16 January 2014 | Len Pannett
Technological advances are opening up ‘revolutionary’ possibilities in supply chains, says Len Pannett.
Read a summary of the fastest growing and most transformative technologies and 3D printing will inevitably be in the Top 10. Much as the microprocessor was in the 1960s, the personal computer in the 1970s and the mobile phone in the 1980s, 3D printing is on the cusp of being a disruptive technology.
Even US president Barack Obama said: “3D printing has the potential to revolutionise the way we make almost everything” in his 2013 State of the Union address. Although not a new technology, recent advances are opening up the possibility of its use in various parts of many different businesses across industry sectors, offering new models of supply chains, lowering risk and reducing costs.
3D printing was invented as long ago as 1984 and was initially known as additive manufacturing. It involves the fabrication of products through the use of printers which either place layer upon layer of material (known as stereolithography) or employ lasers to burn materials (sintering), eventually resulting in a finished item. Unlike traditional manufacturing, which involves cutting or drilling moulded items to make the final product, 3D printing “grows” the product. Once a design is produced using CAD software or a laser scan of an item, it is passed to the printer, which can realise it using metal, plastics or composites.
Today, 3D printing is used across several industries, from the aviation, automotive and construction sectors, to medical, jewellery and, increasingly, retail manufacturing. Many of the companies which make the equipment, firms like 3D Systems, Stratasys and Arcam, have seen their share prices more than double in the last 12 months alone. So what is driving this positive outlook?
The emergence of different and more refined technologies, building on the stereolithographic and sintering methods, is opening up competition between an increasing number of manufactures and ancillary companies. Wolhers Associates, who monitor the sector, have indicated that 3D printing grew in value by 28.6 per cent in 2011, and the market expectation is for the sector to continue to grow at an annualised rate of some 14 per cent until 2020.
These new technologies and a rising demand from customers have enabled the manufacturers to invest in R&D, resulting in the price per unit of a 3D printer to drop considerably. Industrial printers now cost no more than a few hundreds of thousands of dollars, while retail printers are now priced at under $1,000 (£600) each. In parallel, software tools to design products are increasingly powerful and efficient, and scanning tools, such as MakerBot’s Digitizer scanner, are enabling fast and accurate digital captures of items.
This is leading to some exciting developments. In aerospace, General Electric is “printing” fuel injectors which, through optimised designs, are lighter than normally manufactured models. Other similarly produced components have been tested by NASA at operating temperatures and pressures, eschewing any concerns about the strength of 3D printed products. Airbus is already looking at entire aircraft being manufactured using 3D printed components, which will make them lighter and therefore more fuel efficient.
In the medical sphere, many prosthetics, from joints and knees to jaws and mouth implants, are now 3D printed and new techniques are enabling soft tissues, such as cartilage and blood vessels to be created. Already some 30,000 hip implants made using Arcam’s 3D printers have been used in operations. In the automotive sector, many firms are analysing the use of 3D printers in its spares supply chain, having already adopted them for test vehicle parts and rapid prototyping.
The supply chain opportunity
With the continued focus on driving down costs and increasingly improved consumer and commercial sentiment, 3D printing’s role is now emerging in innovative supply chains and these advances are opening up new opportunities.
While much has been written about its impact on design and manufacturing, it is important businesses begin to appreciate the impact the technology will have on their supply chains. Strategically, the technology enables many new supply chain models, such as:
● Streamlined logistics model: Manufacturers use 3D printing at their own sites, reducing inventory levels and warehousing requirements. This is most suitable for items in the inventory “long tail” or where further finishing, assembly or testing is needed before the product or part is shipped. The hi-fi manufacturer Bowers & Wilkins recently announced it is using 3D printing for these reasons.
● Customer-managed inventory: An extension of the vendor managed inventory model, with suppliers installing 3D printers at customer sites, providing the software designs for products and parts to be manufactured on demand. This model could also see the customer acquire a printer with suppliers providing the design data for the printers to produce on a licence or pay-per-print basis.
● 3D printing hub: Much like the high street printing companies that emerged in the 1980s, such as Prontaprint and KallKwik, firms will offer a 3D printing service locally or remotely. In August last year, UPS announced it was installing several Stratasys printers at its sites across the USA to provide this service, whereby consumers and businesses can obtain printed products on submission of their designs.
● Home 3D printing: Earlier this year, 3D Systems announced it would be selling a retail 3D printer through Staples, the office stationery supplier, and Stratasys recently said it too will be offering retail models via its recently-acquired MakerBot brand. Much as retail inkjet and laser printers changed business processes, this has the possibility of transforming the retail market, from DIY spares to toys. Mattel, for example, is considering how to utilise 3D printing, and companies such as Shapeways are offering databases and marketplaces for consumers to create and exchange designs for use with home 3D printers.
These new models, whether partially or fully adopted as the technology matures, will have a tangible impact on the cost and capability of supply chains. Closer provision of parts, such as through installing printers at client sites, will drastically reduce delivery times and increase on-time, in-full and e-fulfilment indices. Supply chain networks will be simplified, with a reduction in warehousing needs enabled by a reduction in inventory levels. Together with faster prototyping and manufacturing, supply chains will respond more quickly to changes and therefore firms will be able to respond to shorter product life cycles. As well as the impact on the physical supply chain, products themselves will ultimately become cheaper to make and purchase, offer greater customisation and be more resilient to issues of obsolescence. GE estimates the cost of 3D printing some components is reduced by up to 25 per cent compared to traditional manufacture, a saving that is enabled by changes in the product design and a reduction in the materials needed. For start-ups and small firms, these saving will be transformative, as set-up costs for manufacture will be radically smaller, and generally, minimum and economic order quantities will correspondingly reduce. In the shorter term, it is the logistics element of the supply chain that will be affected most, as the requirement for shipping and the need for third party warehousing and spares management is reduced, even if the technology is not yet able to produce multi-material items. Additionally, by placing printers in companies’ foreign sites, import duties are also reduced, and landed costs and customs delays will be removed.
The technology is still maturing and considerable obstacles remain before its wider use. Raw materials needed by the printers are still very expensive, making the cost of a finished product correspondingly expensive. The speed of production is measured in hours to days depending on the complexity of the item and, once printed, the finish is often quite rough and currently only one material can be used in the process.
But all of these challenges are being tackled and there is no reason to doubt that they will be overcome. One catalyst for this is that many of the patents involved, which are owned by the leading firms, expire over the coming year, opening up competition from China and India. This will see an acceleration of the technology’s development and a reduction in the costs per unit.
3D printing is beginning to move outside the manufacturing part of the supply chain, and companies are advised to consider how best to adapt to the opportunities and threats that it brings.
By understanding their inventory in detail and segmenting it appropriately, firms will be well-positioned to reduce inventory levels and warehousing costs by moving slow moving stock keeping units and the simplest parts in their bill of materials from the physical to the virtual, printing them when needed. That will be a significant threat to third party logistics companies, transport and warehousing specialists. Competition will increase as those companies that adopt 3D printing develop shorter production cycles. No doubt customers will begin to demand shorter delivery times.
The new supply chain models present opportunities for suppliers and customers to shorten delivery times, improve on time in-full metrics and optimise their supply chains.
☛ Len Pannett is a principal consultant with the operational strategy firm Visagio, and a chartered engineer
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