Circular Economy - Supply Chain Management and Advanced Manufacturing Technologies - Case Study Example

CIRCULAR ECONOMY Name Institution Course Date Date Supply Chain Management and Advanced Manufacturing Technologies 1. Introduction Business enterprises aim at expanding operations by increasing production and sales of commodities. Management is a broad field whose subdivided tasks according to departments within an organization. According to Cottrill, 2011, one important area of an organization’s management supplies chain management. All products and services produced by a company have to find a place in the market. An organization has to identify relevant strategies and implement them to increase the sales and market performance of an organization. These functions fall under the supply chain management of an organization. Supply chain management has to understand all market trends and develop a streamline supply strategy that will ensure an organization’s products sell. Also, an efficient supply chain management can ignite technological advancement. Technological advancements have characterized in the field of communication and transport (Cottrill, 2011). Supply chain management benefits from many opportunities for technological advancement. Technology can make communication between producers and consumers more effective (Shipp et al., 2011). With technology, a company can easily adjust to produce specific commodities without changing the traditional processes of an organization. Service delivery and market performance significantly increases after adoption technology. Supply chain management and technological advancements can be instrumental in ensuring sustainability of an organization. This essay reviews the significance of supply chain management and advancement in technology and transition to sustainability. The case of Boeing aerospace industry and relevant literature signifies the relevance of supply chain management and technology. 2. Discussion Supply chain management and additive technology are essential in tools that drive technological improvement. These two can lead to innovation of new products in the market as well as enhancing the quality of commodities and services in the market. Supply chain management has as stated earlier may involve market research to develop a new approach to business either by alteration of the supply chain plan, change of the production process or modification of a commodity. Additive technology is one good example of a technological advancement that diversifies a business approach (Shipp et al., 2011). Additive technology is an advancement enables a company develop a new approach in production and increases flexibility. Alteration of a production process is one major characteristic of the additive technology. One industry that has displayed more effort in the adoption of additive manufacturing technology is the Boeing aerospace industry. The industry manufactures over 20,000 parts of commercial and military planes using the additive process. Supply chain management According to Janssen et al. (2014), supply chain management has various roles within an organization’s business. A good supply chain management should ensure that a company prospers in all its operations. There is the need for an efficient supply chain plan to match the advancing technology in the field of transport and communication. A supply chain management includes procurement of raw materials, production process, warehousing and distribution to retailers or customers. Management should ensure all activities along the supply chain are controlled. A supply chain is a complex network that requires an extensive study and updating to maintain market relevance. It is a dynamic field that requires that requires a company to vary and adjust its system. There are several challenges and opportunities in supply chain management. Only large firms can conduct a comprehensive market research to improve a supply chain (Ross, 2010). In most cases, Limited financial muscles lockout Small companies doing market research (Shipp et al., 2011). However, market research creates a challenging environment for new technology to emerge and introduces new products in the market. The Boeing aerospace company pursues these opportunities using its financial muscles to invest in technology. Supply chain malfunction is a situation brought about by a technical or situational hiccup in the supply chain. According to The Executive Office of the President and the U.S. Department of Commerce (2015), the disruption may originate from either controllable or uncontrollable causes. Examples of technical hiccup that may disrupt supply chain management include machinery errors or malfunctioning, overall system collapse, financial constraints. Behavioral problems that affect supply chain management includes go-slows in between the labor force and fraud among the labor force. Other factors that may affect the supply chain may be external and beyond an organization's ability to control. Such factors include natural disasters and security issues like terrorism. Supply chain disruption occurs at any point in the supply chain, and the effect on the entire firm’s operation may vary. Pricing of commodities is also bound to change due to supply disruption. The decision to change the pricing of a product is influenced primarily by the market positioning of a firm, customer value or behavior and competitor behavior and capacity. Additive manufacturing technology One significant technological advance in supply chain management is the additive manufacturing technology (Cottrill, 2011). Additive manufacturing technology is also referred to as 3-Dimensional printing. A technology emerged recently and evolved taking advantage of the advancing digital technology (Shipp et al., 2011). Additive manufacturing technology develops 3-dimensional objects primarily from digital models. The process in this new technology is additive that involves layering polymers, ceramics or metals. The method is a direct contrast to traditional process in a way that the additive manufacturing technology bonds several materials to create an artifact. Additive manufacturing technology is quickly taking center stage of many companies to build products. The approach has seen a series of developments concerning increasing performance of additive manufacturing equipment and machine, reduction of cost of both materials and machinery (Gibson et al., 2015). Computer aided design software is mostly used in additive manufacturing. Therefore, Additive technology and supply chain management are two useful resources in an organization. Costs and effect of additive manufacturing The adoption of additive manufacturing has to involve many departments of an organization. The various sections that can incorporate additive manufacturing include areas where machinery and electronics are used, motor vehicles, and aerospace as well as medical production (Cottrill, 2011). The Boeing manufacturers have adopted this technology in manufacturing of planes. The use of additive technology has several advantages and limitations to an organization. According to Gausemeir (2013), additive manufacturing saves the cost of production in a lean production company. The Boeing Company saves more than 2.5 million dollars when using additive technology. Lean production may have many traces of wastes such due to the production of more artifacts than the market demand, transportation posses risk to a product, over processing during the production process, and wasting of useful financial, human and time resources. Additive manufacturing technology can counter all these kind of wastes. Additive technology can significantly trim large inventories to small manageable inventories that instantly reduce the initial cost of production. Additive technology enables a company to produce commodities in fragments and in parts that can match the market demand (Shipp et al., 2011). For example, specific parts of a car can be more demanded and a company can easily shift concentration to production of this parts. Additive production technology enables a company to produce all the parts of a product in the same company at the same time. The technology also enables production of parts of a commodity at various locations, which saves the cost of transportation. The adoption of additive production ensures that parts are produced near the customer base. This increases the proximity of production and related products to a market. According to Gausemeir (2013), additive manufacturing process can be diffused into three parts that include; 3D printers produce products and procurement of additive manufacturing system; understanding the copy shop scenario; and adopting the additive technology in extensive production. Additive manufacturing technology has enabled the Boeing manufacturing company to make a significant material reduction of 50% to 80%. This is specifically in the making of the metal brackets. As stated before, supply chain management incorporates the functions of; purchasing raw materials, manufacturing or processing operations, distribution of products and integration of various processes. Integration involves establishment of a well-designed supply chain management (Gibson et al, 2015). Efficiency in supply chain management describes the enormous success of many business enterprises. Additive technology can significantly influence supply chain management of a company and increase a company’s relevance and performance in the market (Cheng and Choi, 2010). Additive technology is important in reducing the distance between the producer and the consumer and eliminating unnecessary links between the producer and the consumer. This closeness to consumer brought about by additive technology reduces the risks of disasters and operations in businesses. When a company decentralizes its operations, incidences of disruption will only affect a specific location and not the entire region in which the firm operates. Costs of additive technology According to Shipp et al (2011), additive technology reduces the cost of production by reducing the amount of materials used in production. However, the cost of production can significantly increase when compared to traditional production technologies. Specifically, cost of material input in production can increase up to ten times when additive technology is adopted. The cost in additive technology can be distributed into four categories that comprise of rate of building of a product, machine efficiency, costs of production material and the initial cost invested in machines for production (Janssen et al., 2014). The rate at which Boeing builds its plane increases when the use of additive technology is incorporated. The machine efficiency also increases since Boeing produces parts of a plane differently and combines them at a later stage. Besides, the cost of production reduces due to the reduction of the quantity of raw materials used. However, the initial cost of implementing the additive technology is high. The Boeing Company had to invest in different sections and harmonize the sections that increase the cost. Other expenses that accumulate in additive technology include the cost of energy used in the production process and continuous costs to operate the machines (Gibson et al., 2015). Another factor that increases the costs incurred in additive production approach is decentralization. Decentralization of operations reduces the cost of supplying finished products to consumers but increases the cost of transporting raw materials to industries (Shipp et al., 2011). Also, decentralization is also the main reason for the increase energy demand and consumption during production. Design The Boeing Company adopted the rapid manufacturing technique in the production of its planes. The Laminated Object manufacturing technology has been used in the Rapid manufacturing of planes. Advanced composite structures are used to develop various parts of a craft digitally using a computer-aided design (CAD). More investigation on the probable innovation of this technology is underway. Distribution One major aim of a supply chain manager is ensuring that produced commodities get to the consumer in good time, good state and good quality (Mashhadi et al., 2015). Therefore, a supply chain manager controls the distribution channels either by adding or by eliminating links between the producer and the consumer. For instance, direct sales are an approach that aims at eliminating multiple links between a manufacturer and a customer. Customers can contact the producer directly and make a purchase or forward complain. This type of supply chain management enables an organization to collect enough market information as well as enabling strategic planning. Boeing plane aerospace company manufactures most of the planes and sells them directly to customers. Most of the planes are produced by order from customers, for instance, the military helicopters manufactured with different specification. The methods, however, have several disadvantages regarding cost. A company that involves direct sales in its supply chain strategy has to incur the shipment cost of merchandise to the customer. The company may also risk invest in producing specifically demanded goods that may not find a position in the market (Mashhadi et al., 2015). Such conditions end up translating to losses for the company. The Boeing Company has to ensure that no special aircraft is overproduced as it may not satisfy all demands. The additive method can provide an important approach to distribution (Shipp et al., 2011). Decentralization of manufacturing firms enables merchandise to be produced next to the customer. Reducing the distance between the producer and consumer significantly reduces the cost of distribution of a product. However, a company that adopts such strategy has to incur the cost of shipping raw materials to its decentralized firms. Such costs may rise and lead to losses made by an organization. This is one major reason small firms have insufficient capacity to invest in additive production technology. The Boeing Company has enough financial ability to solve every individual customer’s need. The company can adjust the quality and specs of its products to meet the needs of different customers that include military specifications, passenger and cargo planes. Generally, technological advancement is useful in supply chain management and overall operation of an organization (Cheng and Choi, 2010). Technology in supply chain management reduces human errors in collection and analysis of data. Technology enhances transport communication between the producer and consumer and benefits supply chain managers. Technological advancement enhances efficiency in production that can significantly reduce the cost of production. New product and production processes emerge due to advancement in technology. For instance, additive production technology is an important technology in manufacturing of commodities (Gausemeir, 2013). The technology keeps on growing and eases the work of supply chain managers. The Boeing Company overlooks the high costs related production and invests more research to improve technology in additive manufacturing. Sourcing An effective supply chain management should ensure that sourcing of raw materials is reliable and constant (Mashhadi et al., 2015). Overreliance of one localized source for the provision of raw materials can be detrimental to an organization. Failure of such options can jeopardize the operation of a company. Also, the main resources provider can take advantage of the situation to dictate prices for the organization. A good sourcing approach should be global outsourcing and from different companies (Ross, 2010). However, companies must beware of the possible risk on inventory recycling due to large inventories that can result. The situation can be countered by having one major supplier of a resource and other smaller options that can act as security. Such a position ensures that an organization takes control of prices of commodities to be sourced. The Boeing Company can adopt such a strategy to outsource raw materials from various suppliers. Risk management Risk management is a practice that should be done to control and prevent failures in a supply chain management or additive technology (Gausemeir, 2013). Reducing supply disruption is one important risk management in the supply chain management. A useful methodology of controlling supply disruption is through global outsourcing and working with several suppliers in the market (Mashhadi et al., 2015). This strategy aims at diversifying the approach of dealing with major suppliers and gaining flexibility. Technically, an organization reduces overreliance on a single local company to provide resources. However, the effectiveness of the method depends on the size inventory turnover of an organization. The approach is advantageous for organizations with larger inventory turnovers than those organizations with small inventory turnover. This approach gives a company the position and ability to determine the market price of a resource for to the benefit of a company. Managing the integrity of an organization’s information is another risk management approach. The integrity of an organization is within the data used to generate information. Standardizing this data is an important step that ensures useful and dependable information is generated. Standardization ensures a streamline and consistent nature of the flow of information within the supply chain. Also, the method reduces the ambiguity of information generated from an organization’s data. Incorporation of new technology is useful in deleting the manual approaches involved in supply chains. Manual approaches can be prone to error that can jeopardize the position of a company. An example of a new technology is the radio frequency identification tags (RFID). A large company like Boeing can invest in quality software that will ensure integrity in managing the company’s data. The company is able to computerize its system to minimize human errors. 3. Conclusion Supply chain management is an important tool in ensuring a company prospers in business through controlling all organization’s processes. Technology is also another important tool that can be adopted by an organization to ensure sustainability. Technology has the characteristics of evolving and developing over time. Additive manufacturing technology has been identified as one important technology that can ensure efficiency and flexibility of a company’s operation. The Boeing aerospace company has adopted the additive manufacturing technology in manufacturing of different kinds of planes. The company is able to produce different types of airplanes with varying specs. Two tools can be used together to ensure the long-term sustainability of an organization in business. An organization can invest in long-term technology that will ease the duty of supply chain management. Despite the many advantages, supply chain management and additive technology have several challenges. The challenges cannot be a limiting factor of adopting supply chain management and additive technology in an organization. Several recommendations can be useful in overcoming the challenges. The company has to ensure that it understands the entire concept of additive technology. Enough research has to be conducted to understand how the technology can fit in the organization. The supply chain management on the other hand must have enough information on the dynamism of the market composition. Such data will provide useful information as to whether the additive technology will count benefit the organization or lead to losses. After adoption of an additive manufacturing technology, continuous improvement on the system should be done to ensure that processes are not compromised. The supply chain management has also to improve communication to its customers for quality management control.References References Cheng T.C & Choi T, 2010, Innovative Quick Response Programs in Logistics and Supply Chain Management, New York City: Springer Science & Business Media. Cottrill K, 2011, Transforming the Future of Supply Chains through Disruptive Innovation Additive Manufacturing. MIT CTL White Paper. Retrieved on November 5th, 2015 from http://www.misi.edu.my/student/spv1/assets/Disruptive_Innovations4_1.pdf Gausemeir J, 2013, Thinking Ahead the Future of Additive Manufacturing – Exploring the Research Landscape. Direct Manufacturing Research Center. Retrieved on November 5th, 2015 from https://dmrc.uni-paderborn.de/fileadmin/dmrc/Download/data/DMRC_Studien/DMRC_Study_Strategy.pdf Gibson I, Rosen R & Stucker B, 2014, Additive Manufacturing Technologies: 3D Printing, Rapid Prototyping, and Direct Digital Manufacturing, New York City: Springer. Janssen R, Blankers I, Moolenburgh E & Posthumus, 2014, TNO: The Impact of 3-D on Supply Chain Management. TNO White Paper. Retrieved on November 5th, 2015 from http://3din.nl/wp-content/uploads/2014/02/TNO-Whitepaper-3-D-Printing-and-Supply- Chain-Management-April-2014-web.pdf Mashhadi A.R, Esmaeilian B, Behdad S, 2015, Impact of Additive Manufacturing Adoption on Future of Supply Chains. Proceedings of the ASME 2015 International Manufacturing Science and Engineering Conference. Retrieved on November 5th, 2015 from http://getcot.eng.buffalo.edu/wp-content/uploads/2014/03/Impact-of-Additive-Manufacturing-Adoption-on-Future-of-Supply-Chains.pdf Ross D.F, 2010, Introduction to Supply Chain Management Technologies, Second Edition, London: CRC press. Shipp S, Gupta N, Lal B, Scott J.A, Weber C.L, Finnin M.S, Blake M, Newsome S, Thomas S, 2011, Emerging Global Trends in Advanced Manufacturing, institute for Defense Analyse SIDA P-4603. Retrieved on November 5th, 2015 from https://www.wilsoncenter.org/sites/default/files/Emerging_Global_Trends_in_Advanced_Manufacturing.pdf The Executive Office of the President and the U.S. Department of Commerce, 2015, Supply Chain Innovation: Strengthening America’s Small Manufacturers, Retrieved on November 5th, 2015 from http://www.esa.doc.gov/sites/default/files/supply_chain_innovation_report.pdf Read More