Virtual Inventory in the Virtual Warehouse: Will 3D Printing Kill the Traditional Supply Chain?

3D printing has the potential to exponentially disrupt the supply chain and logistics industries—now and in the future.

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Gordon Styles, the founder and president of Star Rapid, a 3D printing service provider, has been 3D printing since 1993, about which he quips, “It was a huge surprise to me when, in 2011, I found out that 3D printing was just invented.” As Styles implies, 3D printing has only recently become a buzzword, which is sort of oxymoronic.

While it is still considered a major disruptive technology, the process was patented in 1984 and commercially available three years later. And while the technology may not be new today, its applicability in supply chain and logistics is going to revolutionize the way we design, manufacture, store and transport products tomorrow.

3D printing, also called additive manufacturing, incorporates the use of a digital product design or computer-aided design (CAD) file to control the addition of layer upon layer of material to create a 3D object or part. It is the opposite of traditional manufacturing in that it adds material—whether it be plastic, metal, ceramic or even chocolate—instead of subtracting it.

Similarly, 3D printing has the potential to turn supply chains on their head. Instead of manufacturing a part, then warehousing and transporting it outwardly from the point of manufacture, 3D printing permits parts to be manufactured wherever and whenever. Rather than shipping a physical part to a distribution center to store or logistics provider to transport, businesses can simply transfer a digital file of the part to be 3D printed within proximity to where it needs to be transported.

And the capability to print a part on demand eradicates the need to carry that inventory, which minimizes warehouse footprints and overhead costs. It also saves on transportation costs and greenhouse gas emissions from reducing unnecessary miles traveled, while also having the positive consequence of speeding up the supply chain as the part arrives when printed.

Because of this, 3D printing can also solve the problem of global supply chain sprawl. It may be more cost-effective to outsource some components in China, for example, but coordinating an efficient global logistics network to get those components to where they need to go after production can be a daunting—and expensive—task. Since producing parts with 3D printing, in contrast, can be done anywhere, part production can be positioned closer to strategic markets or logistics providers, thereby trimming the length of the supply chain, which slashes travel time, and logistics and inventory costs.

With virtual inventories come virtual warehouses and, in some cases, virtual parts transportation since file transfer is the only vehicle needed until the part is printed and ready to be delivered. Almost everything regarding supply chain or logistics can occur virtually.

Better Matching Supply with Demand in an On-Demand Economy

There is no sign of the on-demand economy slowing. In fact, consumers and businesses alike want what they want, when and where they want it, now more than ever. A Business Insider article, entitled “The On-Demand Economy Is Revolutionizing Consumer Behavior—Here’s How,” defines the on-demand economy as “the economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services.” 3D printing certainly qualifies as one of those services that satisfies instant consumer gratification.

The on-demand economy, combined with the need to trim excess inventory and reduce the burden of logistics costs, are just some of the obstacles that 3D printing is overcoming, thus making it an alluring reality today. Kent Firestone, COO of Stratasys Direct Manufacturing, an on-demand parts provider, notes, “Users can either print parts as needed or maintain a much smaller inventory at each location. When applicable, 3D printing facilitates fast production of needed components on site, allowing workers to get parts in their hands in a matter of hours or days. That kind of accessibility is invaluable.”

Due to the on-demand nature of 3D printing, it can also better match supply with demand. Forget the inaccurate, pie-in-the-sky demand forecasts of yesterday. “3D printing creates a more efficient supply chain and better matches supply with demand. People are realizing that 3D printing is an option: I don’t have to buy 5,000 when I only need 500,” says Alan Amling, vice president of corporate strategy at United Parcel Service (UPS), one of the world’s largest package delivery companies, which employs more than 60 3D printers in its U.S. stores.

He says that the current demand for 3D printing centers around low-volume production, which can include prototypes, service parts and minimum order quantities.

Traditional manufacturing requires specialized tooling to make unique parts, and creating the tooling itself is an expensive and time-consuming endeavor. Due to economies of scale, however, it makes sense for mass production because the tooling can be used indefinitely for high-volume parts. By definition, low-volume production (as is the case with prototypes, service parts and minimum order quantities) can’t achieve those economies of scale.

3D printing foregoes the need for this specialized tooling, making it ideal for low-volume production. Firestone confirms, “Using 3D printing for low-volume projects means companies don’t need to invest the time and money into tooling. While tooling is more cost-efficient for high-volume runs, it is cost-prohibitive for low quantities. The time savings also mean companies can get to market faster.”

The service parts logistics sector depends upon quick accessibility for service parts in case of an equipment shutdown due to a damaged critical component. These service parts, while crucial to keeping operations running smoothly, don’t frequently turn or, in some cases, don’t turn at all. And there was no solution for all of these slow-turning products taking up space in the warehouse ... that is, until 3D printing became available. 3D-printed service part designs can be downloaded and parts printed in the back of a truck to more rapidly and easily service customers.

The same can be said about having no solution for disproportionate minimum order quantities. It is frustrating when an organization may only need 100 of a part, but the minimum order quantity is 500 or 5,000. Amling says these scenarios spurred UPS to bring on-demand manufacturing through 3D printing into its supply chain network. The company viewed it as not a manufacturing solution, but a logistics solution.

Not Just a Concept: 3D Printing in the Real World of Logistics

UPS uses a two-pronged approach to 3D printing with its customers—first is pre-production to make a business case for implementing 3D printing or traditional manufacturing, and second, production itself. The company works with partners, such as SAP, to determine if 3D printing is an appropriate solution for a specific product. They ask questions like: Can 3D printing integrate with the customer’s current production methods? Does it make economic and design sense?

Amling warns, “It’s no small task to identify what parts make sense for 3D printing and approve suppliers and certify parts. If you really want to take advantage of it, you need to go through that process and you need to start now, because as these technologies keep getting better, you’re going to see the value and not be able to get there quickly because you didn’t do any of the work. You can’t adopt industrial 3D printing until you go through that process. There’s no bypassing it. You can’t put it into virtual inventory until you prove that the technology and material meet all of your quality standards.” It’s your reputation on the line, after all.

If pre-production proves the use case for 3D printing, then UPS gets further involved, from production through to delivery. In fact, UPS invested in Fast Radius, a 3D printing company, absorbing its expertise and capabilities, then surrounded it with its global logistics network and integrated it so that 3D-printed products can seamlessly go from production to the part’s final destination.

In UPS’s Louisville facility, which houses the company’s first 3D printing factory, Amling boasts, “Our pull time is 1 a.m., so we can really produce until midnight and get it anywhere in the country by the next morning. It’s the integration of manufacturing with a logistics network that makes that possible. The idea is to take these manufacturing pods, what we call our 3D printing factories, and put those in different regions of the world because, as 3D printing begins to really take off and we see more adoption, we are going to see goods being manufactured in smaller quantities, more frequently, closer to the point of use.”

The Future of 3D Printing—Will the Supply Chain as We Know It Die?

The lines between science fiction and reality are blurring. A machine that can make whatever your heart desires on demand? It’s not that far off. A couple years ago, TNT, an international courier delivery service provider, partnered with trinckle 3D, a 3D printing software and service provider. According to Styles, TNT can imagine—and is anticipating—“a time when manufacturing is so localized that people would just go to their local 3D print bureau, choose what they want or order it in advance, and just pop down a few hours later and pick it up, or it’s delivered to you (what is called the last mile).

“TNT and UPS and FedEx are thinking very far in the future and asking the question: What if there was no need to produce something in another country or another end of the same country, and ship it all the way to the customer? There’s no need for a logistics company anymore? That’s why they’re just starting to play with this idea of logistics companies becoming the manufacturer.”

One of the obstacles that 3D printing has to overcome to gain wider adoption in the supply chain and logistics industries, however, is 3D printer and material costs. But it’s only a matter of time before that happens. And once it does, and the cost of these 3D printers make them accessible to the consumer market, then what? It’s not a question of if consumers will 3D print their own parts, but when. What will become of the supply chain and logistics industries then?

“Just a few years ago, national news outlets were raving about how 3D-printing users could print phone cases at home instead of running to their local electronics store. Right now, that just isn’t feasible, nor cost-effective for most organizations or individuals, but we see that as an area ripe for disruption in the coming years,” confirms Firestone.

“The supply chain and logistics market could be drastically changed, especially for consumer products, as 3D printing technology advances, and technology and material costs come down. Those developments could condense the supply chain—raw materials, manufacturing, distribution and retail. With that, sub-tier suppliers will be reduced, consolidated, or in some cases, potentially eliminated,” he says. “Manufacturers may no longer be providers of specific components: Instead, they could be suppliers with warehouses of printers ready to produce parts at the press of a button.”

Amling concurs. He thinks 3D printing is going to eventually mature to the point that more products will be produced on demand, reducing unnecessary transportation and warehousing in the supply chain. He forewarns, “If you aren’t playing in this space now, you’re going to be left behind.”   

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