Since the early ’90s, low shipping costs, free trade, and labor arbitrage have driven worldwide economies and established an international web of interdependence, often referred to as globalization. Economic growth on a global scale allowed for major players, such as China, to quickly advance the country’s manufacturing capabilities. But trends such as regional manufacturing and 3D printing are starting to change supply chains around the world.
These major changes are driven by higher global wages, increased shipping costs and shifting consumer expectations shaping this new landscape. This year serves as the inflection point for an era where global trade will continue to shift to a more regional approach.
The term “slowbalization” was coined by The Economist as, “cross-border investment, trade, bank loans, and supply chains […] shrinking or stagnating relative to world GDP.” Personally, I refer to this new chapter in manufacturing as “post-globalization” — less of a slowdown and more of an increased focus on regionalization.
Post-globalization occurs for a number of reasons, including technological advances. Modern technology has streamlined fabrication within the supply chain, allowing for production closer to the end user. Ultimately, post-globalization is shifting many supply chains from “just-in-time” coordination to “need-it-tomorrow” operations.
The Importance of Industry 4.0
Industry 4.0, coupled with data analytics and IoT, is crucial to the creation of intelligent supply chains. With these advancements, however, comes an increased expectation of transparency. Since trans-ocean shipping times are less of a primary factor in manufacturing planning, real-time visibility allows those who are watching their supply chain in real-time to uncover disruptions and abnormalities that could affect operations, and immediately resolve them before a problem magnifies.
The data and analytics that these technologies offer help to identify and monitor risk, ensuring efficient and optimized operations throughout the entire supply chain. Companies are increasingly turning to digitized solutions to streamline their management, tracking, and modeling.
One such solution at Flex called Pulse aggregates and interprets data from multiple sources around the world, providing insight into global variables that may impact or disrupt supply chains — including demand fluctuations, supply status, or implications of engineering changes. Organizations can then facilitate contingency planning in order to save money and reduce downtime while looking to the future.
The Impact of 3D Printing
Other advancements, such as 3D printing (3DP), help minimize risks and costs, reduce production times and improve quality while allowing for rapid prototyping. According to a study by Gartner, 47% of supply chain managers plan to implement 3D printing in the next couple of years. Benefits include:
- Decreased costs: International freight cost is on the rise, complicating outsourcing and global logistics. 3DP simplifies this by serving as a complete end-to-end process — lowering production costs (no additional storage, transport, labor or wasted material costs).
- High quality, single-step process: Non-restrictive design patterns can be accomplished, and multiple parts can be consolidated into a complete process. For example, flexures designed for pinch clamps require multi-step processes to achieve the appropriate geometry. With 3DP, designers can print features together directly in a single manufacturing process.
- Reduced risk: Supply chains can meet the needs of specific products in a more reliable manner while mitigating supply risk through the use of 3DP.
- Faster production time: 3DP negates lead times by reducing overseas transportation and responsiveness. It serves as a fully independent, responsive production method for successful on-demand manufacturing. In fact, research from the University of Michigan indicates new forms of printing could speed up the process further in the future.
3D printing will become more relevant as a direct result of regionalization – the production speed improvements of printing locally will ensure this. This process is ideal for products like consumer electronics — phones and computers that have multiple, unique designs and styles — since the technology allows for unlimited shapes, creative design and freedom to quickly customize products.
As post-globalization continues, it will be critical to not only understand these emerging technologies but also incorporate them into the supply chain to reduce costs, improve efficiencies and allow businesses to meet the growing demands of their customers.