This document discusses how new technologies like 3D printing, robotics, and digitization will disrupt electronics design and manufacturing through the emergence of a "software defined supply chain". It provides examples of how these technologies could lower costs, reduce minimum production scales, and in some cases lower environmental impact. While the effects will vary by industry, companies should prepare for more localized, flexible, and software-driven supply chains. The full report from IBM will be available in July 2013 with more details on how different products and industries may be impacted.

1. © 2012 IBM Corporation
The New Software Defined Supply Chain:
Preparing for the disruptive transformation of Electronics design and manufacturing
The IBM Institute for Business Value
Paul Brody
Global Business Services
Vice President and
Global Electronics Industry Lead
Veena Pureswaran
Institute for Business Value
Global Electronics Industry Lead

2. © 2013 IBM Corporation2
People can have the Model T in any
color – so long as it’s black.
HENRY FORD

3. © 2013 IBM Corporation3
0
100,000
200,000
300,000
400,000
1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914
Ford Automotive Output, 1901-1914
Shift to moving
production line
$5 Daily Wage Introduced
Assembly time down to 1.5 hours
Model T Introduction
Assembly Time Per Car: 14 Hours

4. © 2013 IBM Corporation4
875,000
1,750,000
2,625,000
3,500,000
1901 1903 1905 1907 1909 1911 1913 1915 1917 1919 1921 1923 1925 1927 1929
Ford Automotive Output, 1901-1924

5. © 2013 IBM Corporation5
STANDARDIZATION
0
1,000,000
2,000,000
3,000,000
4,000,000
1901 1907 1913 1919 1925
D I G I T I Z A T I O NMODULARIZATION
TRADITIONAL ASSEMBL
MODULAR ASSEMBLY
0
300
600
900
TOTAL
COST $
NUMBER
OF PARTS
ASSEMBLY
TIME (MIN)
MASS
(KG)
800
686
104
1
63 56 22 3

6. © 2013 IBM Corporation6
PARTSCUSTOM STANDARD
COMPONENTS MODULESASSEMBLY
MECHANICAL DIGITALCONTROLS
3 KEY RULES
OF PRODUCT DESIGN

7. © 2013 IBM Corporation7
3 CHARACTERISTICS
OF INDUSTRY STRUCTURE & TRADE
Economies of Scale BIG
Multi-Tier Supply Chains COMPLEX
Low Cost Supply Chains GLOBAL

8. © 2013 IBM Corporation8

9. © 2013 IBM Corporation9
3 NEW
TECHNOLOGIES
3 D P R I N T I N G O P E N S O U R C EINTELLIGENT ROBOTICS

10. © 2013 IBM Corporation10
STANDARDIZATION
3D PRINTING
NO ECONOMIES
OF SCALE
ON DEMAND
MANUFACTURING
LOCATION
ELASTIC $0
$0.08
$0.15
$0.23
$0.30
2013 2018 2023
COST PER UNIT VOLUME PRINTED
$/CUBIC CM - BLENDED AVERAGE
-79%
-92%

11. © 2013 IBM Corporation11
MODULARIZATION
ROBOTICS
HARD
AUTOMATION
FLEXIBLE
ROBOTICS
INTELLIGENT
ROBOTICS
$0
$75,000.00
$150,000.00
$225,000.00
$300,000.00
2005 2012
TYPICAL COST PER ROBOTIC
ASSEMBLY STATION
-90%

12. © 2013 IBM Corporation12
DIGITIZATION
INTELLIGENCE
MOORE’S
LAW
OPEN
SOURCE
0
7,500
15,000
22,500
30,000
11/1/08 4/1/09 9/1/09 2/1/10 7/1/10 12/1/10 5/1/11 10/1/11 3/1/12 8/1/12
OPEN SOURCE HARDWARE
DESIGNS ON THINGIVERSE

13. © 2013 IBM Corporation13
HARDWARE CONSTRAINED
BUILD A
MOLD OR
CAST
HARDWIRE
PRODUCTION
LINE
DEVELOP
EMBEDDED
CHIP
SOFTWARE DEFINED
PRINT PARTS
DIRECTLY BY
SOFTWARE
RECONFIGURE
ASSEMBLY THROUGH
SOFTWARE
DIGITAL CONTROLS
USING SOFTWARE

14. © 2013 IBM Corporation14
SOFTWARE DEFINED
SUPPLY CHAIN

15. © 2013 IBM Corporation15
WHEN

16. © 2013 IBM Corporation16
Will be most
affected by
these
technologies?
Strategies
should you
adopt to be
competitive?
Are the best
locations to
invest going
forward?
Will these
technologies
impact
investment
decisions?
Do I need to re-
engineer my
end-to-end
business
processes?
▶ WHO ▶ WHAT ▶ WHERE ▶ WHEN ▶ WHY

17. © 2013 IBM Corporation17
4 DIFFERENT PRODUCTS COST
VOLUME
SIZE
COMPLEXITY
PERSONALIZATION
WASHING
MACHINE
INDUSTRIAL
DISPLAY
MOBILE
PHONE
HEARING
AID

18. © 2013 IBM Corporation18
5 GLOBAL LEADERS
IBM RESEARCH
John Cohn
PLANT LOCATION
INTERNATIONAL
David Zaharachuk
Phil Reeves Leo Bonnanni
Mike Watson Alex Scott

19. EACH PRODUCT INDIVIDUALLY
TORN DOWN

20. EACH PRODUCT INDIVIDUALLY
TORN DOWN

21. EACH PRODUCT INDIVIDUALLY
TORN DOWN

22. EACH PRODUCT INDIVIDUALLY
TORN DOWN

23. EACH PRODUCT INDIVIDUALLY
TORN DOWN

24. EACH PRODUCT INDIVIDUALLY
TORN DOWN

25. © 2013 IBM Corporation25
1 INTEGRATED MODEL
PLANT LOCATION
INTERNATIONAL

26. © 2013 IBM Corporation26
3 AMAZING RESULTS
COST
SCALE
CO2 IMPACT

27. © 2013 IBM Corporation27
LOWER COST
0
25
50
75
100
2012 Traditional 2012 Digital 2017 Digital 2022 Digital
66
91
100100
83
91
100100 9899100100
31
8889
100
23%
CHEAPER
AGGREGATE NORMALIZED UNIT COST

28. © 2013 IBM Corporation28
LOWER SCALE
90%
LESS VOLUME
REQUIRED
0
25
50
75
100
2012 Traditional 2017 Digital 2022 Digital
17
25
100
3
29
100
17
24
100
2
24
100
AGGREGATE NORMALIZED
MINIMUM ECONOMIC SCALE

29. © 2013 IBM Corporation29
NOT NECESSARILY GREENER
0
30
60
90
120
2012 Traditional 2017 Digital 2022 Digital
109
120
100 101100100
92
99100
33
89
100
AGGREGATE NORMALIZED
CO2 ANALYSIS
9%
HIGHER
67%
LOWER

30. © 2013 IBM Corporation30
BIG
COMPLEX
GLOBAL
SMALL
SIMPLE
LOCAL

31. © 2013 IBM Corporation31
HEARING AID CASE
CHEAPER
$0
$125
$250
$375
$500
2012 BASELINE 2012 DIGITAL 2017 DIGITAL 2022 DIGITAL
$132
$370$375
$425

32. © 2013 IBM Corporation32
HEARING AID CASE
GREENER
0
25
50
75
100
2012 BASELINE 2012 DIGITAL 2017 DIGITAL 2022 DIGITAL
33
88
100100

33. © 2013 IBM Corporation33
HEARING AID CASE
LOCAL
Traditional Supply Chain Model

34. Software Defined Supply Chain - 2012
© 2013 IBM Corporation34
HEARING AID CASE
LOCAL

35. Software Defined Supply Chain - 2017
© 2013 IBM Corporation35
HEARING AID CASE
LOCAL

36. Software Defined Supply Chain - 2022
© 2013 IBM Corporation36
HEARING AID CASE
LOCAL

37. © 2013 IBM Corporation37
RECOMMENDATIONS
FOR INDUSTRY
IMPLICATIONS
Product design and retailing will be influenced
greatly by interactions with customers
Competitive dynamics of the industry
will change radically
Supply Chains will become more simple,
flexible and localized
Change how you design and
sell products1
Prepare for the new competitive
landscape2
Build extraordinary flexibility into
your supply chain structure3
RECOMMENDATIONS

38. © 2013 IBM Corporation38
FULL REPORT AND MODEL
AVAILABLE IN JULY 2013
IBM Institute for Business Value
ibm.com/business/value/software-defined-supply-chain
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