3D Printing: Disrupting Manufacturing and MRO Procurement

3D printing and its applications are evolving rapidly, although most manufacturing businesses are at least five years away from mainstream adoption of the technology. It has a long way to go before becoming a routine aspect of many production environments. Market leaders, however, are gradually embracing 3D printing to take advantage of the technology and stay ahead of the competition. The advantages are numerous – speed, lower cost, time and effort, cheaper manufacturing, ability to customize products, etc.

Following are a few recent examples that showcase the growing relevance of 3D printing:

• General Electric has invested heavily into 3D printing, with deals worth $1.4 billion. GE is expected to print 100,000 parts for jet engines by 2020.
• ThyssenKrupp plans to develop in-house 3D printing capability to manufacture various components of elevators, wind turbines, and submarines.
• Daimler’s truck division turns to 3D printing for spare parts. BMW has invested into a major startup called Carbon that designs 3D printers. Ford and General Motors are using the technology to make prototypes of automobile parts, such as shift knobs, brake rotors, and cylinder heads.
• Nike, New Balance, and Under Armor are mass producing certain retail shoes.
• Hershey’s has announced a partnership with 3D Systems to print chocolates and other edible products.

This will have staggering impact on the conventional procurement process in many ways.

Cost Reduction: GE recently realized a 75% cost reduction through a pilot project to prototype parts using 3D printing. 3D prototyping allows for the creation of complex engineered parts by utilizing a single-step manufacturing process involving fewer resources and lower overhead costs. In the long run, the focus of procurement is likely to shift from sourcing low-cost parts and products to sourcing the materials used to manufacture parts through 3D printing, like plastic resins, metal alloys, etc.

Shift in Supplier and Manufacturing Locations: With the introduction of this technology, supplier and manufacturer locations will shift from low-cost countries to sites of actual consumption.  This will considerably reduce logistics and shipping costs by diminishing the distance between manufacturers and consumers. 3D printing of direct and indirect parts for production will help companies achieve just-in-time inventory control and reduce the cost of tooling.

Risk Mitigation: Having parts and products available closer to end users will undoubtedly reduce various risks in supply procurement. In the case of fabricated parts, being able to test the design before investing in expensive equipment will eliminates the risk of cost implications resulting from engineering design change requirements. It is far cheaper to test a 3D prototype than to redesign the equipment altogether.

New Supplier Ties: Suppliers specializing in 3D printing can manufacture quality products and parts; however, they may not provide overall expertise and value to the customer. To take advantage of lower cost opportunities, customers will be bound to either partner with specialized 3D printing suppliers or develop in-house 3D printing capabilities. The former is preferred because it allows companies to focus more on their core business. Meanwhile, reputable manufacturers and distributors are expected to innovate and embrace the technology faster than the new suppliers to keep ahead of the competition and deliver better a value proposition to customers.

Intellectual Property Rights and Regulations: Unless engineered in-house, parts and products are under copyright, trademark or patent protection. Manufacturing can realize significant savings through 3D printing, but procurement executives need to keep in mind the legal risks of copying. Further, highly regulated industry sectors like healthcare and food manufacturing are expected to wait-and-watch, as 3D printing technology has yet to go through numerous tests and trials before regulators approve the use of the technology.

Right now, the implementation of 3D printing as a pervasive part of the supply chain seems far-fetched. However, this disruptive technology will certainly drive businesses to reconsider and reorganize their procurement strategies and operations. The supply chain we are familiar with may never be the same.