Tuesday, March 12, 2013

3D Printer's Impact on Global Supply Chain

In this week's reading Atoms Are the New Bits, I read about how 3D printing is allowing small start-up companies to become manufacturers without requiring high capital investment. It seems that 3D printing has suddenly become a buzz word these days. I didn't know anything about it until I watched a recent episode of The Big Bang Theory. In that show, the two main characters, Raj and Howard, were first designing figures of themselves through a design-your-own website. But when they received the figures, they were disappointed by the result and decide to buy a 3-D printer to print a new one by their own. Below is a video introducing how the 3D printer works.

In fact, 3D printer can print cars, houses, guns - whatever you can think of. Surprised by the technology and the capability of the 3D printer, I was wondering since customers can print whatever they want through 3D printer, will it hurt the demand for traditional businesses and thus affect the global supply chain?

Positive Impacts
Responsiveness - Since the 3D printer could print anything at anytime as long as we have the model data, it becomes possible for manufacturers to start producing product right after they received the order. This could help companies to easily apply the Build-to-Order model and reduce lead time.[1] Besides, as shown in the video, 3D printing technology allows people to print things as a whole. That is to say, the company no long need to wait until all parts to be manufactured and shipped and then start to produce. As long as the company have enough amount of 3D printing materials in stock, it could be its own supplier, manufacturer and assembler. All these changes lead to a leap in the responsiveness of the company's supply chain.

Cost - As discussed above, the assembly cost could be eliminated if a manufacturer applied 3D printing into their production line. This could result in a huge change on supply chain design that since cheap assembly labor is no longer needed, the company could move its manufacturing plants closer to its costumers. The location changing could also lead to a reduce in transportation cost. Moreover, the company will ship the product to the customer right after it is produced. This means the overall inventory level will drop near zero. Thus, except for the 3D printing raw materials, the actually inventory cost of holding end product will be minimised. Therefore, the overall cost throughout the supply chain could be largely reduced.

Negative Impacts
Intellectual Property - From the video we could see that as long as you have the goods you want to make, you can always use a 3D scanner to scan it and the system will automatically detect and build up a model for it. Thus, if someone buys a product in store, 3D scan and print it back home, and sell it to other people, then the company's copyright will be infringed.

Losing customer base - As mentioned before, since 3D printing makes life so much easier, why don't people just buy one and print things themselves? However, someone may say that 3D printer has limitation in aw material input (they think that 3D printer can only work with plastics). In fact, as the technology develops, we now have a wide variety of 3D printing raw materials. See from http://objet.com/3d-printing-materials. Thus, the customer demand might decreases and thus harm the downstream of the supply chain.

In my opinion, the biggest barrier that keeps customers away from owning a 3D printer by themselves is the cost. The price of 3D printer is around $20,000. And the cost of raw materials is also high: PVC for example, only cost $1.63 per cubic inch. But taking in account of the amount waste material generated, the cost increases dramatically to $25 per cubic inch.[2] At this cost level, people might need to rethink if it's worthy to own a 3D printer.

Questions: It seems that 3D printing has make it easier to start a business since all the product line is integrated into a single machine. Under this situation, what moves should the current manufacturers do to maintain their competency? Besides, how could company better protect their intellectual properties against 3D printing?

[1] http://www.smartplanet.com/blog/bulletin/3d-printing-may-put-global-supply-chains-out-of-business-report/2019
[2] http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/4280/The-Real-Cost-of-Materials.aspx

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