Authors Note
Following on from the original paper concerning the impact of 3D printing on the logistics industry (published by Transport Intelligence back in 2012), this paper describes some other scenarios that may evolve as adoption of this technology grows.
The aim is to provide a concise and easy to understand summary of developments and their impact on the logistics and supply chain business. I will discuss this in further detail at Ti’s Emerging Markets Logistics Conference in Singapore on 15th & 16th October with a dedicated ‘Breakfast Briefing’ to be held in the morning of the 16th.
There is no question that 3D printing is continuing to impact multiple industry sectors. The technology continues to evolve at an impressive rate and no industry concerned with physical manufacturing is immune. Indeed, the technology’s rate of evolution is actually increasing and, as it progresses, it is drawing in a number of different technologies. Materials science and bioscience are just two disciplines that have complemented developments in 3D printing. So called 4D printing, where ‘smart’ materials are able to assemble themselves and also, in some cases, adapt to their environment, clearly illustrates this.
As 3D printing technology continues to grow and adoption increases across mainstream industries it will transform them. In some cases it will cause significant disruption to existing business models.
In our previous paper, we suggested that the initial impact would be seen in the area of service parts management. This is still very likely to happen, for instance NASA is placing a 3D printer in the space station for this purpose, but it seems that other implications are becoming clearer; especially in the area of general manufacturing.
Challenging conventional manufacturing and distribution
Most manufacturing is done by companies who sell their products into the marketplace through a variety of channels. These products are either manufactured by themselves in their own facilities, or subcontracted out to other manufacturing plants to provide scope and scale during peak periods of demand. Conventionally this has often been done close to target markets to reduce the time and cost of delivery. In some cases, usually heavy industry or strategic manufacturing operations such as defence, then political and geopolitical concerns will determine the location.
Very often, the manufacturing processes are seen as distinct pieces of intellectual property and as a result, represent considerable competitive advantage. This works so long as the cost of maintaining that advantage does not outweigh the value to the business. Another component in this equation is the focus on operational efficiency to ensure that competitors are unable to manufacture and deliver into the market at a lower cost.
However 3D printing has the potential to render both of these principles irrelevant.
3D printing challenges a number of existing manufacturing processes. It reduces time and cost and can be done anywhere where there is sufficient access to power and reasonable infrastructure for transport. Assuming the availability of the appropriate printers, this manufacturing capability can produce anything that may be required by the market on demand.
Democratising the manufacturing industry in such a manner suggests that companies should begin to shift their value equation from efficiency to design. It also provides huge opportunities for smaller, local niche manufacturers to market their services to larger companies who wish to initiate small production runs into a specific market.
The other implication of this commoditisation of manufacturing is the impact on distribution networks. There will be a greater need for flexibility, especially over the last mile to customers and complete transparency into inventory systems and order flows. Mechanisms that support conversations between customers and the vendors delivering their orders will be essential.
If these assumptions are correct, what should large manufacturers do? This is particularly relevant to contract manufacturers that own or control very little intellectual property of their own. The service they provide is primarily efficiency and scale. As they apparently operate on very thin margins, any large scale changes to manufacturing behaviour amongst their customers represents a significant threat. As a result, they could either explore partnerships with networks of small local manufacturers located close to the emerging markets of the future, or focus on designing and developing their own products. The latter point may be rather tricky as they could be perceived to be competing with their customers before they are able to sustain any defections of those customers elsewhere.
If they were to explore partnering with smaller manufacturers, they would have several advantages. They would be able to contribute manufacturing know-how, capital for investment in new printing equipment and buying power with distribution and fulfilment services. The local manufacturers would provide local knowledge, flexibility and act as a laboratory for developing new models for manufacturing and fulfilment. Imagine doing this with a variety of local manufacturers across a number of markets. It would accelerate adoption and feedback critical information about customer behaviour and market demand.
Because 3D printing technology is a fundamentally different technology in comparison with conventional manufacturing machinery, it opens up the possibility of developing modular and transportable manufacturing units. In other words some kind of ‘Factory in a Box’.
Assessing the pace of inexorable change
While production and distribution processes are expected to be transformed by the general adoption of 3D printing, there a couple of other developments that will impact the rate at which this is likely to happen. These developments include the availability of accurate and reliable 3D scanners and scanning software and the standardization of raw material formulations.
The ability to produce products from 3D printing obviously depends on the accuracy of the instructions and the quality of the materials fed into the printer at the outset. 3D rendering software can be cumbersome to use and often a low resolution scan of the product to be made, has to be ‘cleaned up’ before it is useable. If a very accurate scanner is able to produce a fully rendered image and transfer it directly into a printer in a matter of seconds, it would remove one of the barriers to mainstream adoption. If such a capability was available on a mobile phone, then it would add tremendous scale and boost demand globally.
One of the characteristics of 3D printing technology at the moment is that many printer manufacturers specify their own formulations for the plastics and metal powder compounds used in their machines. This obviously limits the size of the market and over-complicates the utilization of printers for many businesses. It is also a general characteristic of many nascent or developing technologies.
Opportunities for the flexible and dynamic LSP
It was mentioned in our previous paper on this topic that there would be opportunities for logistics companies to develop delivery networks for the raw materials themselves. As standardization of the raw materials evolves, this should become easier and provide related benefits both for the customers and the logistics service providers.
It is possible to imagine a future where a company designs a physical product in response to local market demand derived from social network feedback. They would then request bids from 3D printing facilities located close to the target market, along with requests to logistics companies for delivery schedules and pricing.
This kind of network could be perceived as a kind of virtual manufacturer. Products designed, manufactured and delivered on-demand to very short timeframes. The fashion and high tech sectors are getting closer to this kind of operational model now. The evolution of 3D printing and advanced information systems will continue this trend.
For more information and expert discussion on the possible impact of 3D printing on global supply chains join Transport Intelligence on October 15-16 in Singapore at our Emerging Markets Logistics Conference.
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About the author
Ken Lyon, is the Managing Director of Virtual Partners and one of the pioneers of informatics development and supply chain collaboration within the logistics industry. Ken has over 30 years experience and is a member of Ti’s advisory board.
For further information about the article or to register for the ‘Breakfast Briefing’ in Singapore please contact Sarah Smith, [email protected].
