Smart Products Require a Sophisticated Supply Chain

The first paragraph of my colleague Dick Slansky’s recent Strategic Report on Smart Products’ Supply Chain Challenges (available to ARC clients only) caught my attention.

Increasingly, today’s consumers are being exposed to an environment of intelligent products –from toasters to automobiles. The level of intelligence embedded in everything from our cars, to our homes, communication devices, consumer electronics, and even mundane items as our toasters and toothbrushes, increases every day. In the very near future, not only will humans interact with a rapidly growing array of smart products, but many of these products will interact autonomously with each other and other systems to monitor and control power usage for smart grids, automatically make our dentist appointments, monitor, diagnose, and schedule services for our vehicles, and lots more.

Adrian and I have written a fair amount in Logistics Viewpoints about smart technologies, such as smart phones, mobile technologies, GPS and location tracking, RFID, real time sensors, and cool new visualization technologies. All of these technologies can be, or will be, used to change the face of logistics as we know it. In other words, our focus has mostly been on how smart technologies and products can be used in the supply chain.

But smart products have their own supply chain, and as Dick makes clear in his report, it is a challenging supply chain, particularly form a product design and manufacturing perspective. These complex, mechatronic products require the integration of mechanical, electrical, and software engineering disciplines. Electronics, aerospace and avionics, and automotive manufacturers at least understand that there are sophisticated, multi-engineering development requirements in creating these embedded systems, even if they have not yet mastered a systems approach to product design. Consumer goods companies, however, have not even begun this journey.

A key concept of supply chain management is that work should not be done in silos, that it is necessary to understand upstream and downstream requirements if you want to build an efficient, flexible, and effective supply chain.

Building smart products efficiently requires integrating different design specializations (mechanical, electrical and electronic, and software), sourcing, and validating that the products can be built effectively by an assembly line. Traditionally, when developing embedded software, “engineers addressed software validation at a late stage in the development process, only testing through emulation on hardware prototypes. Compensating for constraints and errors found in hardware or software at this late stage creates costly delays in the overall development process.” It is time consuming to trace errors back to their root cause. Sometimes in tracing root cause problems engineers discover that they need to largely start over with a fundamental redesign.

Dick’s report goes on to explain what is new in systems engineering, concurrent design, and Product Lifecycle Management (PLM) tools. PLM software has become collaborative and multidisciplinary, capable of creating digital models that companies can reuse across the engineering and manufacturing validation domains, and capable of complex product data management.

Many consumer goods are commodities, which makes having cost effective manufacturing and logistics processes key success factors. But with smart products, value migrates upstream to product design and manufacturing validation. Consumer Goods companies will need to learn a new set of skills to compete in the brave new world of smart products.

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