite
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Layer 3: Unit Load
Layer 2: Transport Unit
ActiveRFID
Passive
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Layer 1: Packaging
Layer 0: Item
Passive RFID
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Evolution of Automation TechnologiesEvolution of Automation TechnologiesPaper-based, Human Interface
Purchasing, Marketing Department
CRM, SRM
Relationship Automation
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Assembly Automation
Factory Floor Automation
Airport, Seaport, Distribution Centre Marketplace Embedded SC
Machine Controllers
Cell ControllersFactory
Controllers
WMS, TMSB2B
Controllers
Software-based Relationship Management Agents
AutomatedManufacturing
Control &
Supervision A
utomation
Mat
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CentreAutomation, ASRS
CAD/CAM/CAE
LAN, ERP
Collaborative SCP
Marketplace Embedded SC
Internet, E-mail, Electronic Marketplaces,
Information Automation
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ERPFinance HR MRP Global
TMS
Customer Orders
Customer Orders
Pick
POD POD
Duty
Integrated Information Systems
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xcel Finance HR MRP
SUPPLIERS
Global Logistics
Manufacturing
WMSDemand
Sales History
Manufacturing Schedule
Completed Inter-site Transfers
Production Picks
Purchase Orders
Orders for
Routing
Customer Orders
EDI
Vehicle Routes
Exceptions
Detail
Receipt Detail
Carrier Discrepancy
POD
POD
Customers
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APS
Manufacturing Scheduling
Demand Planning Production Planning
Demand Forecasting YMS
CarriersInter-Site Transfers
ASNs Inventory Summary
ASNs
Bidding
ASNs
ASNs
Load & Dock Detail
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Integrated Manufacturing-Service Networks
Manufacturer
Information Network
Enterprise System or Web-site
Supply Network Demand Network
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Supplier Distributor
Supplier Retailer
Logistics Network
Logistics Hub
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Service Provider
Financial Network
Banks
Service Network
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Modularity, Modularity, Connecting Connecting Technologies, Technologies, Outsourcing & GlobalizationOutsourcing & Globalization
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Product Modularity and Outsourcing
Modular Products and Standardized Production Processes, lead to Outsourcing
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xcel lead to Outsourcing .
Standardized component manufacturers have become IP monopolies and wield global market power (Intel chips, Windows OS, Auto components)Products have become commodities.The strategic competitive advantage for assemblers ( Dell,
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GM, Nokia) moves from factory to managing the global manufacturing.
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Borderless ManufacturingBorderless Manufacturing
Assemblyxxx Lining
zzz
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xcel Shell
yyy
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Made in India
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FillerSikkim
ZipperJAPAN
Label, elastic,studs, toggleand stringAAA
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Product Modularity in AutomobilesProduct Modularity in Automobiles
Different Modules in
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xcel an Automobile
Source:
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DashboardModule
Shimokawa, K., Jurgens, U., and Fujimoto, T. (Eds), 1997, Transforming Automobile Assembly, Springer, New York.
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Process Modularity
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Shimokawa, K., Jurgens, U., and Fujimoto, T. (Eds), 1997, Transforming Automobile Assembly, Springer, New York.
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China assembles all iPods, but it only gets about $4 per unit – or just over 1% of the US retail price of $300
451 parts that go into the iPodHard Drive by Toshiba Japanese company, most of its hard drives made in the Philippines and China; it costs about $73 - $54 in parts and labor -- so the value that Toshiba added to the hard drive was $19 plus its own direct labor costs
Video/multimedia processor chip by Broadcom American company with manufactures facilities in Taiwan This component costs $8
The retail value of the 30‐gigabyte
video iPod that the authors
examined was $299 in
June, 2007
with manufactures facilities in Taiwan. This component costs $8.
Controller chip by Portal Player American company with manufactures .This component costs $5 .
-Final assembly done in China, costs only about $4 a unit
The unaccounted-for parts and labor costs involved in making the iPod came to about $110
The bulk of the iPod’s value is in the conception and design of the iPod. That is why Apple gets $80 for each of these video iPods it sells, which is by far the largest piece of value added in the entire supply chain. Apple figured out how to combine 451 mostly generic parts into a valuable product.
The largest share of the value added in the iPod goes to enterprises in the United States $163 of the iPod’s $299 retail value in the United States was captured by American companies and workers, breaking it down to $75 for distribution and retail costs, $80 to Apple, and $8 to various domestic component makers.
Source: Varian, Hal R. The New York Times, June 28, 2007. An iPod Has Global Value. Ask the (Many) Countries That Make It.
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Accessible Connecting Technologies Accessible Connecting Technologies
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“The Earth is Round”“The Earth is Round”New Routes to the New World!New Routes to the New World!
Narvik, Norway
Prince Rupert, Canada
Vostochny, Russia
Hong Kong, China
Singapore
Rotterdam, Netherlands
p ,
SavannahNorfolk
New YorkLos Angeles
Lazaro Cardenas
Punto Colonet
North China
HOUSTON
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10,000 KM
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NORTH AMERICA
8,000 KM
Atlantic Ocean
16,000 KM
LOGISTICSINNOVATIONS
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SOUTH AMERICA
Panama Canal
21,000 KM
Pacific Ocean
INNOVATIONS
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OutsourcingOutsourcing
Lower cost of collaboration (cheaper
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xcel Lower cost of collaboration (cheaper
information communication and logistics) allowed companies to outsource activities, to low cost countries.Countries in the south have liberalized their economies to attract outsourcing
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their economies to attract outsourcing.
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Global Global Manufacturing Manufacturing NetworkNetwork
Inventory hub
ChinaManufacturing
hub
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USA
USA
Europe
Demand
India
InBoundLogistics
China
Korea
OutboundLogistics
EasternEurope
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Distribution
Europe
Retail
Suppliers
Assembly
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Proliferation CMs & 3 PLsProliferation CMs & 3 PLs
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The Six Dominant PlayersThe Six Dominant Players
Suppliers
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xcel Logistics Players: B2B and B2C
Contract manufacturersOriginal Equipment ManufacturersDistributors
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RetailersThey are independent companies globally
distributed & highly connected
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LLP / Mega Distributor
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Supply Chain Clusters A competitive Advantage
Manufacturing ConsolidatorsRaw materials
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Inbound transportation
Distribution & Delivery
Outbound Transportation
CustomerProductionPlanning &
Supply Chain Cluster
Returns &Repairs
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managementPlanning & Forecasting
Repairs
Information flow Infrastructure
Global Manufacturing & Service NetworksGlobal Manufacturing & Service Networks
Institutions
ControlledExport markets
Resource &
Coordinaer
y Se
rvic
e In
fras
truc
ture
GMSN
Local LogisticsPaper Communications
Local Enterprises using local resources
DistributedNetworksUsing Global Resources
Modular GlobalProduction
Internet enabled3 PLs ServingGlobal markets
Free TradeEnabled Global markets
Supply Chain
ation
Del
ive p
serving Local markets
Vertically Integrated Localized Enterprises
ProductionNetworks
Global markets
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The Orchestration ModelThe Orchestration Model
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OrchestrationOrchestration
Orchestrators are “learning organizations” with privileged relationships
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– Mobilizes assets and capabilities of other companies for value delivery to its customers.
– Builds infrastructure for planning , monitoring and execution – Have a deep knowledge of the network’s operations– Have connections with all strategic partners in industry,
governments and other stake holders
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– Recruits the right Talent.
A Popular model in construction, airlines, newspapers, Apparel, Electronics etc. and spreading fast to other areas
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Managing the Global Network- Own Nothing
Li & Fung orchestrates a
Li & Fung has developed deep knowledge & internal systems to identify quality suppliers in emerging markets, help them design & manufacture for Western customers and make on time delivery despite poor infrastructure
Li & Fung has set up a global video conference
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xcel Li & Fung orchestrates a
highly-customized delivery path through the supply chain
global video conference network. Clients can monitor details of every stage of an order such as color of a material or the stitching on a garment.
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Suppliers DistributionManufacturers
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OrchestratorOrchestrator Business ModelBusiness Model
End Customer
Planning, Coordination and Overall Responsibility
OrdersOrchestrator
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Material FlowOperationalStatus
Plans
Payment
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Supplier Contract Mfg 3PL
Execution
Supplier Contract Mfg 3PL
3PL
3PL
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eConclusions
Manufacturing has undergone rapid changes from human intensive to fully automated; vertically integrated to globally dispersed; fully owned to orchestrating owning
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none;Identifying and managing relations with government, trade, social groups, labour, resources and B2B and B2C delivery mechanisms are required capabilities.The principles can be applied in agriculture and services such as health care
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Theory development needs Integration of Social networks, Inter-organizational theory, Machine learning, Optimization, Game theory with SCNs.
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Manufacturing ScenarioManufacturing Scenario
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eIndian Manufacturing SectorIndian Manufacturing Sector
India’s manufacturing sector is 16% of GDP & 1.8% of Global manufacturing.Why Lower productivity in manufacturing:
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– Low technological depth : SCM, Production planning, Quality & Service
– Low labor productivity : Indian Workers are almost four (Thailand) or five (China) times less productive.
– Poor Infrastructure: High logistics costs, High % of damaged goods– Poor implementation: Too many stakeholders, Poor Coordination &
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Low returns on Capital InvestmentDesign to counter poor Execution with Ecosystem Based Governance
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Manufacturing retuning to US
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Basis for Global manufacturing footprint: Total costs of making products for markets
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– Worker productivity in countries– Labor & Logistics as a share of total costs– Hidden costs and risks
The low cost advantage of China disappears with changed cost structure between China and the U.S.
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