The New Reality: 3D Printing and the On-Demand Economy

Do you remember the words, "hold the pickle, hold the lettuce?"

What’s the next line?

“Special orders don’t upset us – all we ask is that you let us have it your way.”

In 1974 Burger King came out with their "Have it Your Way" campaign where if you wanted fast food you didn’t have to get it the way they made it, you could have a hamburger made especially for you.

And we liked that.

We wanted that hamburger made especially for us, our way. That’s the kind of people we are, we love things customized. We like things being tailor-made for us. To think that Burger King was on to something nearly half a century ago with that catchy slogan. Admit it… you are singing that jingle right now, aren’t you? 

My friend, Jack Heslin, has been in the 3D Printing industry for several years and we always talk shop. He often asks me what I think the impact of 3D printing will have on the supply chain. Well, let me now share what I see as some of the big impacts. Before I get to 3D Printing, and why it will have a transformational effect on manufacturing and logistics, it is important to understand the background of the On-Demand Economy.

More and more, consumers are in charge. We want things made our way and shipped and delivered to our front door in 2 days or less. And thus, the explosion of the On-Demand Economy.

The On-Demand Economy is defined as the economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services. Supply is driven via an efficient, intuitive digital mesh layered on top of existing infrastructure networks.

The On-Demand Economy has revolutionized commercial behavior in cities around the world. The Amazon and Alibaba effect has had a profound and transformational impact on how we consume and buy everything from groceries to electronic gadgets to designing our own shade of lipstick. 

Many ask: Is this a bubble? Is this a short-term trend? Is the hyper-growth we’re seeing going to slow down soon? Categorically and unequivocally, the answer is no. The new on-demand models have opened the door to the real-time fulfillment of goods and services, which consumers have embraced with a frequency that is unprecedented.

It is no longer a question of if the On-Demand Economy will revolutionize the way people transact or create thousands of jobs or move governments ... this is all happening. It is clear by now that the early adopters are well entrenched in the On-Demand business model. The early majority is well on its way to adopting the model. What does this mean for the future of retail and the traditional manufacturing “push” supply chains? 

We cannot underestimate the power of the internet to make human desires more easily attainable. The convenience and ease of “Buy-With-One-Click” have upended traditional retail supply chains. Many retailers and manufacturers will go by way of the cotton gins and the Edsel unless they adopt the new mindset and shift their supply strategies.

Indeed, the Internet of Things (IoT) and 3D printing are having a significant impact on the Supply Chain, and in particular, it will disrupt the way we think about manufacturing and logistics. How the Supply Chain operates will be significantly impacted, and specifically, the impact will relate to how supply chain leaders access information, among other things.

Companies have invested millions in ERP systems and these have been the basis of supply chain management. However, the IoT revolution requires that we connect people, processes, and partners using shared data via devices and sensors. I was recently at a conference where everything related to the event was on an app. Whether it was my personal agenda, logistical information, biographies of key speakers and so on - all of it was on my iPhone.

Automation in the factory and visibility of data are bringing a deeper intelligence to the end-to-end supply chain bringing the On-Demand economy much more to life. The greatest impact of IoT is on the logistics ecosystem and its many moving parts. The many nodes in the supply chain – manufacturers, suppliers, distribution centers, retailers, and consumers – require an agile and informed supply network. Cloud-based GPS and RFID (Radio Frequency Identification) technologies, which allow visibility and tracking of inventory in the entire value chain, are enabling speed to market. The IoT is enabling the make-to-demand versus the make-to-stock models, releasing working capital and enabling, even more, investments in IoT. It is a consumer centric “pull” supply chain of the highest order. Companies like Finding Ferdinand, MatchCo, Beauty Pie and others are taking flight as they cater to consumer desire to customize products to their specific preference with very little lead time. It is a “chassis” based manufacturing model with late variant additions (LVA) which enable the late stage customization. Think Cold Stone Creamery: Patrons first select what flavor of ice cream they would like (the chassis) and then choose from a plethora of mix-ins available to be folded into their ice cream (the LVA)… on demand, having it their way! Now imagine this model for everything from cosmetics to personal care products to apparel. For durable goods manufacturing, 3D Printing is a key enabler.

3D Printing – the Seismic Shift in the Supply Chain

A decade ago, consumers accepted waiting a week plus for their product but now with the infusion of companies such as Amazon and Alibaba, consumers are making their purchase decisions based on how quickly they will receive the product. In order to stay competitive in the marketplace, companies are turning to 3D printing to create their products quicker.

While it is true that manufacturing in certain locations can be low-cost, managing a global logistics network is not, especially as transportation costs continue to rise. That is where the opportunity for 3D printing lies. It is not surprising that analyst firm Canalys anticipates that the worldwide market for 3D printers and its associated materials and services will grow to $22.4 billion by 2020.

Supply chains are about to make a fundamental shift. The 4-lane Supply Chain highway of Plan, Source, Make, Deliver, is still applicable but 3D printing is innovating that model and putting consumers in the driver’s seat.

Over the past few years, application of 3D Printing has moved from prototyping to manufacturing. Led by the automotive and life science industries, 3D Printing is growing exponentially. Based on online research and my discussions with people in industry, experts project that adoption of 3D Printing could dramatically alter the supply chain, with many suggesting that 3D Printing will reduce the total supply chain cost by at least 50+% as production will move from make-to-stock in offshore/low-cost locations to make-on-demand closer to the final customer with major reductions coming from transportation and inventory costs.

Adoption of 3D Printing is providing a new way for companies to manufacture products on demand in small batch sizes in physical proximity of the end customer with a capability to customize products. This has altered the supply chain equation in a complex way. Here is how this is impacting the traditional supply chain models.

Plan: “I get to have it my way” – Joe and Jane Consumer

3D printing’s most amazing impact will be how it puts consumers in charge of the supply chain—and most companies are not ready. The make-to-demand shift will take all the waste out of the process. Making the right inventory and putting it in the right place at the right time, puts the consumer/customer in charge. In the traditional supply chain model, companies take a huge gamble on whether and how many of a product they will sell, leading to waste and diminished profitability.

Source: Components on Demand

In the last decade, it has taken China 2 years to erect whole cities, and yet it takes that long to design and launch a bottle and a cap filled with a new shampoo or body wash. How can this be?

Traditional supply chains suffer from long lead times from sequential activities, with months required to design and source components, and then assemble them into a finished product. Much of the time and expense in supply chains derives from the need to design, test, and validate the product, negotiate with and monitor suppliers, install capacity and source materials globally and manage in-transit inventories along each step of the chain.

The specialization and economic scale benefits of globalization become outdated in a world where a 3D printer and various generic materials/inputs can make nearly any desired product relatively quickly with precision and high quality. Spools of generic materials require far less negotiation and planning. They also do not become obsolete and the quality is standardized, meaning that there’s less need to monitor supplier performance. Since nearly all value is added by the 3D printer and inputs are relatively low value, standardized commodities, Just-in-Time Inventory (JIT) and other inventory reduction approaches will be needed less.

3D printing means a greatly simplified, highly responsive, and infinitely flexible supply chain fulfills the order. In the future supply chain, the customer places the order first, and then a local, highly automated 3D printing shop produces the finished product and then delivers it, often via drones. Rather than plan, source, make and deliver, a future supply chain model will start with the consumer order which will initiate the make and deliver processes.

Make: Manufacturing and 3D Printing

Will 3D printing really disrupt global manufacturing? Will 3D printing render traditional manufacturing factories obsolete? And consequently, will logistics volumes be disrupted?

It is relatively clear that 3D printing will not be used to mass produce anything and everything such as run-of-the- mill commodity goods. 3D printing is much more suited for low volume high complexity SKU’s and spare parts. Instead, the promising advantages and applications of 3D printing illustrate that the technology’s greatest potential lies in its capability to simplify the production of highly complex and customizable products and parts, and a significant reduction in inventory. A growing number of innovative companies are experimenting with 3D printers, propelling the technology closer to the mainstream market.

For companies involved in this type of manufacturing, 3D printing could become a disruptive force that in the future redefines traditional manufacturing and supply chain strategies. Following are some realistic scenarios where the 3D printing revolution will take hold.

Spare Parts:

A quick search online will reveal that almost all leading 3D printing publications and studies mention the spare parts sector as one of the first areas to be disrupted by the proliferation of 3D printing. Why is this?

At present, hundreds of millions of spare parts are kept in storage all across the world to service products as diverse as cars to watches to sewing machines. Although most spare parts warehouses have a high proportion of fast-moving items, many items will rarely be used and some may never actually be needed. Imagine Ford not needing to carry spare parts in inventory for the cars, or parts for their older models held for collectors? Think of how much working capital can be liberated if these slow moving parts were never held in inventory to begin with and can be 3D printed on demand from digital files.

Direct Parts Manufacturing:

There are many exciting examples of companies in aviation, automotive, health- care, and other industries using 3D printing to produce individualized parts.

When customers require high levels of customization, 3D printing can represent a source of competitive advantage for the organization; companies are incented to create tailored parts that can be delivered quickly to the point of use.

As with the previous example of spare parts on demand, companies can work with logistics providers to create a network of 3D printers, each of which acts in essence as a small micro factory. These printers can be located in regional warehouses or local distribution centers.

Healthcare is a key industry capable of leveraging such a concept. Already the healthcare industry is using 3D printing in many different areas and achieving quality standards on a par with traditional manufacturing methods.

Medical technologies often are expensive when they enter the market, becoming cheaper over time, but many of the new 3D-printed solutions are coming in at a reasonable price point. This shift has the potential to disrupt the alarming trajectory of rising health care costs at exactly the moment when aging Baby Boomers will be putting more pressure on the health care system.

Part of the reason 3D-printed solutions are often cost-effective is the technology: the process involves building solid, three-dimensional objects from a digital model, using additive processes in which successive layers of material are assembled on top of one another to build the desired object. This process means that items can be assembled directly from a digital model, increasing precision and removing room for error. This is still early days in the Healthcare industry but the potential is game changing, as even replacement organs are being 3D printed!

Deliver: I Want My Stuff Now

3D printing is making its way into business, but many experts believe they will be making their way into homes prolifically. Recall that Jay Leno famously has a 3D printer that he uses to print spare parts as he works on his antique cars collection. How will this change the world? It will have a monumental effect if 3D printing goes mainstream. Goods will be made at home without the need for delivery. This is an extreme example as we are not there yet. However, as production becomes much more local, there will be a much lower need for shipping goods across the ocean. 

It is clear that 3D printing will become a huge enabler of the On-Demand Economy with the reduction of lead times. For those of you who believe that 3D printing is just a fringe technology overhyped by an enthusiastic maker community, or that its impact is limited to headline-grabbing futuristic experiments like 3D printed organs, think again. Industrial 3D printing, also referred to as additive manufacturing, is poised to significantly and permanently disrupt global production. No longer just a tool for rapid prototyping, 3D printing is now being used for end-use part production and adoption is growing exponentially. Are you ready for this massive shift?

If you liked this post, please click the thumbs up icon, comment, and share. I would love to hear your thoughts.