technologies and innovations that are transforming supply...

Technologies and Innovations that

are Transforming Supply Chains

Scott Sopher

Principal, Deloitte Consulting LLP

• Over 400 respondents from different

company types, industry sectors, and

levels

• Majority of participants (57%) are

executives holding the role of CEO,

Vice President, or General Manager

• Five supply chain realities and eight

technologies

• Identify trends and technologies

• Your future supply chain

2

Survey Overview

Intro to 2015 MHI Annual Report

Supply Chain Innovation: Making the Impossible Possible

Source: 2015 MHI Annual Industry Report – Supply chain innovation – Making the impossible possible

MHI Study Summary:

Supply Chains Face Conflicting Demands to

Be Better, Faster, and Cheaper

• It’s all about the customer experience

• Alignment between supply chains

and customer needs is paramount

• Collaboration is crucial as

supply chain boundaries blur

• Traditional cost-cutting strategies will likely miss financial targets

• The workforce crisis is real and innovation only adds to the challenge

3


Adoption Levels for Eight Technologies Redefining the Future of

Supply Chains

4

1 2 3


Maturing Phase1

5

Companies deferring investment will likely struggle to keep up with customer

expectations for lower costs and improved service levels

Inventory and Network Optimization Cloud Computing and Storage

Maturing technologies include:

Sensors & Automatic Identification Robotics & Automation

What you should know:

• Significant level of adoption today (35%+)

• Moderate growth in adoption (~10-15% CAGR) over next 3-5 years

• Reached the tipping point of adoption with a wide variety of use cases and demonstrated

business value

• Maturing technologies can offer significant improvements in both efficiency and service,

which may quickly become industry standard as adoption levels are expected to approach 80-

90% by 2019


Growth Phase2

6

Early adopters may have an opportunity to get ahead of the competition through

early piloting and deployment

Predictive Analytics Wearable and Mobile Technology

Growth technologies include:


• Moderate levels of adoption today (20%+)

• Significant growth in adoption (20-25% CAGR) over next 3-5 years

• Approximately 1-2 years behind maturing technologies

• Applications and use cases are less common, creating more ambiguity around value and

requiring different investment criteria and risk tolerance


PREDICTIVE ANALYTICS

Predictive Analytics Overview

8

Predictive analytics is the application of advanced statistical analysis of structured and unstructured

data sources to identify patterns and predict future events or outcomes.

Reduce Machine Failure Rates Improve Responsiveness

Predictive analytics can be used in supply chain to…

Improve Inventory Management Sense Demand

Reduce Lead Time Variability Plan Reliable Transportation Networks

Underpinning Data

Systems & Services

IoT

Supply Chain

“Gateway”

RFID

Data AnalyticsERP / Big Data

Storage

Assembly Robots

Cloud Storage

Asset Sensors Mobile Devices Wearables Other


Applications of Predictive Analytics

9

Solution Area: Process OptimizationUtilized in-process data collected to dynamically determine

what final testing protocol is required for individual chips,

projecting savings of $30M in testing reduction

Solution Area: Asset ManagementDeveloped predictive failure model for municipal water system

taking into account wear drivers for specific material

types, extending asset life from average to

predicted useful life, saving $64M in operating

costs and reducing $75M in capex

Solution Area: Quality ImprovementDeveloped predictive models to estimate the

probability of product failure and key drivers of

failure based on manufacturing line, shift, batch size,

day and month, number of engineering changes, consumer

usage patterns, demographics, and water hardness ratings by

city. This analysis identified $16M to $28M in cost of quality

reductions.

Solution Area: Maintenance and RepairGE uses sensors in jet engines to collect data to

track engine performance and runs it though a

predictive analytics engine with historical data.

With predicative maintenance, GE is able to predict and

pinpoint engine wear, proactively identify maintenance needs,

and improve asset utilization. GE has translated their capability

into a new business model (Power-by-Hour)

Predictive

Analytics

Intel Corporation Water Utility

Small Appliance Manufacturer GE Aviation

Predictive analytics is being used across multiple industries to help drive significant

savings in the supply chain

Source:

Intel - http://newsroom.intel.com/community/apac_en/blog/2014/10/09/big-data-and-iot-in-manufacturing-in-everyday-life

Intel - http://www.informationweek.com/software/information-managemetn/intel-cuts-manufacturing-costs-with-big-data/d/d-id/1109111

Case Study: Reduce Service Parts Inventory and Increase

Operating Profit

10

Target

Key Challenges

• Lead time discrepancies between similar parts

from the same supplier

• High variability in transportation lead times

causing increased inventory in transit across

different locations

• High inventory requirements due to a complex

product portfolio

Improve service parts inventory by 40%

ApproachReduce service parts inventory by leveraging

companies diverse data sets, and applying

advanced analytics and data science

Parts Insight PlatformConsolidated a wide range of characteristics regarding each component

part (e.g. diameter, length, thickness, materials, etc.) and assigned

parameters to each characteristic. Combined these characteristics to

develop an integrated aftermarket parts management platform (Parts

Insights). The platform merged all aftermarket parts data for analysis to

reduce inventory costs

Reduce Service Parts Inventory and Increase Operating Profit

11

Re

sult

s

Data Sources Levers Impact

Parts analytics helped with identifying the seven levers that can achieve significant

inventory cost reductions

WEARABLE TECHNOLOGY

(WEARABLES)

Wearables Overview

13

A growing set of wearable technology options can be deployed to address emerging supply chain and

manufacturing challenges

Increase Asset Efficiency

Reduce Risk and Improve Safety

Differentiate Product and Services

Wearables can be used in supply chain to…

Increase Resource Efficiency

Types of Wearables:

• Glasses and Headsets

• Watches and Wristbands

• Arm Bands

• Beacons

• Rings


Leveraging smart glasses requires a truly integrated system:

• Hardware devices

• Multiple users

• Systems integration

1

Valuable industrial applications exist when the stakes are high2

8

14

We Developed Two Fundamental Wearable Beliefs

Customer

Service

Warehouse

and

Logistics

Public

SectorRetail

Field

ServiceHealthcare

Hands-Free Contextual Information Is Critical to the Value

Proposition

15

8

An Example Use Case in Manufacturing/Warehousing Operations

16

Typical usage:

• High-value asset handling and monitoring

• Routing, tracking, expediting, and exception handling

• Receiving and cycle counts

• Custom order picking

Sample improvement metrics:

• Assembly time

• Labor productivity

• Lost inventory

• Defects or incorrect order %

Common Challenges

Scenario: Many support warehouse operations like pick and pack, complex

assembly to help boost productivity and reduce errors

Capabilities & Specifications

• Weight, comfort

• Manufacturing execution and

warehouse management

systems

• Camera resolution

Regulatory/Safety Concerns

• OSHA — industrial safety

• Prolonged user exposure

Business Case

• Significant improvement

required in low wage work

environments

Applications of Wearables Solutions

17

Solution Area: HVAC Maintenance Mitsubishi Electric implemented multiple 3-D maintenance

scenarios and instructions for HVAC contractors that can be

visualized directly through overlay on an existing unit

Solution Area: Field ServiceOver 30 Schlumberger employees are using smart glasses to

complete complex checklists and receive real-time intelligence

Solution Area: HealthcarePhilips is building new product concepts for

healthcare settings – e.g. surgical procedures where

doctors can monitor vital signs and consult via

telepresence with other doctors in the operating room

Many of the smart glasses that

could be used in supply chains

today are priced on par with hand-

held scanners, which cost several

thousand dollars each

Wearable

Technologies

Mitsubishi Electric Schlumberger

Phillips

Enterprise wearables are already being piloted across multiple industries and

demonstrating initial tangible benefits

Sources:

Mitsubishi - Augmented World Expo 2014; “Mitsubishi Electric MeView AR Enterprise App”

Philips - Accenture; Oct, 2014, “Philips collaborates with Accenture…”

Schlumberger - Motley Fool; April, 2014, “Google Glass Is Appearing…”

18

Demonstrated

Business CaseCapabilities and

Specifications

Regulator / Safety

ConcernsDevice Cost

Device

Competition

Device / Platform

Compatibility

Several Common Challenges to Wearables Adoption Will Likely

Be Overcome in the Next Few Years

Emerging Phase3

19

Companies should understand current and near-term applications in their industry

and the potential for disruption

3D Printing Driverless Vehicles and Drones

Emerging technologies include:


• Lower levels of adoption today (~10%)

• Accelerating growth

• 6+ years behind maturing technologies in expected adoption levels

• Current applications are more limited and tend to be more relevant to specific industries


3D PRINTING

(ADDITIVE MANUFACTURING)

3D Printing Overview

21

Electronic design file (.STL) of

object created using CAD or

scanner

Software slices model into cross-

sectional layers and sends file to

3DP

Following the design, the 3DP

layers raw material(s) until the final

object emerges

Final object is produced

without any waste

3D Printing, or Additive Manufacturing, is the process of creating an object from its 3D digital model

using one of many manufacturing techniques to build objects by adding material rather than

subtracting it

3D Printing can be used to….

Improve Quality Reduce Cost

Increase Flexibility

The Breakeven Point for 3DP vs. Traditional Manufacturing Is

Shifting Every Year

22

3D PrintingConventional Manufacturing

Material Costs

Tooling Costs

Processing

Costs

Processing

Costs

Post Processing

Costs

Post Processing

Costs

Logistics Costs

3D Printing

Can Reduce

Co

st P

er

Un

it

Units Manufactured

Greater

Lower

Low Volume

Breakeven

Quantity

3DP costs start lower

as no tooling is

required

Lower quantities – 3DP

cost advantage

Higher quantities

– conventional

manufacturing

cost advantage

High Volume

Source: Deloitte Review 3D Opportunity – Issue 14, June 2014

Potential Impacts of 3DP to Supply Chain and Product

23

Business Model

Evolution

� Transformed supply chain

� Redesigned parts

� Point of use manufacturing

High

Impact on

Product

High

Impact on

Supply

Chain

Low Impact

on Product

and Supply

Chain

Product Evolution

� Increased product

functionality

� Improved product

performance

� Improved quality

� Produce systems as single

components

Stasis� Replace conventional

manufacturing techniques

with 3D Printing

- Duplicate physical

characteristics

- Duplicate lifecycle

characteristics

- No impact to warranty

policy

Supply Chain Evolution� Increased accessibility

� Reduced barriers of entry

� Management of demand

uncertainty

� Reduced inventory

1

43

2

Pro

du

ct I

mp

act

Supply Chain Impact


The Evolution of 3DP Applications in Supply Chain

24

Innovation will drive 3DP adoption rates; however, as the market matures, there will likely be a shift

in the technology used as companies transition towards a focus on manufacturing

Time

Po

ten

tia

l Im

pa

ct o

n t

he

Ma

nu

fact

uri

ng

Pro

cess

Prototype

Production

Tooling

Production

Custom Medical

Devices

Weight

Reduction for

Aerospace Parts

Slow Moving

Service Part

Production

Production

Parts for Risk

Mitigation

Widespread

End-Use Part

Production

Existing Applications Future ApplicationsToday


Applications of 3D Printing

Solution Area: Production Cost SavingsReduced production costs 50% for aerospace components

while still maintaining functionality and performance by

deploying Electronic Beam Melting, a 3D printing

technology

Solution Area: Operation EfficienciesLeveraging laser sintering technology, Siemens is able to

create 80 specialized hearing aids in 4 hours; additionally, this

technology has eliminated inventory by storing patient

data digitally

Solution Area: Quality ImprovementBMW used AM in direct manufacturing to make

the hand tools used in testing and assembly. These

custom-designed hand tools have better ergonomic

design and are 72 percent lighter than traditional hand tools.

According to BMW, the customized tools helped save 58% in

overall costs and reduce project time by 92%

Solution Area: Maintenance and RepairDelphi used selective laser melting (SLM) to

make aluminum diesel pumps. Producing pumps

as a single piece helped Delphi avoid several post

processing steps, resulting in a final product that is less

prone to leakage and cost effective to produce

3D Printing

Lockheed Martin Siemens

BMW Delphi

Enterprise applications of 3D printing are already being piloted across multiple

industries and demonstrating initial benefits

Sources:

Lockheed Martin - http://www.rapidreadytech.com/wp-content/uploads/2014/05/redeye1.jpg

Siemens - DU Press article “3D opportunity for end-use products”

BMW & Delphi - http://dupress.com/articles/additive-manufacturing-3d-opportunity-in-automotive/

25

Amazon Patents 3D Printers on Delivery Trucks

26

Business Model Disruption

Reduction in Delivery TimesProduct can be produced closer to the customer reducing

lead times

Reduction in Inventory and Warehouse SpaceMinimal inventory is needed as products are printed on

demand

Reduced Transportation CostsProducts don’t need to be transported from suppliers and

are made in close proximity to customers

AmazonTechnology Used: Mobile 3D Printing

and Delivery

Amazon files patent for a method of 3D

printing on-demand within mobile

manufacturing hubs

Amazon - http://3dprint.com/46934/amazon-3d-printing-patent/

DRIVERLESS VEHICLES AND DRONES

Driverless Vehicles and Drones Overview

28

Driverless vehicles and drones can be leveraged for streamlining the first and last mile of delivery and

gaining greater visibility

Reduce Cost

Sense Demand

Increase Visibility

Driverless Vehicles and Drones can be used in supply chain to…

Increase Safety

Reduce Stress

Drones

Driverless Vehicles

Stability Control Radar and

Ultrasonic Sensors

Electronic

Sensor

Vehicle-to-Infrastructure (V2I) Vehicle-to-Vehicle (V2V) Communications Technologies

RegulationsBattery Technology Airspace

Camera

Technology

3D Mapping

Technology


How Are Companies Using Driverless Vehicles and Drones Today?

29

1 Consumer product delivery

Search, rescue and firefighting 3

2 Oil and gas field monitoring

MHI Study

Gartner: Predicts 2014: Global Logistics Differentiating for the Future, November 2013

Agriculture and crop management 4

Media and entertainment 5

Drones in Logistics

30

Within Facility

Surveillance

Rural Delivery

First and Last Mile

Observation Transportation

Source: DHL – UAV in Logistics Study - http://www.dhl.com/content/dam/downloads/g0/about_us/logistics_insights/DHL_TrendReport_UAV.pdf

Mining Company

Solution Area: Maintenance and RepairOne of the largest mining companies in the

world is now funding the globe’s largest non-

military robotics programs. It operates 40 autonomous

haul trucks (AHT) working at locations across Australia,

with plans to add 150 more. All trucks are controlled remotely

from as far as one thousand miles from the mines. To navigate,

the vehicles use a combination of sensors, radar and GPS

Applications of Driverless Vehicles

31

Solution Area: Commercial AutomotiveGoogle’s driverless cars have logged over a million accident-

free miles and are currently out on the streets of Mountain

View, California and Austin, Texas. Google forecasts 2017

as the commercial launch date

Solution Area: Shipping and TransportationDaimler AG demonstrated its driverless tractor trailer,

FutureTruck 2025, which navigates via sensor and camera

technology. Daimler plans to have the truck on the

road within a decade

Solution Area: Shipping and TransportationVolvo Trucks has been participating in the SARTRE

(Safe Road Trains for the Environment) project to

test vehicle platooning. In this system, a driver at the

head of a convoy of electronically-linked trucks drives the

entire line of vehicles, assisted by automated systems in each

vehicle that adjust for following distances and speed

Driverless

Vehicles

Google Daimler Trucks

Volvo Trucks

Driverless vehicles are impacting traditional transportation models with safer, more fuel

efficient vehicles

Source:

Google - http://www.forbes.com/sites/sarwantsingh/2015/05/19/move-aside-google-car-the-self-driving-truck-is-in-your-rear-view-mirror/

Daimler / Volvo - http://www.truckinginfo.com/article/story/2015/07/can-autonomous-trucks-solve-the-driver-shortage.aspx

8

Applications of Drones

32

DHL tested its drone technology, PaketKopter, in late 2014 with

deliveries of essentials (e.g., medications) to the German island of

Juist. DHL was the first major shipping company to use drones for

shipping

Solution Area: First & Last Mile Delivery

Solution Area: Logistics Yard Management

PINC Air follows a pre-programmed flight path to locate inventory both

inside and outside facilities. GPS, RFID, LIDAR, ultrasonic, and optical

sensors coupled with Real-Time Location System (RTLS) algorithms locate

assets and upload this information for analysis. PINC Air is being tested by

organizations including Daimler Trucks North America and Kenco Logistics

Drones are being used across multiple industries driving significant savings in the supply chain

DroneScan uses a drone and an integrated hardware, software, scanning, and

communications technology to provide robotic scanning solutions of high

shelves in large uniform warehouses. The drone flies up to the high shelves

and scans the barcodes on each item, as well as the barcode on the shelf.

This saves the time and effort of lifting a human up to the high shelves using

a forklift or reach truck, which can be as high as 8m

Solution Area: Inventory Management

DHL

Source:

PINC Air – Material provided by PINC air and approved for usage in this presentation http://www.pincsolutions.com/air

DHL - http://www.theguardian.com/technology/2014/sep/25/german-dhl-launches-first-commercial-drone-delivery-service

DroneScan – Material provided by DroneScan and approved for usage in this presentation http://www.dronescan.co/

A Brief Overview of PINC AIR Solution: Application for Yard

Management System

33

Source: PINC Air – Material provided by PINC air and approved for usage in this presentation

How Will These Technologies Affect Your Supply Chain?

34

Predictive

Analytics

Driverless

and

Drones

3D Printing

Wearables

UniqueValue

Proposition

Source:

http://www.forbes.com/sites/sarwantsingh/2015/08/03/uber-taxi-truck/

http://www.wsj.com/articles/ups-tests-a-3-d-printing-service-1442618648

http://blogs.wsj.com/cio/2015/05/26/3-d-printing-cloud-converge-in-new-business-services/

http://www.bizjournals.com/sanjose/news/2015/09/10/google-amazon-help-defeat-california-drone.html

http://www.dhl.com/en/press/releases/releases_2015/logistics/dhl_successfully_tests_augmented_reality_application_in_warehouse.html

http://www.techtimes.com/articles/91923/20151006/volvo-shows-off-xc90-self-driving-interface-as-autonomous-cars-all-set-to-hit-the-roads-in-2017.htm

http://www.logisticsmagazine.com.au/Features/Injecting-data-science-and-big-data-into-the-wirel

So What?

35

Companies that continue to rely on traditional supply

chain models will likely find it increasingly difficult to stay

competitive

These emerging technologies can enable improvements

to meet customer expectations for orders that are complete, accurate, and on-time

• Align with customer needs

• Determine where to invest

• Collaborate across blurring boundaries

• Invest in workforce hiring and training strategies

36

How Can You Make It Happen?

Q&A

Scott Sopher

Principal, Deloitte Consulting LLP

About Deloitte

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte

LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or

services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any

decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on

this publication.

Copyright © 2015 Deloitte Development LLC. All rights reserved.

technologies and innovations that are transforming supply...

Documents