Adding Links to the Chain
The concept of location-specific manufacturing was first called into question five years ago in Fukushima, Japan. Like China, Japan has long been considered a central hub of industrial manufacturing. Prior to 2011, 60% of the word’s auto parts, 22% of the world’s 300 mm silicon wafer supply (a component of many electronic devices), and many other critical consumer product components were manufactured in Fukushima prefecture, according to Harvard Business School.
But in March 2011, a tsunami hit Fukushima, setting off three nuclear meltdowns in the Fukushima Daiichi nuclear plant and releasing radioactive material into the surrounding area. With these manufacturing centers rendered inoperable, delays, shortages, and price fluctuations sent the global supply chain into temporary chaos.
As a result, suppliers have since realized that they need to remove critical dependencies from the supply chain by centralizing core manufacturing processes; many are pointing to 3D printing technology as a means to this end. As IndustryWeek observes, 3D printers -- which use additive manufacturing techniques to construct physical objects layer by layer from computer models -- provide enormous flexibility, creating many unique components that would previously have required a host of individual machines to produce.
Even better, they can bring the manufacturing processes closer to the consumer, cutting down on both delays and shipment costs. In fact, UPS, SAP, and Fast Radius recently joined forces to provide an on-demand 3D printing service, whereby industrial customers can order customized parts to be printed and shipped from any number of Fast Radius locations.
While 3D printing could shorten the supply chain by facilitating manufacturing processes independent of a fixed plant location, some companies want to break new ground altogether. One Chinese businessman, Wang Jing, has ambitious plans to build a canal in Nicaragua, thereby gaining exclusive access to an entirely new supply chain channel. According to Fortune, the proposed 172-mile, $50 billion canal would be one of the largest infrastructural projects in human history, at nearly quadruple the size of its Panamanian neighbor.
Although plans have stalled and Mr. Wang’s fortune may in fact be drying up, this particular case is representative of a growing trend of supply-side operators pushing to expand their role in the global supply chain.