Lower supply chain costs should be taking the additive manufacturing spotlight

Posted by Kelly Marchese

I’m pretty excited about developments in 3d printing that mean I may soon be able to order a bespoke running shoe. A recent Fortune article highlighted the impact 3D printing is having on the running shoe business–allowing customers to completely customize their shoe design from the foot bed on up. This is a win-win for consumers and running shoe manufacturers. Can you imagine a pair of shoes fitted to your feet’s idiosyncracies? Bliss. Sign me and my arches up.

But, behind the headlines of the running shoe story lies a supply chain cost-saving story about additive manufacturing and the opportunity to capture tremendous value within the 3D supply chain. The win for running shoe manufacturers using 3d printing is the time–hence cost–saved by printing on demand and removing the steps required when using molds, or carrying large inventories.

This ability to enhance supply chain capabilities, or even innovate across whole sections of the supply chain is what I think may be additive manufacturing’s most useful role. In my latest article, “3D opportunity for the supply chain: Additive manufacturing delivers” I highlight many reasons for this hypothesis, which you can read in more detail. However, there are three that I want to highlight: the reduction of cost, the decentralization of supply chain networks, and distributed production on demand. Each of these provide compelling reasons for manufacturers to consider additive manufacturing in their supply chain.

A chance to reduce costs

Consider an industrial product manufacturer with a customer who needs a particular low-demand service part immediately, and can’t wait for shipping from a central warehouse–or, worse, for fabrication by some remote supplier.

How widespread is additive manufacturing right now?

According to a recent Deloitte study, 24 percent of companies are using additive manufacturing (AM) in more than just prototyping.

Engineering organizations have been using it to develop prototypes in product development, but it’s not becoming more heavily used and considered in supply chains.

50% of leading supply chain companies—outperforming other organizations in terms of both their quality as well as their cost performance—50 are using AM. So they’re using it as a competitive advantage.

When we asked organizations whether they were going to increase the use of AM, the number rose to over 70 percent.

If a dealer could simply “print” a new component on the spot, that customer could be served far more efficiently and effectively. The shorter wait time could prove to be a compelling value proposition to the customer.

In addition, costs may be reduced for companies that have traditional suppliers upstream. The supplier would design parts, but no longer has to maintain all of the inventory for obsolete parts. The company now has a secure supply chain for the long term without having to pay for that supplier maintaining historical inventory or historical tooling. Additional cost savings will come from a reduction in the size of warehouse space a company might need and the amount of materials they have to purchase.

Decentralizing the supply chain

The opportunity for decentralization of production is revolutionary. If a company is looking to expand globally by setting up a facility in another country, they actually don’t have to invest in a lot of new manufacturing equipment. Using AM can help decentralize production and decrease transportation costs, thereby reducing the amount of capital needed to enter a new country or new market.

Distributing products on demand

Leaders in the logistics industry have taken notice of AM’s potential to disrupt traditional supply chains through the use of distributed production on demand. UPS has experimented with on-demand AM services in UPS stores, piloting a program in six markets in September 2014 and, in the months since, expanding AM services to nearly 100 locations throughout the United States.i

NASA and the US Navy are also currently experimenting with using AM to improve supply chain performance. NASA is testing AM for in-space manufacturing on the International Space Station, enabling on-site production of hardware upgrades and tools rather than requiring a space launch to deliver them. The Navy is investigating the use of AM to produce spare parts while at seaii.

While supply chain innovation using 3d printing may not be getting a lot of mainstream media attention, it will resonate with business leaders and manufacturers looking to compete and gain a competitive advantage.

What should your business consider before getting into AM? Read more in Kelly Marchese’s article 3D opportunity for the supply chain: Additive manufacturing delivers at Deloitte University Press (www.dupress.com) or take our upcoming online course: 3D opportunity: additive manufacturing for business leaders.

i UPS Corp., “3D printing services expanded across nation,” www.theupsstore.com/small-business-solutions/Pages/3D-printing.aspx, accessed April 14, 2015.
ii “Ship-shape and in space, 3-D printing could boost supply operations for NASA, Navy,” Industrial Engineer, August 2013.

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