Nur auf Docsity: Lade The Impact of Additive Manufacturing on Digital Supply Chains versus Traditional Supply ch und mehr Abschlussarbeiten als PDF für International Management herunter!
Garber
*Number between 100 and 0, without decimal place.
COVER SHEET MASTER THESIS
MBA International Management Intake 2017
Student ID No:
MBA Master Thesis
First Supervisor: Alex Tsipoulanidis Second Supervisor: Matthias Tomenendal
Topic: The Impact of Additive Manufacturing on Digital Supply Chains versus Traditional Supply chains – An EOS Customer Case
Number of words: 13,000 – 15,
Thesis due on: 16 th^ September 2019
To be filled in by the office:
Handed in on:
The term paper has to be marked with written corrections and with comments to explain the grading.
Grade in percentage*:
Garber
*Number between 100 and 0, without decimal place.
Date / Signature of Examiner: …………………………………………….
Garber
Hochschule für Wirtschaft und Recht
Master of Business Administration International Management
Master Thesis on
The impact of AM on Digital Supply Chains versus
Traditional Supply Chains – Analysis of EOS Cases
submitted by
Albert Tristan Garber
Matriculation No.:
First Supervisor: Prof. Dr. Alex Tsipoulanidis
Second Supervisor: Prof. Dr. Matthias Tomenendal
Date of Submission: September 30
th
Garber
Garber
1. Introduction
Subject Relevance and Problem Statement
Literature Review
Research Gap
Research Questions
Research Scope and Limitations
2. Terminological Foundation
Definitions of fundamental Expressions/terminologies
Supply Chain
Supply Chain Management
Traditional Supply Chain
Digital Supply Chain
Additive Manufacturing
Fundamental Theories
3. Theoretical Background
What is Supply Chain Management
Evolution of Supply Chain Management Critical Concepts in Supply chain management
The Importance of Supply chain Management
Supply Chain Performance
Supply Chain Integration
Supply Chain and Environmental Sustainability
Digital Supply Chain
Additive Manufacturing and Historical background
The AM Technologies
4. Methodological Framework
Sample
Data Collection
Literature Review
Case Studies
Garber
1
1. Introduction
1.1 Background
The supply chain plays a crucial role in a company´s quest for a competitive advantage. The structure and organisation of a company´s supply chain are directly related to the performance of the company. A Company that has a poor supply chain design automatically has poor processes and poor performance, on the other hand, a company with well-designed supply chain proves to be efficient and reflects it performance. (Influencers, Design decisions and Building blocks of SCs.). Supply chains are complex systems in an organisation, and therefore companies require the best strategic fit and common language between the different players in the supply chain to effectively and efficiently manage the supply chain. According to Deloitte, 79% of companies with high-performing supply chains, achieve a revenue growth superior to the average within their industry (Deloitte, 2014). Only 8% of businesses with less capable supply chains report above-average growth^1.
Traditional manufacturing companies and their supply chain processes currently overwhelm the business environment. The conventional flow of production processes is not customer-oriented but rather production-oriented, in that most supply chains are designed to operate on a push strategy rather than a pull strategy. These supply chain processes are relatively inflexible, and therefore experience inefficiencies and poor performance in today´s market environment. Such companies also tend to serve their global customer needs from a single point of production. Consequently, in providing value, companies incur series of problems and difficulties leading to increased costs, such as transportation cost, warehousing cost, sustainability problems like environmental pollution from transporting the goods but also speed. The company failed to meet the need for delivery. Delay in the supply chain process probably caused by efficiencies in the supply chain Here some remarks to costs, sustainability and speed, inventory.
With the emergence of Industry 4.0, technology is offering businesses and companies a new path to creating value for their customers. Among other groundbreaking technologies such as IoT, Robotic Process Automation, Advanced Analytics and digital twin, Additive Manufacturing (AM) is one of the promising technologies with the potential to disrupt the manufacturing industry. With 3D technologies, enterprises can simplify the complex structures of their supply chains. In principle, AM facilitates the speed of production and distribution processes on a global scale which is a considerable advantage when compared to the conventional production methods and supply chain processes, and it enables the efficient customisation of products. Nevertheless, it is often unclear how a supply chain with AM integration should be efficiently re-designed. The lack of knowledge, skills and expertise in utilising this technology remains a considerable barrier for companies to apply AM and to attain value add. For many companies, the technical knowledge is available through the design engineers, although these do not have the firsthand AM knowledge, they are able to find their way around the complexities posed by the technology. Correspondingly, there is a huge number of academic research papers about AM, most if not all of these have focused on the technical
(^1) Australian…
Garber
3
RQ2: What knowledge-transfer model can be developed to bring the expertise of the design engineers into the current business environment?
RQ3: What are the criteria that characterise the efficient integration of AM technology into the supply chain?
RQ4: Can a framework for DSC with integrated Additive Manufacturing technology be developed for different industries if yes, how can it look like?
RQs 1, 2 and 4 are validated by literature review from while RQ3 by company case studies.
1.4 Research Scope and Limitations
AM technologies so far are mainly applied in the medical industry, lifestyle industry, automotive industry and aerospace industry. It can be assumed that SCs in these industries have general characteristics but also specific features. This thesis focuses on the aerospace industry.
This thesis is mainly a qualitative study utilising data from the literature and journals as well as case studies from EOS on the aerospace industry. Detailed quantitative analysis, especially concerning the cost-impact of AM to particular supply chains are beyond the scope of this paper and could be the area of further research.
, which constitutes the need for this research paper.
The primary objective of the thesis is to analyse how the emergence of additive manufacturing can transform the business model and strategies of companies, thereby impacting digital supply chains.
It is fair though to state, that supply chain management has long leveraged information and slick logistics for inventory strategies. The result has been highly business efficiency, and customer service levels unimagined generations ago. This has resulted in part from leveraging technologies, but in a more significant part from viewing supply chains holistically, like a
system^3.
With the advancement and development of supply chain management, it is still faced with tougher challenges, especially with the emergence of technology, digitalisation and globalisation. In a today´s globalised market environment, companies move around so fast in search of cheap labour and other resources and supply chains just like economies and markets, have become more globally interconnected that their exposure to shocks and technology disruptions has heightened. The speed of conventional supply chains only aggravates the problem the more as such, even a minor miscalculation in one activity of the supply chain can have a significant ripple effect on successive events due to their interconnected nature, and the repercussions can quickly diffuse throughout a complex network of the supply chain.^4 In 2012, the Australian Securities and Investment Commission reported that 44% of companies in
(^3) https://www.scmr.com/article/technology_is_supply_chains_greatest_threat (^4) IBM, 2009
Garber
4
Australia failed because of weak strategic management^5. The result of such a report clearly shows that supply chain strategy is significant to the success of the overall company strategy.^6 MNCs with global supply chains, a category which includes a fast-growing number of corporations, medium-sized companies and even small businesses, can be standing on a cost base of which 90% is attributable to supply chain expenditure^7.
Traditional supply chains are complex to understand because they are so much interconnected and processes take place in sequential order with too many in-between stages. This complexity makes AM a standout reformer with just three steps — supplier of material, the printing of parts and post-processing (Supply – Printing/Manufacturing – Post-processing).
The emergence of industry 4.0 comes with huge potentials, but companies will also have to deal with many challenges. As these technologies are new to the industry, companies will require the necessary skills and expertise to handle the new processes. The dilemma for companies is whether to ditch the old knowledge already explored or go for new knowledge as new knowledge exploitation and exploration will create additional. As the saying goes, “knowledge is power”, the new knowledge and expertise gained, will allow companies to leverage the advantages offered by AM over their competitors.
In earlier research and contribute to a critical theory debate and to the development of DSC as supply network theory has been influenced by SCM its concepts could be a way to develop SCM theory
This thesis is structured as follows…
1.2 Problem Statement – Why (and objective of the thesis)
In the modern business world, the supply chain needs to be agile, fast, less expensive and make production and manufacturing of goods where they are used. The traditional supply chain is still slow, rigid and very expensive to manage and most of all, very interdependent. With Additive Manufacturing, supply chains can be modernised, cheaper, and products can be manufactured at the point of use. Moreover, additive manufacturing technologies are still undergoing research and development as to how to improve the technology to reach a maturity level to allow scalability.
Most if not all of the larger manufacturing companies are involved in the further development of AM towards mass production. Nevertheless, the lack of knowledge, skills and expertise in utilising the technology remains a considerable barrier for companies to attain this objective. With the knowledge, and the skills, there will be no experts and the technology will be of no substantial use to companies. It is time that the technology that has for decades been utilised as a prototyping tool expands its imagined potential for manufacturing companies. Acquiring the right knowledge and skills can speed up the integration and implementation of 3D printing …
or the knowledge gap or only exploratory
(^5) https://www.logisticsbureau.com/7-reasons-why-the-supply-chain-matters-to-business-success/ (^6) https://www.logisticsbureau.com/7-reasons-why-the-supply-chain-matters-to-business-success/ (^7) https://www.logisticsbureau.com/7-reasons-why-the-supply-chain-matters-to-business-success/
Kommentiert [MH1]: Management, strategy, costs gehen etwas durcheinander
Kommentiert [MH2]: Satz ist nicht verständlich, unvollständig?
Garber
6
2. Literature Review
Companies depend on the efficient use of their available resources to create value for their customers. While creating these values, costs are incurred.
The concept of managing an building a supply chain structure is developed on specific theories of the company.
It has been argued that the SCM area lacks sufficient theoretical underpinnings resulting in simplified conceptualisations of supply chains and their contexts, and furthermore, that theory may bew helpful to uncover some of the complexity characterising supply chains. A literature review made in 2000 (Croom et al.) shows a relative lack of theoretical work compared to the to the empirical-based studies.
Croom et al. underline that theoretical development is critical to the establishmen t and development of theory of supply chain management. Without a foundation of effective supply chain organisational relationsships, any effort to manage the flow of information or materials across the supply chain is likely to be unsuccessful (Croom et al 2000). Despite a large amount of research performed in academia and management practice implemented in different industries, SCM is still in its infancy. There is an interesting and attractive future ahead for SCM to be a challenge in both academia and practise (Svensson 2002).
Start from the invention of Additive Manufacturing – Literature existing
Chronological order of the improvement of the technology (Advancement)
Geographical (approach) paths
Major questions concerning this topic that has been addressed by researchers
Traditional manufacturing has come a very long way in its progress towards cost-effective production, speed, technology integration etc. However, with the emergence of digital technology, the optimism of an alternative manufacturing technology that would take production and manufacturing to another level is high.
There are several useful conditional theories of supply chain management. Until now, there’s no universally recognised supply chain theory, and it is still a mystery whether an optimal supply chain structure exists (…). An optimal supply chain structure can be said to be a dynamic one that while maximising supply chain surplus, it is able to adjust to changes in the market environment to produce optimal performance.
It is optimal for companies to build robust operation management that is supported by a flexible but efficient supply chain. Different school of thoughts have proposed various theories on supply chain management. Traditional SC, … DSC
2.1 Fundamental Theories
Contingency Theory According to contingency theory, managers must recognise the relationship between a changing environment, managerial decision-making, and performance. Managers must be able to react to
Garber
7
situational changes to adjust the company’s resources in a dynamic competitive environment. This theory serves as a basis for the activities of the modern business environment. Digital technologies have altered the rules of the game, and it is clear that for companies to survive the torrential competition in the contemporary business environment, the transformation of processes and dynamism in the business environment is vital. Managers cannot only recognise but must react fast to these changes and make the appropriate decision. According to surveys conducted by leading consulting firms , manufacturing companies are aware of the impact of digitalisation but are yet to come to terms with the challenges and opportunities of digitally transforming their operations (PWC 2018; EY 2016). Companies that are agile in the digital world and are fast in tapping into available resources of digitalisation can reap the benefit in their turnover numbers. The appropriateness of the contingency theory to the research topic can be seen that
Contingency theory recognises the need for managers to consider the relationship between a changing environment, managerial decision-making, and performance.
Resource-based Theory RBT emphasises management of internal sources must establish a unique skill set to create and gain competitive advantage. A company’s ability to deliver producs/servives that are differentiated to its competitors adds value in the eyes of the customer. Unique skills/processes which form the core competence of an organisation can lead to a robust and sustainable competitive advantage.
Resource-based View Resource-based view (RBV) is considered as the most dominant dimension in supply chain management. These resources are rare, valuable and difficult to purchase. Such resource provides competitive advantage over the competitors who lack such resources (Barney 1991). Competitive advantage is generally considered as the implementation of strategies not currently being implemented by other firms that facilitate reduction of costs, exploiting market opportunities, and neutralisation of competitive threats. Appropriate deployment of resources results in competitive advantage.
The automotive industry and electronics industry have the most digital champions with automotive 20% and 14% for electronics companies implementing innovative solutioins across their marketplace and creative processes within their operations and supply chains (PWC 2018). Digital champions create value through providing integrated customer solutions ecosystems. They do so through continuous improvement of their digital products and service offerings as well as providing better and improved access to their customers (EY 2016).
Knowledge-based Theory The knowledge-based view provides insight in terms of coordination of supply chains. A tradidional organisation largely relies on the hierarchy for coordination. Normal philosophy of supply chain lacks informal hierarchy. They largely depend on knowledge to facilitate concerted actions. Generally, most of the supply chains informal mechanisms are for storing vital knowledge (information) in an organisation (Grant 1996).
Kauppi, K. (2013, “Extending the use of institutional theory in operations and supply chain management research”, International Journal of Operations & Production Management , Vol. 33 No 10, pp. 1318-1345. https://doi.org/10.1108/IJOPM-10-2011-
Kommentiert [MH3]: Satz unvollständig?
Garber
9
Advances in digital technology are having a significant impact on the world around us and leading to substantial changes in customer behaviour. In the modern business world, customers are digitally connected, and as such, they are equipped in responding to digital trends and participating in online dialogue across a wider global community. However, many supply chains can´t keep up. That is because they are structured in a very traditional and sequential way.
A company whose supply chain still operates traditionally reacts very slow to peak demands of customers. Most of the traditional supply chains are operated on a push strategy. In peak situations, organisations still operating on conventional supply chain incur unnecessary premium costs. But with the advent of digitalisation, supply chain structures are transformed from a sequential manner into a more network ecosystem pattern or processes that are time- consuming and are bottleneck to efficient flow and functioning of the supply chain are eliminated to create compact and seamless supply chain structure. Companies must be able to develop and evolve their supply chain into smart, connected, and highly efficient supply chain ecosystems with layers to address customer solutions and digital operations.
Companies who are able to set up and run customer solutions and digital operations ecosystems, empower themselves to proactively manage and efficiently fulfil customer needs across multiple channels. They are also able to quickly identify the changes in demand and to organise and transform their supply chain into a sustainable competitive advantage and using this as an enabler for a future digital business model. With their proactive sensing capability, coupled with their social media tracking activities, they can identify a peak in demand at an early stage and thanks to a direct link between demand and manufacturing, they can accordingly adjust their production plan. At the same time, an update demand plan can be shared with all relevant suppliers who immediately include the new requirement in their material planning and adjust their manufacturing priorities accordingly. Meanwhile, the customer is able to track the order's progress and is well informed of the entire process from product manufacturing stage on to delivery. Throughout the process, supply chain transparency solutions is able to monitor relevant supply chain data from a variety of internal, external sources enabling proactive risk management.
For the last mile delivery to the customer, the company leverages an established flexible logistics network with a shared infrastructure. The result, companies that leverage the digital supply chain, operates with versatility and agility needed in the digital age.
The intelligent digital supply chain will usher in an era of a hyper-connected ultra-efficient supply chain that forecasts demands based on social sentiment and real-time point of purchase. For example, IoT will capture a stream of real-time data across the entire supply chain from supply, distribution and logistics. By distilling the data into actionable intelligence, decision- makers will receive insight and action that wasn´t possible before. All of these in a cloud and mobile platform that is available and actionable anytime and place and this will enable companies to adapt swiftly to changing supply and demand and allow the production of more precise products. Companies will also be equipped to immediately spot any potential problems that may interrupt supply or production process. Companies can also optimise their network, reduce inventory, improve service levels and most importantly move at speed faster than their competitors (jabil.com).
Additive manufacturing technology, one of the leading technologies in the technology revolution, is transforming the manufacturing industry and precisely the traditional supply chain. AM is poised to completely change the structure of the conventional supply chain. A
Garber
10
supply chain structure that due to ist sequential set-up of activities is complicated and difficult to manage (Source: Article: Impacts of Additive Manufacturing on Supply Chain Flow: A Simulation Approach in Healthcare Industry). With AM, a design file can be directly transformed into a physical product eschewing a couple of manufacturing stages in the traditional supply chain. AM can positively affect all logistics and supply chain activities.
Garber
12
Supply Chain Management
In a competitive enviromnment, single enterprises acting alone caanot fully achieve all management goals. As customer demands increase and become more specific firms must undertake initiatives to coordinate responsibilities across the supply chain in order to improve service and lower costs. The problem is that different firms typically operate under different management philosophies and pursue divergent goals. Successful relationsships require managers to rethink the way they conduct business with suppliers and customers so that the benefits of integrated and focused supply chain strategies can be achieved.
Additive Manufacturing
Additive Manufacturing (AM), the process of joining materials to make objects from three- dimensional (3D) model data, usually layer by layer, is distinctly a different form and has many advantages over traditional manufacturing processes. Commonly known as “3D printing”, AM provides a cost-effective and time-efficient way to produce low-volume, sutomised products with complicated geometries and advanced material properties and functionality [34]. Although separation of product design from manufacturing capabilities is a significant advantage of Additive Manufacturing (AM), the impact of AM is not only limited to design and manufacturing stages. In addition to the freedom of design such as elimination of design constraints, material saving, and free complexity, AM offers other potential benefits to the manufacturing industry as well. One of the most immediate potentials of AM is the possibility of more efficient logistics and improvement in production systems.
KEY OBJECTIVE OF SUPPLY CHAIN
The principal objective of a supply chain is to improve performance, provide higher service level to customers, reduce costs, reduce bullwhip effects and most importantly respond to market and environmental fluctuation while continuously improving the quality of the supply chain. In other words, the objective is to maximise the overall generated value of the supply chain. This value can be called the supply chain surplus or supply chain profitability and can be demonstrated in the form of an equation.
The primary objective of the supply chain is to optimise the performance of the chain of flow of resources, to add as much as value to the processes as possible for the least cost. In other words, the goal is to establish a knit fit of cooperation and collaboration of both internal units of the organisation and external players like suppliers and customers to maximise the productivity of the supply chain while delivering the benefits (Finch, 2006). Imagine if every activity of an organisations operations were carried out individually, this could be a titanic task and cost the company cannot afford.
Supply Chain Surplus = Customer Value + Supply Chain Cost
SCS = CV + SCC
Garber
13
Figure: Supply Chain objective formula
(Source:)
In order to maximise the supply chain surplus, many factors have to be considered as these affect the total cost of the supply chain. For example, Suppliers’ suppliers or customers’ customers.
There is only one source of revenue in the Supply chain, and this is the customer. Other cash flows are an exchange of funds that occur within the supply chain since the different stages of the supply chain have different owners. When a manufacturing company pays ist supplier, a portion of the value generated by the customer is used to pay the supplier.
By delivering value for the customer, supply chains incur different types of costs such as transportation cost from manufacturer to the warehouse and from retailer to customer, making product availability to avoid stock out situations, over-production costs, over-processing costs
- all these activities are clogged under supply chain costs.
Supply chain cost may also be impacted by structure and design. The structure of the Supply Chain has a significant impact on the value of the supply chain. The success or failure of a supply chain is dependent on how the Supply Chain has been designed and how well the flow of products, information and funds are managed.
A supply chain is a concept that can be viewed from different perspectives. So looking at the processes involved in managing SCs; two different distinct views of aspects of these processes and the way they are organised within the SC. can be justified.
The cycle view
The push Pull View
PUSH/PULL VIEW OF A SUPPLY CHAIN
Among the few other supply chain integration strategies, the push/pull strategy has become one oft he most important and probably effective in delivering customer value. Traditionally, organisations have decided to implement either a push strategy or a pull strategy depending on certain factors. Recently, companies have started implementing a hybrid approach of push-pull.
PUSH-BASED SUPPLY CHAINS
In the push approach, value execution is initiated in anticipation of customer order. In other words, the company operates in speculation. Decisions regarding production and distribution of goods and services are primarily based on historical data and long-term forecasts.
PULL-BASED SUPPLY CHAINS
In the pull approach, value execution is initiated in response to customer order. The company is in this view reactive to customer demand. Production and distribution decisions to deliver
