3D printing at home may still be a novelty, but additive manufacturing (AM), the more formal term for industrial 3D printing (3DP), promises shortened supply chains for durable goods manufacturers. By cutting reliance on workforce, manufacturers can bring production closer to the end-customer, and remove a good portion of their logistics chain. As the price, speed, and availability of industrial 3D printing improves, companies that heavily rely on long-distance transportation of durable goods are about to face a disruptive new reality.
Why Do We Outsource?
In today’s discrete manufacturing ecosystem, humans and machines work in tandem to cut, drill, mold, and assemble an unending variety of parts. Finished goods are pushed out to distribution through warehouses, stored, and sent to customers as needed. Generally, made-to-stock is far more prevalent than made-to-order.
Manufacturing locations are commonly determined by the lowest cost of raw materials, labor, facilities, freight, taxes, and insurance. Factors such as quality, fulfillment reliability, production time, delivery time, and public image are balanced against price incentives to narrow the field of potential manufacturing locations.
Advanced logistics have allowed manufacturers to trade local labor for outsourced production. Remote inventory tracking, fully-integrated logistics services, port automation, and a complex web of cargo carriers have made the world a smaller place. As long as the total landed cost for outsourced manufacturing outweighs the price of local production, and fulfillment lead times remain reasonable, then finished goods will continue to be shipped half way around the globe. However, 3D printing is about to destroy this traditional logic.
How is 3D Printing Disrupting Manufacturing?
- Increase Raw Material Utilization – Instead of starting with a block of raw material and carving out desired components, additive manufacturing stacks thin layers of metal, resin, or tissue to create components. As a result, there is very little waste material, fewer seams that require welding or bolts, and surfaces can be extremely thin (<16 µm).
- Rapid prototyping – Instead of investing a pile of cash on injection molds or hand-machined components, 3D printers can create extremely complex on-demand proofs. Production-grade prototypes can be generated by designing-oriented designers, without the need to involve fabricators. As a result, turnaround time for certain products can be significantly reduced to match market demand.
- Reduced Labor – Industrial 3D printers can produce extremely complex components without human error or unnecessary welds. For example, NASA is now 3D printing rocket engine injectors and combines sub-assemblies into a single part. The traditionally manufactured version required 115 parts and a year of skilled craftsmanship, while the new version only requires 2 pieces and less than four months to produce.
- Rapidly alter “production lines” – Traditional production lines are the equivalent of the Gutenberg Press, and 3D printing is comparable to an inkjet. Traditional manufacturing generally requires time and people to retool equipment between varying batches. In contrast, 3D printing changeover simply requires a user to upload a new 3D print file.
- Reduced Footprint – Compared to assembly lines with people and robots, 3D printers can be relatively small. While large-format industrial printers that can print entire car frames are just hitting the news, desktop models that can print complex phone-size components are widely available. The challenge with justifying the footprint of 3D printers to-date has been print speed. A warehouse full of printers that each output one component per day may not offset the benefit of injection molding. However, new 3D printer models, such as Exone’s S-Max, show massive improvements in print speed. Exone’s S-Max can produce resin objects up to 70” long on the x-axis with 1/7000“ layers in just 45 minutes.
Logistics Goes Local
As the cost of outsourced labor and oil continues to increase, and the price of 3D printing decreases, remote regions lose their seduction of total landed cost. Without a significant price advantage, manufacturers are not going to pay for overseas production when they can improve service levels, reduce logistics cost, and increase flexibility by establishing additive manufacturing facilities closer to the customer.
“Industrial manufacturers will establish regional 3D printing hubs that require minimal labor, and result in faster turnaround on production runs…”
High-volume manufacturers that can tolerate a low frequency of customization, long lead-times, and larger inventory stockpiles for bulk discounts are the exception, and will stick with low-cost global production hubs for the foreseeable future. However, manufacturers that need lean inventory, short lead-times, the ability to quickly respond to market changes, and a greater degree of customization are going to use 3DP to bring their production home. In an analysis of the global aerospace industry’s MRO parts market, PwC estimates a $3.4B annual savings in material & transportation costs alone if 50% of the industry’s MRO parts are 3D printed, and over $1B savings if just 20% are 3D printed.
Instead of transporting finished goods across the world, industrial manufacturers will establish regional 3D printing hubs that require minimal labor, and result in faster turnaround on production runs. By localizing 3D printing facilities in high-demand regions, manufacturers can avoid taxes, shipping expense, customs delays, and holding costs. Through this regional 3D printing model, inventory is produced as needed by the end-customer, instead of resting idle in a warehouse.
Demand and supply collaboration between buyers and suppliers will become even more critical with narrower margins between orders and deliveries. Real time visibility into available inventory, manufacturing disruptions and shipping times will be key to ensuring a lean manufacturing chain, even a local one, meets the expectations for customer service and satisfaction.
Check out our previous 3D Printing blog post “How Does 3D Printing Fit into Your Mid-Market Supply Chain?”
The (3D Printing) Future is Now
This is not a distant concept – at the current rate of improvement, additive manufacturing will be commonplace within five years. According to Morgan Stanley, “AM industry growth over the last 25 years has been 25.4%, and 27.4 % in the last three years”. Forecasts for 3D printing vary by firm, but Canalys estimates the market for 3DP products and services will increase from $2.5B in 2013 to $16.2B by 2018, Wohlers estimates conservative growth to $10.8B by 2020, and Morgan Stanley predicts a bullish $21.3B by 2020. While these growth estimates are all over the map, the predictions of massive growth seem to be uncontested.
Rapid improvements in printer prices and speed will drive this growth and change the landscape of traditional manufacturing. By taking advantage of more localized production, companies will be able to decrease total landed costs, increase speed of delivery, reduce the reliance on skilled laborers, and funnel resources into design improvements, becoming increasingly competitive in this changing market.