21 Mar Pandemics Are The Mother of Invention
Last year, multiple events including a pandemic, weather disasters, worker shortages, and port congestion exposed long-standing problems with global supply chains. The result has been a surge in demand for technological solutions that can improve logistics networks’ resiliency, agility, and efficiency, so that manufacturers, suppliers, and retailers can move toward more proactive business models. In the coming years, digital twins and microfactories will help manufacturers, merchants, and other stakeholders to improve their operations.
Digital Is Driving Supply Chain
The following are some of the most significant market drivers in supply chain innovation:
- Digitization: Using technologies such as digital freight matching and blockchain-based asset monitoring, data availability and value are being enhanced through better matching of supply with demand.
- Visibility: Demand forecasting and visibility systems enable firms to detect inefficiencies and potential disruptions and respond accordingly.
- Automation: Robots are becoming increasingly important throughout the supply chain, providing capabilities such as automated ground delivery with drones, as well as robotic fulfillment.
The potential here is enormous. For example, in 2020, the retail industry was estimated to lose $2.1 trillion due to out-of-stock items. Furthermore, being able to deliver in two days rather than seven or ten can increase sales. According to Metapack, 70% of online consumers are prepared to pay extra to ensure speed and convenience, such as one-hour, same day or Sunday delivery.
While progress is being made to prevent interruptions and improve efficiencies across supply chain operations, a few sectors are gaining traction as we approach 2022.
One of the most promising solutions is digital twins. The market is expected to reach $63.5 billion by 2027 and is already reshaping supply chain management by allowing simulation of an organization’s supply chain, which could include thousands of vendors, warehouses, logistics operations, and other elements.
Reshaping The Supply Chain
As we approach 2022, some sectors are gaining traction as progress is made to prevent interruptions and improve efficiencies across supply chains. One of the most promising solutions is digital twins. By simulating organizations’ supply chains, which might include thousands of vendors, warehouses, logistics operations, and other elements, digital twins are reshaping supply chain management.
The technology, which is augmented by AI, may assist in predicting what will happen in a virtual environment if a severe weather event or a labor or components shortage occurs at any point along the supply chain. It might then automatically propose and implement a solution, such as obtaining a component from another location.
According to a Grant Thornton poll conducted in the fall of 2020, about one-fifth of manufacturers expect to invest in supply chain digital twins, suggesting that the technology is still in its infancy. According to BCG, organizations that have previously used the technology are witnessing benefits such as lower total inventory and capital expenditure, as well as increased throughput.
Big Tech Leads The Way
Because of their advanced cloud platforms and computational capabilities, big tech companies like Google, Microsoft, and Amazon are in a position to lead the market. In fact, in recent months, all three major internet companies have introduced digital twin for businesses:
- In September 2021, Google introduced its Supply Chain Twin cloud service. Customers such as Renault are apparently experiencing a 95 percent reduction in the time it takes to evaluate data using the platform.
- In November 2021, Microsoft released a preview of its supply chain digital twin solution. Daimler Truck AG is implementing the solution to reduce downtime and parts shortages, as well as to speed up decision-making when supply chain difficulties develop, or even before they do.
- In November 2021, Amazon Web Services (AWS) began rolling out its IoT TwinMaker. The solution focuses on assisting businesses in creating digital twins of industrial operations, but Amazon may soon try to broaden its reach to include the entire supply chain.
As companies try to avoid supply chain disruptions, digital twins will gain popularity in 2022.
From The Cloud To The Factory
Moving from the cloud to the factory floor, companies are developing microfactories, which use automation and robots to develop more flexible manufacturing frameworks that can be installed in a fraction of the time and on a much larger scale.
While the idea has been around for decades, a number of factors are making it more viable and appealing, from the pressing need to reduce emissions to the falling cost of AI and robotics to the growing desire for small-batch and personalized goods.
The model is being pioneered by startups. Corporations and established players, on the other hand, are experimenting with the technology through investments and partnerships.
Arrival, an electric bus and van manufacturer, is now constructing three microfactories, each of which will cost roughly $50 million and produce 10,000 vans or 1,000 buses every year.
The microfactories employ only 200 people, occupy 200,000 square feet, and may be operationalized in as little as six months to do this. In comparison, billions of dollars and millions of square feet are required for Tesla’s gigafactories. Hyundai and Kia have invested in the startup, as well as UPS, which has committed to purchasing 10,000 of its vans.
Relocalize, a firm in the food tech space, is building shipping container-sized microfactories near grocery distribution centers, with each microfactory serving 100-200 local grocery stores. In November 2021, it opened its first microfactory, which is designed to produce ice without wasting water, with the goal of producing and storing 1.6 million bags of ice per year.
Bright Machines provides organizations with a microfactory-as-a-service solution that includes a series of small, intelligent robots. DRW, a producer of point-of-care diagnostics, claims to have increased production output by 10x and decreased unit assembly time from 2 minutes to 20 seconds using Bright Machines’ microfactory solution.
The Knock-on Effect
Current implementations of the microfactory concept rely heavily on automation to make production efficient enough for micromanufacturing to be economically viable. Microfactories will become more profitable with the advancement of AI and robotics, which may have important knock-on effects for improving supply chain efficiency.
Businesses will continue to face disruptive occurrences at every step in the coming year. Those who engage in technology to strengthen their supply chains may not only avert disaster but also emerge victorious.