3D Printing Can Revolutionize Supply Chain Management
As with most of today’s systems and technology, the current supply chain architecture may soon be a thing of the past. Current supply networks utilize low-cost countries to improve the efficiencies in their production operations, however, these practices have necessitated long, complex global logistics networks with many levels of suppliers. This architecture is costly to manage without adding any value, but firms still choose to do it because of the cost savings from not producing in high labor cost countries – such as the U.S. This could all change with additive manufacturing, otherwise known as 3D printing.
3D printing for manufacturers will have a large impact on global supply chains, from the initial design concept to the delivery of the product to the end consumer. We have broken down the impact to the three broadest areas of supply chain management: manufacturing, logistics, supply management & procurement.
Manufacturing is probably the most obvious application that 3D printing has (and will continue to) impact. Large firms such as Boeing, Volkswagon, BMW, Ford and many others are investing heavily in additive manufacturing technologies to improve their operations. The benefits of utilizing 3D printing for manufacturers includes new design possibilities, shorter lead times, more choices for customers, and lower inventory levels.
New design possibilities mean that engineers now have the ability to offer mass customization of products, can produce products with more complex designs, and can reduce the part count needed in a system. Mass customization is possible because 3D printing does not require any tooling or other large fixed costs that must be amortized over thousands of units in a production run. With 3D printing for manufacturing, the cost per unit is similar to the unit cost of 10,000 units. As a result, more customization is possible, and consumers suddenly have more product choices to choose from. All the while, designs are held in a digital repository, ready to be manufactured on-demand when requested by the customer. The ability to hold products in a digital repository rather than as a physical object in a warehouse dramatically reduces inventory holding costs along the entire supply chain.
The current supply chain structure for an original equipment manufacturer, or “OEM,” is long and complex. Final assembly is either done in-house or is outsourced to a contract manufacturer. The OEM then utilizes tier one suppliers for its larger assemblies: engines, frames, electrical systems, etc. These tier one suppliers then utilize a network, typically 1-4 layers deep, of component suppliers and processing houses.
Those component manufacturers then source their materials from raw material distributors, who obtain their materials from metal or plastic mills, who obtain their materials from mining companies. In all, the supply chain can quickly add many layers of sub-tiers located all over the world. This creates a long and complex global logistics network. Complex logistics networks do not add value but are there merely to support the transportation of goods to and from the low-cost manufacturing centers.
3D printing for manufacturing has the ability to change the entire infrastructure of today’s logistics networks. Rather than requiring multiple tiers of suppliers, OEMs or tier-one suppliers can simply utilize 3D printing, either in-house or through a service bureau, to quickly create their products on-demand with the flexibility to scale their supply with their demand. This ensures that resources are not wasted on carrying excess inventories and prevents production systems from being held up from parts shortages.
Supply Management and Procurement
Long, complex supply chains have necessitated the need for more management of the supply network. Tasks include creating and negotiating contracts to link each of the nodes of the supply chain, along with the management of supplier delivery and quality. Companies have invested in large procurement and supplier management organizations to support the large amount of contracting and supplier performance management required of such a structure. 3D printing would allow for the reduction of contracts and supplier oversight in a supply chain. Rather than managing 4-7 levels of a supply chain, procurement activities would merely include placing a contract electronically with a single 3D printing service bureau which could rapidly fill the order on demand, with much of the process being automated. This will significantly lower labor costs and enables companies to move resources and operations closer to their customers geographically.
The Future of Supply Chain Management
The future of supply chain management will make on-demand manufacturing, mass customization, and short lead times the new norm. In a hypothetical future state scenario, an OEM could access a digital repository of product designs, make customizations and personalized design changes, as required by the customer. The design will then be electronically sent to the 3D printing service house where the product will then be routed to an available unit with the material requested. The machines will then print the parts, autonomously unload them, and route them to the shipping department via conveyor, where it is packaged and delivered via drone to the customer. In this future scenario of supply chain management, much of the network complexity is eliminated and the processes that remain are largely automated.
What do you think the future of supply chain management with 3D printing will look like? Leave a comment below with your ideas!