The additive manufacturing revolution is underway, and product supply chains lie directly in its path of creative destruction. Which ones, if any, will survive?
In additive manufacturing – also known as 3D printing – a computer-controlled laser melts materials such as plastic or a mixture of alloys according to a blueprint that is programmed into the machine. An object is made by building up ultra-thin layers of the material one by one.
The technology reduces waste to a minimum because material is added (hence the term “additive”) in the precise quantities needed to make an item. Also, additive manufacturing is incredibly flexible both in terms of the types of objects that can be manufactured and where the process takes place.
Some supply chains will become obsolete as a result of this flexibility. For example, 3D printers in auto repair shops and retail outlets could make certain auto components on site, eliminating the need for these items to be delivered by suppliers. Many expedited shipments will not be necessary as the technology matures. When a production line goes down, for instance, the part needed to fix the problem might have to be shipped from a faraway supplier using expensive same-day delivery services. Simply printing the part in situ avoids this costly transportation option.
Scenarios like these do not auger well for express delivery companies. But the news is not all bad because alternative business opportunities will open up. Delivering the raw materials that feed 3D printers is such a possibility.
Customization offers another example of how the technology will close some doors and open others in the supply chain domain.
3D printing makes it much easier to tailor products to customer needs, even down to the individual level. By tweaking the computerized blueprint and maybe altering the mix of materials, manufacturers can produce a limitless number of design variations.
This newfound versatility is likely to trigger a dramatic increase in the number of product SKUs, which adds complexity and hence cost to supply chains. The proliferation of SKUs will pose a major challenge for companies.
On the other hand, 3D printers are smaller and more compact than traditional manufacturing installations, and require fewer and less skilled operators. As a result, they can be located closer to consumer locations. This close proximity to markets, coupled with the short lead times made possible by 3D technology, shortens supply chains and reduces the need for large inventories. Service levels can be improved since additive manufacturing is ideally suited to just-in-time operations.
These are only the possibilities that we can imagine in this early stage of the technology’s evolution.
Imagine global networks of additive manufacturing machines that are attuned to local markets and can be reconfigured in real time as demand patterns change. Such a network would take supply chain agility to new levels. Or distribution centers that store and supply product blueprints rather than physical products, located “in the cloud” or in server farms.
Of course the world can be altered further if home-based 3D printing becomes the norm. In this world, every home is equipped with a printer capable of making most of the products it needs. Supply chains that support the flow of products and parts to consumers will vanish, to be replaced by supply chains of raw material.
It’s a compelling vision, but a long way off. Even assuming that consumers want to become micro manufacturing centers, the technology is many years away from such mass market applications.
Meantime, 3D printing is a disruptive technology that will destroy many traditional manufacturing models. But reports that the concept of a supply chain will die at the hands of additive manufacturing are exaggerated.
Professor Yossi Sheffi is Director of MIT CTL. He can be reached at: email@example.com.