By Dr. Mustafa Çagri Gürbüz
Extreme market volatility, shorter product life cycles, the rise of mass customization and increasingly stringent sustainability goals, are some of the forces that are shaping the future of manufacturing and process operations across the globe.
It’s impossible to know exactly what these industries will look like a decade or so from now. However, the sustainable production of high-value, customized products delivered rapidly to customers, minimal resource usage and pricing, and an emphasis on local operations, are likely to be prominent features of the commercial landscape.
Business models will have to adapt this unfamiliar environment – but how? Perhaps the key to future competitiveness is flexible, modular processing based on localized production and supported by integrated supply chains.
A European project called INSPIRE aims to develop innovative business models that help manufacturers in Europe’s process industry to thrive in this emerging competitive landscape. The link with discrete manufacturing will also be considered within the same framework. The ultimate goal is to provide an industry-supported roadmap to create flexible networks based on intensified processing that leads to more local production in Europe in the near future.
Funded by the European Commission (EC), four organizations are participating in the two-year INSPIRE project: CNR (Italy), PNO Innovation (Belgium), TNO (Netherlands) and the Zaragoza Logistics Center (Spain).
The project team will study a number of business models. Examples are the circular economy (extract maximum value from products and recover/regenerate them), industrial symbiosis (associations of industrial facilities that feed off each other), and mass customization (the mass manufacture of customized products).
There are businesses cases associated with these models, and the research partners have devised a methodology based on a system of scoring various factors for selecting which business cases to focus on. For example, the Zaragoza Logistics Center (ZLC) has proposed two cases: 3D printing or additive manufacturing, and an ingenious method for administering drugs to patients.
The potential impact of 3D printing technology on manufacturing operations and their supporting supply chains is huge. Decentralized networks of printers capable of producing complex, customized products in small batches would fundamentally change supply chains from the sourcing of raw materials to last mile delivery. The inherent flexibility of additive manufacturing enables companies to reduce inventory levels, ship fewer components and sub-assemblies, and direct-ship more product to customers. Lower volumes of returns, and the siting of spare parts supplies closer to users, could also have a significant impact on supply chain design and management.
The healthcare business case proposed by ZLC is a revolutionary method for drug delivery. A company called Microchips Biotech, Inc. supplies a microchip that can store and release precise doses of drugs over periods of months or years into a patient’s bloodstream. The implant is placed under the individual’s skin, and its output can be controlled remotely by physicians.
Again, the supply chain implications of this innovation are far-reaching. Switching to the delivery of extremely precise dosages of medications will enable the healthcare industry to eliminate or reduce hospital visits, reduce drug inventories and SKUs, and improve supply management because healthcare providers will have more accurate demand data. The transportation of drugs will likely change; for example, since a single chip can be active for a prolonged period, healthcare facilities will require fewer, less frequent shipments. The device also could reduce supply chain complexity, since there will be less demand for cold chain infrastructure and less medical waste.
The INSPIRE project team is currently investigating candidate business models and cases. In addition, the team is creating a list of technologies that will be required to successfully implement the models it has targeted.
A long-term goal is to identify bottlenecks in the supply chain, as well as the modes of operation best suited to achieving more flexible, demand-driven and sustainable manufacturing and processing systems.
Finally, the team will propose a research roadmap for reshaping European industry and making it more competitive, in line with the global trends that are redefining the way products are made and delivered to customers.
The INSPIRE project is scheduled for completion at the end of August 2018. Its sponsor, the EC, wants the project to identify models and networks “that would promote more local production in Europe within five years after the end of this study.” And the Commission wants the researchers to pay special attention to the needs of small- to medium-sized enterprises and their role as partners in value chains.
For more information on the research described in this article contact the author Dr. Mustafa Çagri Gürbüz, Professor of Supply Chain Management, the MIT-Zaragoza International Logistics Program, and the INSPIRE project’s main researcher, at: [email protected]es.