Fall 2017 Off the Shelf - Micromanufacturing and ‘The Third Wave’ — a transition into the information revolution

Micromanufacturing and ‘The Third Wave’ — a transition into the information revolution

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by Chris Beeson
Executive Vice President,
Sales & Supplier Management Digi-Key Electronics

Chris L. Beeson, executive vice president of sales and supplier management at Digi-Key Electronics, has been driving global business innovations at Digi-Key for more than 12 years and has been instrumental in creating the company’s unique business model for the electronics industry. Beeson has more than 30 years of experience in the electronics distribution industry and is currently responsible for global sales and the management of more than 650 industry suppliers.Chris is a member of the Electronics Representatives Association (ERA) Executive Committee and is involved in many industry organizations, including the Electronics Component Industry Association (ECIA) and numerous supplier representative councils.

You can reach Chris Beeson at chris.beeson@digikey.com.

In the current age of the customer, empowered consumers demand a new level of instant gratification and flexibility. The customer demand is more interested in niche, specialized products than ones that are uniform and mass produced.

In business today we are currently undergoing a revolutionary shift, often referred to as “The Third Wave” or information revolution. During this transformation away from the industrial revolution, we will see less capital and labor and more knowledge and information. The ages of manufacturing and distribution have given way to the ages of information and the customer. Most importantly, the idea of mass production, made popular by Henry Ford, is being replaced by a new form of production called, “micromanufacturing.”

Mass production in the industrial age allowed companies to make products for scale, capacity and at low cost. In many cases, however, they had to sacrifice choice, flexibility, nimbleness and uniqueness. Micromanufacturing, a phenomenon historically and generically referred to as “high mix/low volume,” allows for mass customization and gives manufacturers the ability to cost effectively produce products in smaller lot sizes. In the current age of the customer, empowered consumers demand a new level of instant gratification and flexibility. The customer demand is more interested in niche, specialized products than ones that are uniform and mass-produced.

Real-life examples of this phenomenon can be seen through traditional mass-production companies such as Harley-Davidson, Nike and Dell. These companies have migrated and pioneered lean manufacturing techniques to offer customized products to the masses. In contrast, however, perhaps the best example of micromanufacturing can be seen in the rapidly growing popularity of microbreweries across the U.S. Consumers now prefer small batch, individually brewed beers in craft breweries over the mass-produced beers brewed by large breweries and beer distributors.

The electronic components industry has already begun to embrace the revolutionary shift by catering to a new subset of engineers, commonly referred to as “makers,” a tech-influenced DIY community. The combination of creative makers and innovative technologies, such as the Arduino microcontroller and personal 3D printing, are driving innovation in small-scale manufacturing, engineering, industrial design, hardware technology and education.

The demand for personalized, complete solutions, such as development kits and boards, is giving a rise in popularity to maker-friendly brands such as Arduino, Raspberry Pi, Adafruit and more.

The higher functionality contained on standard development boards is allowing for a new generation of makers, and the advancement in both robotics and lean manufacturing is allowing for cost-effective personalization of product at smaller lot sizes. Lean manufacturing is being supported by the advancements in the Internet of Things (IoT) and connected or smart factories. It is becoming easier than ever to have machine-to-machine (M2M) connectivity controlling all aspects of manufacturing and distribution processes. Traditional manufacturers are witnessing this movement and are adopting business practices which incorporate micromanufacturing.

To support the personalization trend, customers want access to a wide breadth of product to support bills of material that are changing daily, ship from stock capability, and which contain broken pack quantities to allow them to build to order without experiencing supply chain delays or a buildup of excess inventory on their end.

As a result, customers need efficient access to partner information in addition to price and availability. Thus, the current movement of companies is toward a digital supply chain solution, or application program interfaces, commonly known as APIs. With this technology, a customer’s software can retrieve real-time data, such as stock and pricing information. This real-time data help customers make a decision comparing their needs with a supplier’s ability to satisfy them. Speed and instant access to rich information flow have been the defining characteristics of the information and customers ages.

The Third Wave is evident by the growing customer demand within the electronic components industry. As Chris Anderson highlights in his book, “The Long Tail: Why the Future of Business is Selling Less of More,” we have clearly moved away from the industrial age in which scale lowered the cost point to make product available to the masses to the point that consumers want personalization. Supporting small-lot runs takes a different type of business model that allows supply chain partners to add value; cost is always a consideration, but the primary differentiation in this segment is speed and quality. This need for speed will continue to force a higher integration through M2M communication through APIs and other medium to connect distributors with their customers.


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