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Utilizing virtual reality to drive supply chain innovation A series exploring Industry 4.0 technologies and their potential impact for enabling digital supply networks in manufacturing.
Utilizing virtual reality to drive supply chain innovation Contents What is virtual reality? 4 Benefits of virtual reality in the supply chain 6 Criteria for evaluation and adoption 8 ''Applications" vs. "levers'' 10 Getting started with VR technology 11 Key Deloitte contacts in virtual reality and supply chain management 12 02
Utilizing virtual reality to drive supply chain innovation
Do you need virtual reality in your supply chain?
Virtual reality can improve supply chain operations in
four main areas: product and process design,
data and process visualization, employee collaboration,
and experience-based learning.
Of interest because: Companies with complex
product development processes and a need for global
collaboration are starting to pilot the technology.
Hardware and software capabilities have improved
greatly over the last few years, leading to easier adoption.
Could improve your supply chain by: Increasing
design productivity; increasing proficiency; improving
data visualization and supply chain planning; expanding
workforce collaboration.
Why not? VR technology is still rapidly evolving
and has not reached operational maturity or seen
implementation at enterprise scale. Companies can
face difficult development and adoption hurdles.
Deloitte recommends: Begin with small pilots to test
and validate applications that could have immediate
benefit and scalability.
03Utilizing virtual reality to drive supply chain innovation
What is virtual
reality?
Overview The advancement of mobile computing
Virtual reality (VR) is an artificial, power is eliminating the need to connect the
computer-generated, three-dimensional headset to a centralized, powerful computer
environment that a user can experience unit, making the application more mobile
through sensory stimuli.1 The user is able to and affordable. Newer features also include
interact with the environment in a seemingly “inside-out tracking” technology, which
real or physical way through specialized tracks the position of objects through a
electronic equipment, including goggles, camera inside the VR headset. Barriers to
simple head-mounted displays, and 3-D mainstream adoption remain in the areas of
images. The most cited use cases today are computational power, pricing, security, and
entertainment and gaming, but there are user perception. Today’s hardware, however,
also significant enterprise applications. has already solved some of the fundamental
From an enterprise perspective, VR is problems that plagued earlier generations
being leveraged for product and process of VR: the Oculus Rift, for instance, offers 1.3
design, virtual collaboration, and million times the computing power at one-
experience-based learning. fiftieth the cost. In addition, it combines this
performance with less than 20 milliseconds’
Recent developments and outlook
latency, which is critical to mitigating
Virtual reality (VR) technology has evolved
nausea effects.3
tremendously since its inception in the
Many large companies are pouring
late 1950s.2 The last five years, in particular,
money into both hardware and software
have seen an incredible uptick in both
development, and it is only a matter of time
capabilities and use of VR devices; they
before more barriers continue to fall and
have shifted from niche devices primarily
the full enterprise capabilities are realized.
for hard-core gamers to devices with more
Traditional PCs and smartphones will
widespread adoption and applications for
continue to provide competition as they take
both consumers and enterprises. Forrester
on increased capabilities around augmented
predicts that the adoption of mid- to high-
and mixed reality. However, as VR
end VR headsets will be 52.3 million by 2020,
applications continue to expand and prices
increasing substantially from today’s market
continuously decrease, the VR market alone
of approximately 11 million.3
could reach up to $48.5 billion by 2025.4
4Utilizing virtual reality to drive supply chain innovation
Virtual reality in the supply chain within the virtual environment can give Overview
Deloitte predicts that VR has the greatest better insight on how to optimize the
potential to impact supply chains in four factory line. Leveraging 3D capabilities for Value •• Increased productivity and
areas: product and process design, data visualizing complex data sets in new ways drivers efficiency
and process visualization, employee will have an impact on supply chain planning •• Improved data visualization
collaboration, and experience-based functions, as companies will use novel tools •• Enhanced product and
learning. Global teams can streamline to process customer data. Finally, immersive process design
process and product design through virtual environments are providing a useful •• Ability to separate presence
immersive VR applications by collaborating tool throughout operations for coaching from physical location
simultaneously, irrespective of physical decision-making best practices and learning •• Greater employee
location. Using VR to design a factory line, procedures through low-risk trial and error. collaboration and
for instance, engineers can both collaborate Research has already shown that learning communication
on design and learn how to operate in with the help of VR technology can increase •• Improved employee training
the new environment. At the same time, information retaining rates.5 effectiveness
studying how workers and robots interact Scope Enhance design and
communication across the
supply chain
Technology Smartphones, tablets,
substitutes PCs, augmented/mixed
reality devices
Five key developments in virtual reality
Improvements in hardware and electronics performance
Reduced equipment costs (hardware and software)
Parallel advancements in augmented and mixed reality devices
Development of “inside-out” tracking systems
Digitization of development
5Utilizing virtual reality to drive supply chain innovation
Benefits of virtual reality
in the supply chain
Virtual reality value drivers Value drivers for virtual reality In addition, a second truly unique attribute
Primary potential benefits is the ability to separate presence from
Virtual reality has evolved significantly in the
physical location. Utilizing VR’s audio and
last five years due to technology innovations
video capabilities with different field of view
such as the development of low-cost, high-
points, workers can collaborate with other
quality mobile components and electronics,
Reduce product and colleagues around a shared visualization or
improvements in frame-rates, and the
process design time interact through virtual avatars. Access to a
ability to synchronize the human processing
platform is achieved in various parts of the
system with the virtual one. Given these
world instantly, leading to enhanced virtual
significant improvements, supply chain
Visualize complex collaboration through real-time simulations
organizations should move to test the
enterprise data and immersive “games.” These interactions
applicability of VR in specific areas. Deloitte
not only drive down costs, but also give
believes that the successful adoption of
manufacturers and suppliers further insight
VR in the supply chain depends on the
Reduce risk of earlier in product and process development,
alignment of technology value drivers with
operational hazards especially important across distributed
a company’s use cases, operational needs,
supply networks. The efficiency gains across
and organizational readiness, not just a
the supply chain are evident.
broad-based approach built on the current
Enhance workforce
popularity of the topic.
collaboration
A primary value driver for organizations
is VR’s interactive visualization capability. Secondary potential benefits
Companies are starting to leverage the
Increase employee •• Encourage unique problem-solving
technology within their design organizations
training effectiveness perspectives with improved
to enhance CAD functionality and engineer
employee engagement. The VR-enhanced visualization
designs allow for visualization capabilities
•• Reduce company travel expenses
previously unavailable; this allows product
through increasingly engaging
engineers, architects, and designers to
virtual meetings
rapidly shift through multiple designs and
evaluate them on the spot. Automotive •• Collect better customer data to
OEMs and large construction firms are improve responsiveness of the
partnering with design software companies supply chain
and VR hardware manufacturers to create
these immersive experiences. Creating •• Improve employee engagement
virtual prototypes is delaying—and in through new, immersive technology
some cases, minimizing—the need for
•• Improve product quality through
physical prototyping and costly early-stage
improved early-stage designs
experimentation, ultimately reducing costs
for these organizations.
6Utilizing virtual reality to drive supply chain innovation
The data capture and visualization
capabilities of VR are transforming the Case study
supply chain from product development all A large logistics organization was looking •• The globalized, remote training
the way to the end customer. Leveraging to reduce logistical and operational offered by the simulator standardizes
interactive 3D data visualization not possible costs (travel, housing, lost time, etc.) knowledge across geographic
on 2D screens will assist with complex associated with a centralized learning locations, allowing the company to
decision making and help companies see facility where employees are sent to repair and troubleshoot around the
the interdependencies and impact of certain train on equipment maintenance, repair, clock without the need of an expert in
decisions on operations. Using VR devices to and troubleshooting. a specific geographic location
facilitate analysis and rapid decision making
They invested in developing a highly •• The increased traceability of the
will address serious pain points within and
immersive 3D equipment simulator, VR solution creates a data platform
across organizations.
which provides learners with a flexible on which analytics can be used
Finally, VR’s ability to create high-fidelity training platform emphasizing just-in- to improve personalization and
virtual environments will have a great impact time training and performance support. effectiveness
on human resources within supply chain The simulator also provides a consistent
organizations. Many industries, including •• With the success of the solution,
and trackable learning solution that can
industrial products and services, energy, the organization is considering
be accessed anywhere and anytime by
and manufacturing, have difficulty preparing expanding into serious games and
equipment maintenance workers.
employees for high-risk environments. augmented reality
Observed benefits in the supply chain:
VR can help employees quickly make the
best decisions possible in safety-critical •• The company is incorporating the VR
environments: developing the ability, for learning platform into their overall
example, to identify, prioritize, and analyze maintenance and training solution,
situational variables indicating an oil well aimed at maintenance cost reduction
is about to enter a dangerous condition and repair effectiveness
or that a machine is about to fail. In many
of these industries, an aging and retiring
workforce has created a looming experience
gap that will likely create risk in these rare
situations and operations. With virtual
reality, companies can simulate these high-
risk scenarios, giving new workers real-life
experiences that create significant value in
reducing risk in the supply chain.
7Utilizing virtual reality to drive supply chain innovation
Criteria for evaluation
and adoption
Operational considerations Functional deployment Security
To adopt virtual reality in your supply chain, Applications that benefit from enhanced Security is an important consideration for
start by understanding where you will use visualization, collaboration, and training will the adoption of virtual reality: cybersecurity,
the technology and how it will connect to gain the greatest initial improvements from in particular, is often ranked as one of the
your existing systems. Each organization has virtual reality technology. Understanding top three risks for companies, as indicated
a unique operating model and the adoption which functions, facilities, and individuals by a Deloitte survey.6 As connected devices
of VR should match strategic objectives. should start with the technology will be increase in the workplace, companies
The following five attributes can help shape critical to successful rollout. are incorporating operational technology
your decisions and determine the potential Key considerations in this category: privacy and security into their traditional
overall return on your investment. information technology considerations.
•• Which functions offer the best use case
and rapid value capture for initial rollout? •• Given increased device-enabled
workflows, what are your mitigation
•• Do software and unique applications exist
strategies for a network disruption?
for your desired use cases? If not, do you
have the capabilities in your organization •• Do you have a comprehensive security
to build them? network for operational technology?
•• Do existing workflows need re-engineering •• Do you know which pieces of hardware
to incorporate virtual reality? and software are able to operate on
private networks?
•• What type and how many devices do
you need to achieve expected benefits? Regulations
Is it possible to utilize existing corporate New regulations remain in flux for things
mobile devices for VR applications? like heat generation and device use time,
augmenting standard OSHA, ANSI, and
Technology infrastructure
other traditional industry requirements.
Virtual reality very much depends on a
There is also great uncertainty around
comprehensive IT ecosystem to support
future regulations in a virtual world: whether
creation and consumption of content. It is
real-world laws will be applicable in virtual
important that these devices connect to
reality platforms or new laws written and
existing enterprise systems, design software,
tailored to the virtual environment.7
communication networks, security systems,
Intellectual property and trademarks are
and possibly more if the intent is to leverage
at the forefront of the discussions among
full capabilities as part of existing workflows.
regulators, both for developers and for
Key questions to consider:
the new products, processes, and services
•• What are the required changes in the created within VR.
existing technology stack to facilitate the
Additional considerations within
integration of VR?
this category:
•• How digital is your supply chain or
•• Which countries do you operate in and
supply network?
how do regulations differ across each?
•• Is your preferred VR hardware and
•• What are the industry requirements for
software able to integrate with
wearables in your workplace?
your systems?
8Utilizing virtual reality to drive supply chain innovation
•• Do you have a plan to handle IP created Basic considerations in this category:
Impactful
globally through these devices? •• How do you expect the current workforce Purposeful and
•• Do you know how IP for VR content is to respond to working with VR? strategic goals
driven by
being addressed in your industry? •• Does your proposed physical environment executive-level
Operating environments and perception satisfy the necessary requirements? support.
Because of its immersive nature, VR poses •• Are you expecting employees to share the Tailored
a hazard to both users and bystanders VR devices with each other? Customized to an
if the surroundings are not reasonably •• How much training is required to organization’s
specific needs,
controlled. Cyber sickness is a real issue for familiarize employees with the culture, products,
VR users, which results from the mismatch new technology? and operational
Implementable
of virtual and physical realities: dizziness objectives.
•• Do you need to establish insurance Defined
and headaches may occur when the refresh policies to accommodate for implementation,
rate is not fast enough for the human clear objectives,
VR-caused sickness? and plan for
vision processing system. We do not fully integration with
Framework for decision making
understand the neurological impacts from existing ERP or
VR and the field requires further research Virtual reality success factors CAD systems,
Flexible strong program
to ensure there is no neurological harm Leveraging industry-leading practices can management.
Flexible approach
from prolonged VR use.8 Incorporating help you define an implementation strategy to rollout, taking
VR can be a drastic change for some for virtual reality in your organization. advantage of
employees’ everyday tasks. Implementing on-the-ground
As with any new strategy, your goals for experimentation
the appropriate trainings and change incorporating virtual reality into your supply and learnings.
management processes to help ease the chain should match your organization’s Transparent
transition and drive adoption are overall vision, goals, culture, and strategy. Impacts and
requisite initiatives. benefits, as well
as investment
needs, clearly
communicated to
stakeholders.
9Utilizing virtual reality to drive supply chain innovation
Key levers for virtual reality
in your supply chain
Supply chain applications
Significant opportunities for virtual reality exist at each stage of the supply chain.
1 2 3 4 5 6
Develop Plan Connect Build Deliver Sell
Examples advanced electronics, and other are starting to experiment with use in design
highly regulated supply chains. New and training so that they are familiar with the
01. Develop: VR enhances the ability to
visualization capabilities help workers technology as use cases expand.
rapidly test design iterations to reduce
see step-by-step assembly procedures or
costs in the product development Companies with large global teams that
visualize their impact on line operations
process. Virtual prototypes can test stand to benefit from design collaboration
in ways not previously possible.
engineering issues, quality, and fit of or highly immersive learning experiences
CAD designs before physical prototypes. 05. Deliver: Remote assistance in large will soon find themselves playing catch-up
VR training requires up-front investment capital industries like energy, high- if they are not experimenting with virtual
but has the potential to increase tech manufacturing, and heavy reality. As the technology continues to
collaboration and significantly drive manufacturing can be delivered mature, new uses will emerge and the
down new product introduction costs. effectively with VR applications. Like business case will become even clearer. But,
other augmented reality devices, VR as is the case with other technological shifts
02. Plan: Successful supply chain plans
speeds up flow of information during in the supply chain, simply placing it in the
incorporate multiple supply chain levels
repair response to ensure equipment organization is not transformative; the real
and an investment in human capital. As
uptime, and can also be used to improve value comes from the process to select,
industries increase the use of “big data”
communication for high-risk supply design, apply, and integrate the technology.
in planning, working with complex data
chain delivery, such as medical supply. The approach to deploying VR will be
sets in VR, users can interpret the data
discussed in the final section.
across many more dimensions intuitively 06. Sell: Virtual reality’s ability to enhance
and collaboratively. the customer sales experience also
provides unprecedented insight into Virtual reality adds value throughout
03. Connect: Virtual reality allows teams to
customer preferences. If used correctly, the supply chain:
grow and connect globally with fidelity
this can feed back into product design •• Increased productivity and efficiency
and scale not previously experienced.
to create better products and more •• Improved data visualization
The enhanced communication aspects
responsive supply chains.
connect engineers with their suppliers •• Enhanced product and process design
and reduce barriers for collaboration Motivation for action •• Ability to separate presence from
across supply chain planning teams. physical location
The time for companies to start assessing
04. Build: VR allows organizations to safely virtual reality in their supply chains is now. •• Greater employee collaboration and
and efficiently train in a highly immersive, The VR market could reach nearly $50 billion communication
simulated environment before operating by 2025,9 and leading companies continue to •• Improved employee training
on the costly and sometimes dangerous invest in VR’s space—improving features and effectiveness
capital equipment in heavy manufacturing, overall costs. Enterprises across industries
10Utilizing virtual reality to drive supply chain innovation
Getting started with
VR technology
Virtual reality can drive true transformation
in supply chain and operations. However,
like every major change, it requires a
strategic approach to begin deploying within Follow the business case. First, leaders
a company. Leaders need to understand must have a clear view of where VR will
that shifting toward a completely new, drive the most value in the supply chain—in
virtual environment mandates a shift in other words, identify the optimal use case
culture toward innovation, openness, or possible high-value use cases. This will
and collaboration. A successful adoption help make the business case and allow the
strategy should include four major points. technology to pay for itself in successive
implementations if successful in
initial projects.
Clearly communicate the strategic Target and pilot. Third, companies Pick the “champions.” Finally, companies
goals. Second, supply chain leaders should should pilot the technology in an area of must find a small group of employee
communicate a VR strategy clearly. Virtual the organization where the risk of VR to super-users who can help tailor VR to
reality will radically shift employee workflows operations is low. Often, this may be the the company’s needs and will ultimately
and processes; these shifts may face difficult R&D organization, but for other use cases, champion its future rollout. Identify
adoption in some areas of the workforce. it may simply be a small experimental team employees who can influence the rest of
Clear communication about the vision in the field. Piloting the technology may the workforce and help them serve as
and benefits from leaders is critical and mean choices about outsourcing aspects “champions” of VR. These people will be
will ensure confidence as implementation of the technology rather than developing it eager to find out about the technology and,
and other operational risks arise. This will in-house. Organizational leaders must also in this way, be in a position to advocate
help early adopters apply bold ideas and be quick to address unforeseen barriers to about the benefits of VR and urge their
view each failure as a learning opportunity success: monitoring how the technology coworkers to participate in training seminars
toward future success. changes workplace layouts, modifying and implement the technology in their work.
standardized workflows, and responding
to cultural issues of using headsets. Careful
design and execution on a pilot scale will
help prove the technology for greater
investment and adoption later.
11Utilizing virtual reality to drive supply chain innovation
Key Deloitte contacts in
virtual reality and supply chain
management
Joseph Fitzgerald Tony DeMarinis
Principal, Supply Chain & Managing Director, Deloitte Digital
Manufacturing Operations Deloitte Consulting LLP
Supply Chain Innovation +1 571 814 6703
Deloitte Consulting LLP tdemarinis@deloitte.com
+1 415 519 2115
josfitzgerald@deloitte.com
Allan Cook Kellen Smetana
Managing Director, Manager, Supply Chain &
Digital Reality Lead Manufacturing Operations
Deloitte Consulting LLP Deloitte Consulting LLP
+1 310 400 2060 +1 248 231 6543
allcook@deloitte.com ksmetana@deloitte.com
The authors of this paper would like to thank the following contributors:
George Pilitsis, Deloitte Risk and Financial Advisory Services LLP; Lynne Calligaro, Deloitte Digital Studios;
Brenna Sniderman, Deloitte Insights; Deloitte Mubeen Khumawala, Deloitte Consulting LLP
12Endnotes
1. Merriam-Webster Dictionary.
2. Virtual Reality Society, "History Of Virtual Reality," https://www.vrs.org.uk/
virtual-reality/history.html.
3. J. P. Gownder, et al., "Virtual Reality: The Next Frontier For Enterprise
Developers," Forrester, https://www.forrester.com/report/Virtual+Reality+The
+Next+Frontier+For+Enterprise+Developers/-/E-RES129908, July 21, 2016.
4. Grand View Research, "Virtual Reality Market Size Worth $48.5 Billion By 2025,"
https://www.grandviewresearch.com/press-release/global-virtual-reality-vr-
market, May 2017.
5. HTC Vive, "New Research Suggests VR Offers Exciting New Ways to Unlock
Student Potential," Cision PR Newswire, https://www.prnewswire.com/
news-releases/new-research-suggests-vr-offers-exciting-new-ways-to-unlock-
student-potential-300375212.html, December 8, 2016.
6. Edward Hida, "Global risk management survey, 10th edition," Deloitte Insights,
https://www2.deloitte.com/insights/us/en/topics/risk-management/global-
risk-management-survey.html, March 2, 2017.
7. Eugene Volokh, "Law, virtual reality, and augmented reality," Washington Post,
https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/03/17/
law-virtual-reality-and-augmented-reality/?utm_term=.8cd792cd3572,
March 17, 2017.
8. Brian Blau, et al., "Market Trends: Head-Mounted Displays for Virtual Reality
and Augmented Reality," Gartner, https://www.gartner.com/doc/3052518/
market-trends-headmounted-displays-virtual, May 13, 2015.
9. Grand View Research, "Virtual Reality Market Size Worth $48.5 Billion By 2025."
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