Sunday, November 16, 2014

Disruptive Technology: Creating Beneficial Shifts in the Supply-Chain Model

“Disruptive”, what’s that all about?

For many the word disruptive evokes thoughts of chaos. However, disruptive technology offers much more light to the manufacturing process. The most significant contribution of disruptive technology is the mass customization of products and services.

The title of disruptive is given to specific forms of technology due to their ability to shift the current supply chain model. For example, 3-D printing eliminates wait time for prototyping, which allows companies to replace their traditional suppliers of specific parts.[1] 

For companies, the main goals are to locate manufacturing and innovation as close to demand as possible to easier identify and meet local needs.Utilizing disruptive technology allows companies to come closer to these goals.

For customers, these forms of technology allow consumers to be “marketers and cocreators” allowing for the ultimate level of customization.

How do we get there: McKinsey Advice

In February 2014, McKinsey published, How technology can drive the next wave of mass customization, detailing the requirements necessary to generate profit when customizing products.

“The first step is to identify opportunities for customization that create value for the customer and are supported by smooth, swift, and inexpensive transactions for both consumers and producers. The second is achieving a manageable cost structure and cost level for the producer even as manufacturing complexity increases.”[2]

To expand on the first step, McKinsey details how to customize a product. It must be known what components customers want to configure, which options to offer, and how to price each option. Companies can find out customer wants through various applications, such as: crowdsourcing and virtual product creation websites.

Sounds great! But why can this happen now?

McKinsey suggests that the time for profitable mass customization may have finally arrived. Additionally, the generations that have grown up with the Internet are more likely to demand personalized products.

What does disruptive technology actually look like?

Disruptive technology includes (images provided below):
3-D scanning
3-D modeling 
Online interactive product configurations
Social Technologies
Recommendation Engines
Smart algorithms

Why should I care?
3-D digital modeling can allow you, the customer, to receive an actual prototype of your customized product in a shorter amount of time than previously experienced. In turn, this will allow companies to test multiple configurations reducing product-launch risk.[3] Recommendation engines reduce the usual risk of purchasing products that a customer has never tried before by suggesting popular options.

These forms of technologies provide more pathways for the creation of startups and small businesses. Companies can gain free marketing from social media and create a more engaging customer experience through product configuration sites. 3-D printing allows for companies to change their sourcing strategies by potentially manufacturing specific parts of products in-house. 

 I believe that disruptive technologies have the ability to increase customer enjoyment and to allow smaller businesses to enter the market. However, I must ask does the advancement of mass customization disrupt or challenge our understanding of the risks created by variability in product manufacturing?

 In this blog I have only scratched the surface of disruptive technology. For more information read:

3-D scanning

                                                             Recommendation Engines
Online interactive product configurations
Social Technologies

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