3D Printing – The Next Inflection Point in Manufacturing

It is late Friday night and you happen to see a note in your blackberry from the CEO of a Fortune 500 organization (with whom you are negotiating a large deal) asking you to join him for a round of Golf on Saturday Morning at 8 AM. You sadly realize that your golf kit is not in shape and there is no one around who can lend you a golf club. So what would you do? You will simply “print” yourself a flashing new Golf Club of a reputed brand with your ‘personal 3D home printer’.

Welcome to the world of 3 D printing! 3 D printing enables you to download CAD designs from the standard CAD/CAM software packages and build products using additive manufacturing technology.

Let’s take a step backward to the beginning of 2D printing when John Gutenberg invented the printing press in 1400s. The invention of the printing press created a huge increase in the knowledge levels of people around the globe due to wide dissemination of knowledge made possible by mass production of books and newspapers. However this method of printing had its own disadvantages. It was a very complex process to typeset and set up the printing press to print a book and it was unviable to print books and newspapers unless there was scale. Printing only a single copy of a book was simply unthinkable. With the outset of DTP and PC based Home Printers in late 20’th century, this once un-surmountable barrier was overcome and it was possible to customize the printing process and the element of the ‘scale’ became no longer relevant.

Same is the case with manufacturing industry. So far most of the manufacturing is assembly line based and the machinery has to be set up/configured for the manufacture of a specific product or a specific model. It is a time consuming process to set up the assembly line and not easy to change the set up for making changes to the product design or features. Once again the ‘scale’ factor comes into picture here and unless there is a minimum scale the set up process is too expensive making the process of building POCs and prototypes needed for certain complex products very cumbersome.

What the DTP and PC based Home Printer did for 2 D printing the 3 D printer will do the same for manufacturing. It is no understatement to say that 3 D printing technology will unleash the new wave in the manufacturing industry and will radically change the way we look at manufacturing. ‘The Economist’ in its Feb 2011 edition calls the ‘3 D Printing’ a new industrial revolution which does exactly the opposite of what the 18’th century industrial revolution did. The game will now change from mass production which was heralded by the earlier industrial revolution to customized production which the current revolution will herald.

I will now briefly touch upon some of the ways in which the 3D Printing will change the face of manufacturing and how the IT industry can take advantage of this next inflection point. This certainly will create disruptions in the way we think and work currently

1.   There was an article in ‘Scientific American’ last year which talks about formulating a customized medicine for each person and for a disease based on the DNA sequencing and the genetic conditions. This will be the most effective cure for a person based on his genetic profile unlike the ‘one medicine cures all’ format of today. Similarly using 3 D printing each person can create his or her own customized version of the products on the web and can either have them manufactured by the company or get the manufacturing done at using the home printer by simply downloading the CAD model of the custom product to his or her PC and paying the firm online for the ‘design’. This creates a world where one would have every product delivered in digital format like we do today with music and books.

2.   Individual users can actually participate in the product development online either individually or in teams. There will be actual co-creation right from the product conception to the product manufacturing stage. The firms have a role to play in terms of making it easier for the users to enter the product specifications and features and convert them to actual design or CAD models in the backend. This is important as the end users will not be able to deal with the intricacies of the complex CAD/CAM modeling software which is the realm of mechanical engineers. The software needed for visualizing the end products from an end user perspective needs to be built as the wire frame models used in today’s CAD packages will not be understood by the end users

3.   Firms will own the IP for the products as well as the brands and will only give the right to the end user to download and print X copies of the product only. This will be very much like the licensing models in use for software products today. There is also a possibility of a number of commodity products being available on the Internet in the ‘Open Source’ mode and open to improvisation and further development by the community very much like the current ‘Open Source’ models in vogue today

4.   Prototypes of products that are in R&D phase can be manufactured multiple times and quickly with this technology thus enabling the design team to quickly see the design come alive and fix defects early on in the game

In summary, 3 D printing will herald a new revolution in the way we look at manufacturing and will create disruptions in the manufacturing ecosystem (such as the manufacturing plant, supply chain, suppliers, ancillaries, partners, retail outlets and the like)

For more information on how this technology works please see the Wikipedia link below:

http://en.wikipedia.org/wiki/3D_printing

Supply Chains, Food Shortages and Inflation in the Emerging Markets

‘Inflation’ is the buzzword in economies around the world and more so in the emerging markets which have been witnessing unprecedented growth in the last decade or so. This leads to the central banks like Fed and RBI raising the interest rates in a bid to take inflationary tendencies head on which in-turn becomes an impediment to growth. The point to note is that the inflation in emerging markets is driven much more by the rising food and oil prices and not so much by the growing demand for goods and services. So raising interest rates may not have much of an impact in controlling inflationary tendencies.

Between the two key determinants of inflation viz: Oil and Food price increases, the former is based on extraneous factors and there is little that can be done an economy level to control it but the latter is within the ambit of the nations internal control systems and can be tackled to a large extent.

In nations like India there is a huge differential in the retail prices which consumers pay in retail stores and the farm gate prices. The differential is accounted for the middle men commissions, transportation costs, storage costs and other elements which form an integral part of the ‘Food Supply Chain’. It is  a shame that 40% of the food produced in the farms gets wasted / rotted by the time it traverses the food supply chain. A recent study by the India’s economic advisor to the Prime Minister says that a lot can be achieved by way of optimizing and enhancing the supply chain efficiencies and if done well this could have a substantial impact in bringing down the food inflation by several percentage points. The report went on further to say that the permitting FDI in multi brand retail (which means allowing the retail giants like the Wal-Marts and the TESCOs of the world to set up shop in India) will have a significant impact on reducing the food inflation.

The fears that the mom and pop stores (the Kirana stores in Indian context) will perish if the Global retail giants enter Indian shores seem unfounded if we go by the data from other emerging economies which opened up their retail markets to FDI much earlier in the game. In Mexico which opened up in 1991, 40% of all the retail stores are still mom and pop stores. In China which opened up in 2001, even today a global giant like Walmart has only 6% of the market share and is the third largest player. A local Chinese player called WuMart on the other hand is the biggest player and has 12% of the market share. The second biggest player is also a local Chinese retailer called Kangcheng with 9% market share.

The kirana stores can very well live alongside the global biggies by the introduction of ‘cash and carry’ in India. This means the Walmarts of the world will need to set up whole sale stores which will in-turn sell to the kirana stores and other smaller stores thus enabling the smaller kirana store to leverage the supply chain efficiencies of the global retailers. In addition the global players can also set up the retail stores which will sell directly to end consumers. India badly needs the investments in the areas of cold storage (both warehouses and vehicles), bringing the economies of scale in the transportation across the length and breadth of the country and leveraging the global best practices in sourcing, inventory management and just in time replenishment of the goods on the shelf. If these practices bring down the food wastages across the supply chain from 40% to 20% this will have a substantial impact on reducing the food prices as the food availability will go up by 33% at one stroke.

It is not just emerging markets which are showing resistance to the entry of the Walmarts and TESCOs. The recent edition of ‘The Economist’ talks about the travails of TESCO in the UK market where there is resistance from locals to prevent expansion of TESCO in some of the neighborhoods as they feel the pavement vendors and small shop keepers who have been there for ages will lose their livelihood. Such fears are unfounded as these expansions provide employment to many people and will boost the local economies.

In economies like India if we need to grow and leverage the progress and developments made in all sectors since the liberalization in 1991 and if we are serious about becoming the world’s third largest economy by 2030, we have no choice but to tackle inflation head on. We need to aid and abet growth in both exports and consumption in the domestic market. We need to prevent inflation from often rearing its ugly head. Encouraging FDI in multi brand retail and leveraging the globally acclaimed best practices in the area of supply chain management to bring down food prices is a sure shot way of helping this become a reality.

World 3.0 – Creating a flourishing global market Integration amidst protectionist tendencies

It has become a fad off late to use the software versioning nomenclature for naming the latest business concepts, organizational vision, strategic initiatives etc. Several organizational use terms like Vision 2.0 or Mission 3.0 to reflect the latest ‘version’ of their vision/mission etc and similar nomenclature is used for strategic organizational initiatives. I think this approach serves the organization well in terms of being a chronological indicator of the progress and changes made in the organization over a period of time.

In the last 9-10 months, I have read three remarkable books written by people with Ivy League backgrounds which also follow a similar nomenclature. The first one is the book from Kellogg’s Marketing Guru, Philip Kotler titled “Marketing 3.0” which extols the virtues of social media and collaboration and talks in detail about how the 4Ps of marketing should be re-aligned keeping in view the changes happening in today’s ‘socially networked’ world. The second one is the book called “Enterprise 2.0” by Andrew McAfee which talks about the new avatar of the organization that leverages Web 2.0 technologies as a competitive advantage.

The third and most recent book is a book titled “World 3.0” by Pankaj Ghemawat who taught Economics and Strategy in Harvard Business School for 25 years. This is a very impressive book and in this blog I will talk about Ghemawat’s ideas and also express my view points at relevant places.

Ghemawat talks about the first era of the world (20’th Century) as 'World 1.0' where there was a domination of individual nation-states and there was little cross boundary business activity and little market integration. He then talks about the world during the early 2000s when the "Flat world" and "Boundary-less world" themes were fashionable and people expected that the world would be free of protectionism and become truly boundary-less. He calls this state as 'World 2.0'. Ideas from experts like Thomas Friedman and management guru Kenichi Ohmae were dominant during those days and people believed in ideal situations like borders being torn apart and a possibility of completely free trade across borders.

The reality is that the world today is plagued with protectionist tendencies and the global economic recession and sovereign debt crisis has added to the woes further acting as an impediment to full market integration. Ghemawat argues that the future state is 'World 3.0' where we will need to work within the constraints of protectionism and market regulations and still look for ways and means of creating a environment for market integration and trade to flourish. So the reality is that the market regulation and market integration will need to co-exist and we will need to look around for ways and means of making cross border business happen despite of the regulations.

Some of the ways in which global firms can make this happen are as follows:

1.   The pitch/business case that the global companies need to make to the governments where they intend to do business should incorporate the ‘political imperatives’ from the local government’s stand point rather than focusing purely on economic parameters and business benefits.

2.   Being sensitive to local customs/laws and adapting to the local culture and the market sentiments. Instead of sounding as an external threat to the local markets the global firms must make adaptations needed for the local markets and make the trade with them a win-win situation instead of appearing like a ‘colonial’ power.

3.   Engaging with the local authorities and common man is the key. Global firms must have a local flavor in all things they do and ensure that they communicate the benefits that accrue to the local populace. They must generate employment locally (including in leadership roles) and participate in the society building initiatives and become a ‘local’ firm in all possible ways.

4.   There are several situations wherein the global technological know-how and knowledge of global industry best practices can help local economies to come out of difficult economic situations. Such conditions will need to be leveraged by foreign firms. Also where ever reasonable global firms can work out ‘technology transfer’ arrangements with local industry thus creating a seed cluster which will boost the economy

5.   In many cases there is a minimal/negligible impact to the domestic economies at macroeconomic level due to certain types of cross border trade. The domestic macroeconomic parameters are largely due to the domestic conditions and cross border trade has negligible impact on these parameters. This should be analyzed and business case made accordingly at the macroeconomic level.

In summary, protectionist tendencies and national regulations are here to stay and will become a way of life for the global companies. It is up to the firm’s ingenuity to work around these impediments and create economic value to all the stakeholders involved.