June 29, 2016

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Impact of 3D Printing on Supply Chain and Logistics Industry

Have you heard about 3D printing on the fly from Amazon? The largest Internet-based retailer in the United States and world, Amazon has patented the concept of mobile 3D printing delivery trucks to deliver products even faster to consumer. When a shopper orders a selected product from Amazon, this triggers the nearest truck to 3D print and deliver the product to the consumer, effectively removing the need for any storage.

They 3D printed a complete 6-storey office building in China!

Over the span of 10 years, the price of the cheapest 3D printer came down from USD 18000 to USD 400 and became 100 times faster. All major shoe companies have started 3D printing shoes. In remote airports, spare airplane parts are 3D printed. Cosmetic companies started testing new products on 3D-printed skin instead of animals.

3D printing technology has emerged as one of the most disruptive innovations to impact the logistics industry and the global supply chain. 3D printing technology is impacting professional and our personal lives, with some claim that the technology merely enhances some aspects of production process, while others argue that technology will revolutionize and replace existing manufacturing technologies. Whether revolutionary or evolutionary, 3D printing technology is recognized as an important trend that will significantly impact supply chains. Although, in the private consumer market, expansion of 3D printing is an interesting development in its own right, the biggest potential for disruption lies in industrial applications. It is striking to see how 3D printing will influence supply chains of the future.

Gartner forecasts 3D printer shipments will more than double every year between 2016 and 2018. Overall, end-user spending on 3D printers is expected to increase from USD 1.6 billion in 2015 to about USD 13.4 billion in 2018. McKinsey predicts 3D printing will generate an economic impact of USD 230 billion to USD 550 billion per year by 2025, the vast majority originating from consumer uses and direct manufacturing applications.

Economists have labelled additive manufacturing (a.k.a. 3D printing) the 3rd industrial revolution. Following are the key areas in supply chain and logistics likely to be impacted by 3D printing technology:

  1. Rationalization of inventory and logistics: Logistics will adjust to print on demand, eliminating the need to carry inventory
  2. Resource efficiency: Material saving during production and ability to utilize recycled materials
  3. Customer demand will be met more quickly: Reduction in manufacturing lead time and strategic near-shore manufacturing facility
  4. Customization: Tailoring individualized offers to each customer, involvement of client in design, and providing ability to test prototypes
  5. Global Logistics: Reduction in cost of international logistics by reducing overseas manufacturing thus decreasing quantity of air and ocean freight and brokerage cost

The supply chain traditional model is founded on traditional constraints of the industry, efficiencies of mass production, the need for low cost, high-volume assembly workers, and so on. But 3D printing bypasses those constraints.

From that point of view, the traditional model stops making sense—It is no longer financially efficient to send products zipping across the globe when manufacturing can be done almost anywhere at the same cost or lower.

However, disruptive technologies come with challenges. Following are challenges for 3D printing:

  • IP Issues – Authors of digital design templates could be targeted by hackers and incur copyright infringement.
  • Security Concerns – For example, when printing harmful objects such as a knife, gun etc., which party would be held responsible?
  • Liability – For example, who is to blame if a 3D product fails: the company printing and selling it, the material supplier, the printing machine manufacturer, or the designer?
  • Mass Production – It cannot compete with the speed of traditional manufacturing process.

The raw materials today are digital files and the machines that make them. And that demands a new model—both for manufacturer and logistics provider.

Forward thinking companies are viewing 3D printing technology from all possible lenses. For example, UPS and DHL have begun to offer 3D printing services. But only time will let us know whether manufacturers turn to their logistics service providers to store and maintain their blueprints or whether this will be a new niche for IT specialists.

Logistics service providers will only be allowed to store and print out the data models if the manufacturers trust them and are prepared to give them the 3D data models. What’s certain is that in future, the “value” of a product will reside in a digital file. Manufacturers will try to protect their IP by inserting copy protections and assigning licensing rights. It is too early to say what the role of the logistics service providers will be in all of this. However, logistics companies have a huge opportunity of becoming a strategic player in the game.

CXOs of supply chain and logistic industry must be aware of the potential impact that 3D printing technology could have on their respective organization and be prepared to react in an agile, flexible, and adaptive manner.

References:

  1. http://www.gartner.com/newsroom/id/2887417
  2. http://www.mckinsey.com/insights/business_technology/disruptive_technologies
  3. https://3dprint.com/46934/amazon-3d-printing-patent/>
  4. https://www.theupsstore.com/print/3d-printing
  5. DHL Trend Research and Technology Innovation Management Review