Creating an effective sourcing and supply chain decision tool

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Credit: Kelly Davidson

 

Formlabs democratizes the printing process: The Somerville company designs and produces high-quality, affordable 3D printers using ultra-precise stereolithography technology. They also create their own software, post-processing solutions, and consumables (such as printer resins) to enable customers to create high-quality 3D-printed parts. MIT Media Lab students David Cranor, Natan Linder, and Maxim Lobovsky founded the company in 2011.

From maximum precision to clear decisions

A decade into launch, the organization needed a structured process by which to evaluate supply chain and sourcing decisions — so it made perfect sense to bring in current MIT Leaders for Global Operations (LGO) students for help. As part of their Operations Lab (Ops-Lab) project, Zoe Hinton, Jennifer Pandolf, and Lisa Schleuter worked with the company to devise a decision-making method.

Hinton, a mechanical engineer, applied to the LGO program to sharpen her leadership skills. Schleuter, a structural engineer and production engineering manager, wanted to hone her technical and business skills to lead larger teams. Pandolf is a control systems engineer who worked on engineering design for Rolls Royce and appreciates efficiency in all its forms.

All three were drawn to the Formlabs project because of the nascent company’s flexibility, open-mindedness, and entrepreneurial mindset. Here, they could truly make an impact by devising a new process from scratch with a willing audience who trusted MIT’s guidance.

“There wasn’t yet a robust process in place for making the decisions in this part of the supply chain, and that was really intriguing to me — to apply the things we had learned in our classes, but also because I think setting up a process of any type is pretty challenging. Getting to see how that works at a company of this size, at this point in their growth trajectory, was really appealing,” Schleuter, LGO ‘23 says.

A mutually beneficial pairing

The pairing was perfect: Ops-Lab, one of MIT Sloan’s many Action Learning labs, is devoted to operations problem solving. This lab gives students the chance to tackle projects that leverage LGO engineering and management skills with a small team of peers and guidance from industry mentors.

In this case, mentor and engineering management executive Dawn Fitzgerald, chair of the advisory board for MIT Machine Intelligence for Manufacturing and Operations and an LGO graduate, oversaw the project. Fitzgerald is moved by the symbiotic relationship between organization and student, so distinct to Action Learning.

“Action Learning labs have the opportunity to bring problems forward for a fresh set of eyes [and] brilliant minds … The discovery is very powerful for the organization that’s bringing the team in, and the discovery is very powerful for the students participating in it. I’ve used the things that are being taught in Ops-Lab on a daily basis. This is not stuff that you learn once and put on the shelf. I believe in its impact,” she says.

LGOs helping LGOs

“Working with LGO alums ended up giving us a lot of freedom and independence,” says Hinton, LGO ’23. “It was very exciting: Formlabs put a lot of trust in us to give our true opinions based on what we’ve learned through our coursework at MIT. They weren’t swayed by what they already believed they should be doing as a company.”

The team determined that criteria for deciding between a traditional “Contract Manufacturing Purchase” and a “Contract Manufacturer with Consigned Inventory” option was essential for Formlabs to protect its product quality, delivery, and improve their supply chain cost structure moving forward. They eventually landed on criteria that included lead time, complexity of the part, risk of rework, and set-up time or production hardening with suppliers.

The team’s problem-solving approach was based on ‘DMAIC’ methodology (Define, Measure, Analyze, Improve, Control). As part of the project research phase, they conducted one-on-one stakeholder interviews to understand the key considerations for sourcing decisions. They determined that sourcing decisions should be based on three pillars: strategy, economic factors, and risk. Happily, because the company is local and MIT-focused, the team was able to meet in person and develop a rapport, eventually conducting workshop sessions with stakeholders to test out the tool.

“Hosting the Ops-Lab team was an opportunity to achieve one of our strategic goals in a timely manner, allowing my team to focus on other priorities. Having taken the class before, I had high expectations of the students, and they delivered,” says Ammar Asfour, LGO ’15 and head of supply chain operations and fulfillment at Formlabs.

The LGO team was eager to help the company speed up and focus their decision-making discussions. But it was a slightly amorphous task, and so the group pressed Formlabs to tighten the focus and define the problem. This realization was a learning experience on its own.

“We were given a pretty broad explanation of what they wanted from us. Over the first few weeks, we realized as a team that maybe they weren’t asking the right question. And so it was really the skill to learn to ask what the company really wanted and be able to define the problem really well, that ultimately set us up for success. If you don’t have a good problem, it’s going to be hard to give a good solution,” Hinton says.

“We were able to help them think through their problems, rather than just giving them the answer,” says Pandolf, LGO ’23, linking work experience to classroom learning throughout.

For instance, “I was in an operation strategy class where we talked through supply chain’s strategic frameworks. This includes thinking through your suppliers’ motives, what type of environment like they’re in from an industry perspective, and how it relates to their goals and objectives as a company. I probably wouldn’t have thought that initially about the class until I’d actually taken an Action Learning lab,” she says.

A simple but elegant solution

The Ops-Lab team ultimately presented Formlabs with a tool that provides a standard evaluation process for supply chain decisions, grounding communication between diverse stakeholders and decision makers. Using a step-by-step questionnaire, it creates a chart with sourcing solution recommendations.

“Sometimes, going too far into the weeds isn’t the right approach. You just need to take a step back and keep it simple, and that’s all that’s needed,” says Hinton. “I think we were all surprised by how simple our solution ended up being.”

Simple, but effective.

“We needed a tool that allows us to assess the best strategy of sourcing certain parts given their attributes. This was one of those ideas that seemed simple at face value, but we knew it would grow in complexity the more we worked on it,” Asfour says.

And, indeed, Formlabs is using it now as they expand internationally.

“Our team in China is revamping our sourcing strategy and locking in suppliers for new products. We were actually talking about some of the recommendations that came out of the tool today.”