How 3D Printing changes the economics of outsourcing and globalization

3D Printing is a revolution that changes two important economic equations – insourcing/outsourcing, and the globalization/localization equation.

It tips the balance between insourcing and outsourcing of manufacturing in favor of insourcing. And it tips the balance between globalization and localization in favor of localization.

In the pre-3D Printer era, outsourcing —  the transfer of a number of business activities to third parties either at home or abroad — allowed companies to improve efficiency, cut costs, speed up product development, and focus on their “core competencies.” It helped American companies address the destructive forces of globalization; that is, the intensification of competition and the price and profit erosion that followed it.

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How 3D Printing changes the economics of outsourcing and globalization

3D Printing is a revolution that changes two important economic equations – insourcing/outsourcing, and the globalization/localization equation.

It tips the balance between insourcing and outsourcing of manufacturing in favor of insourcing. And it tips the balance between globalization and localization in favor of localization.

In the pre-3D Printer era, outsourcing —  the transfer of a number of business activities to third parties either at home or abroad — allowed companies to improve efficiency, cut costs, speed up product development, and focus on their “core competencies.” It helped American companies address the destructive forces of globalization; that is, the intensification of competition and the price and profit erosion that followed it.

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Manufacturing as a Service

Personalized, customized, one-off – many consumers are gravitating to products they can personalize when purchasing cars, handbags and shoes. Armed with technology that makes customization more manageable, factories are positioning themselves to respond with an offer known as Manufacturing as a Service.

MaaSAs consumers embrace the ability to personalize the goods they buy – from customized bras that fit the wearer’s unique proportions to shoes with mix-and-match fabrics that reflect the consumer’s specific taste – Manufacturing as a Service (MaaS) is being implemented worldwide, especially at factories that do manufacturing for hire.

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The advancement of 3D Printing and its impact on manufacturing and distribution

The transportation industry depends upon shippers’ need to transport products and components from one geographical location to another. Can 3D printing technologies eliminate much of that need?

3D printing technology is rapidly evolving and the advancement of this field could present a radical challenge to the transportation industry over the next 20 years. e-Commerce shipping volume may suffer as sellers recognize the capability to transfer their product designs electronically for 3D printing at a location near the consumer. To mitigate the risk of losing shipping business to electronic transfer of 3D printing blueprints, industry leaders need to incorporate 3D printing into their strategic thinking. They need to partner with both shippers and 3D printing service providers to optimize 3D printing use and logistics, and it is not unreasonable for these transportation companies to offer 3D printing services at selected customer-facing locations.

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3D printing disrupting supply chains

Michael Minall of supply chain specialist Vendigital tells Engineering Capacity about the impact the 3D-printing revolution is starting to have on supply chains.

Easyjet’s announcement of its intention to use 3D printing to produce replacement cabin parts is further evidence that a technological revolution in the sector is gaining momentum. And it is already having a significant impact on supply chain and procurement strategies.

Michael Minall is Director and aerospace and defence sector specialist at Vendigital, a firm of procurement and supply chain specialists.

Michael Minall is Director and aerospace and defence sector specialist at Vendigital, a firm of procurement and supply chain specialists. 

While the low-cost airline’s decision to use 3D printing to produce basic cabin parts, such as arm rests and other on-board features, is not a game-changing development in itself, it is a further sign that take-up of the technology is gaining momentum. At a time of significant downward pressure on prices and concern about production capacity, the announcement also sends a clear message to the supply chain that airlines are ready for change and are keen to benefit from the efficiencies such production methods can bring.

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The limits of 3D printing

Contrary to what some say, 3D printing is not going to revolutionize the manufacturing sector, rendering traditional factories obsolete. The simple fact of the matter is the economics of 3D printing now and for the foreseeable future make it an unfeasible way to produce the vast majority of parts manufactured today. So instead of looking at it as a substitute for existing manufacturing, we should look to new areas where it can exploit its unique capabilities to complement traditional manufacturing processes.

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Additive manufacturing, or “3D printing” as it is commonly known, has understandably captured the popular imagination: New materials that can be “printed” are announced virtually every day, and the most recent generation of printers can even print several materials at the same time, opening up new opportunities. Exciting applications have already been demonstrated across all sectors — from aerospace and medical applications to biotechnology and food production.

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3D printing: the future of manufacturing medicine?

As the pharmaceutical industry shifts from mass manufacture towards personalised medicine, 3D printing could become part of the drug production line.

Imagine a paediatrician talking to a four-year-old child who is having trouble adjusting to taking daily doses of steroids after being diagnosed with Duchenne muscular dystrophy the previous month. “What’s your favourite animal?” she asks. “A zebra,” quietly replies the child, who we will call Sam. The paediatrician smiles as she makes a note on her office computer. “But not a black and white one, a blue and green one,” adds Sam, with a little more confidence. Later, the toddler watches with wide eyes as the uniquely coloured, zebra-like tablets appear from a three-dimensional (3D) printer in the hospital pharmacy.

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The 3-D Printing revolution

Industrial 3-D printing is at a tipping point, about to go mainstream in a big way. Most executives and many engineers don’t realize it, but this technology has moved well beyond prototyping, rapid tooling, trinkets, and toys. “Additive manufacturing” is creating durable and safe products for sale to real customers in moderate to large quantities.

The beginnings of the revolution show up in a 2014 PwC survey of more than 100 manufacturing companies.  At the time of the survey, 11% had already switched to volume production of 3-D-printed parts or products. According to Gartner analysts, a technology is “mainstream” when it reaches an adoption level of 20%.

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Will 3D printing make obsolescence obsolete?

Machine spare part obsolescence is a major headache for manufacturers. The stockout costs or consequences of non-available spare parts are invariably higher with longer periods of downtime. As time equals money, in the majority of manufacturing operations maintenance staff take their own approaches to stock management. One such way is the squirrel approach where obsolete parts are gathered for insurance purposes. Some manufacturers look to rationalize their spare part stock profile and often target high-value slow-moving parts, which are usually also the obsolete parts.

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Unfortunately the rapid developments in industrial automation have accelerated the obsolescence process, leading many companies to be caught short. But with the recent burst of 3D printers becoming more accessible to the masses, we have been asking ourselves if the dawn of the 3D printer will eventually make obsolescence obsolete. The advancement in 3D printing could well change the process in which spare parts are managed – if the International Space Station can use a 3D printer to print spare parts, why can’t any other manufacturer in the future?

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