1 xcellence Evolution of Distributed Manufacturing SW upply Chain Ex Networks N. Viswanadham INAE Distinguished Professor Computer Science and Automation Indian Institute of Science INTEGRATED S Global S Indian Institute of Science Bangalore- 560012 [email protected]lence Contents Contents History of manufacturing Mass production ply Chain Excel Automation: Integrated Manufacturing Networks RFID and Sensor Networks: IMSNs Modularity, Connected Technologies, Outsourcing & Globalization: Global Manufacturing Proliferation CMs & 3 PLs: Supply chain Clusters Global Supp 161107 N.Viswanadham Proliferation CMs & 3 PLs: Supply chain Clusters The Orchestration Model Conclusions
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Evolution of Distributed Manufacturing
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N. ViswanadhamINAE Distinguished Professor
Computer Science and AutomationIndian Institute of Science
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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– 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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Henry Ford : Transfer Line (1913)MIT : NC Machine (1952)Devol : Robot (1968)Williamson : System 24 (1968)Process Industry: On-line Computer control (1970’s)
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
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
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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
Modular Products and Standardized Production Processes, lead to Outsourcing
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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
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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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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.
“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
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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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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
Global Manufacturing & Service NetworksGlobal Manufacturing & Service Networks
Institutions
ControlledExport markets
Resource &
Coordinaer
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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
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Del
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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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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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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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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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