The 3D printed supply chain: stronger, faster, and more flexible.
My first encounter with 3D Printing was 15 months ago on deployment to Bahrain. 'While reading New York Times bestseller, Abundance: The Future is Better Than You Think by Dr. Peter Diamandis (Chairman and CEO of the X PRIZE Foundation) and Steven Kotler (bestselling author and science journalist), I was introduced to the technology as one of several that have the potential to solve the world's greatest problems. They explain that, "Suddenly an invention developed in China can be perfected in India then printed in Brazil on the same day." (LOC 1369 Kindle)
Working in the supply office of a US Navy Minesweeper helped me realize the vast potential that could be unlocked if we had access to a 3D printer on the ship. Assuming we could print enough parts to justify the initial investment in the technology, we could save time and money on transportation costs, benefit from skilled technical distance support, reduce opportunity cost (the cost incurred when we don't execute), and increase overall mission readiness. The idea of not having to suffer long lead-times for one-off production runs of legacy parts, items no longer provided through the Navy stock system, intrigued me and I began to investigate the history and capabilities of this technology.
INVENTING THE 3D PROCESS
In 1983 Chuck Hull invented Stereo-lithography, a process that uses an ultraviolet laser to cure a photopolymer resin one layer at a time to build a three dimensional object. He subsequently founded 3D Systems in 1986. Over the past 30 years, the technology has been steadily evolving to its current state. Some would mistakenly take this relatively slow evolution coupled with the current capabilities and limitations to mean that the technology still has a long way to go, but others (who understand the concept that supports Moore's Law (l)) (ii) realize that we have just recently reached the tipping point. In a March 27, 2013 Forbes article, TJ McCue quotes Terry Wohler, a widely recognized expert on the AM industry, explaining that:
"Low-cost 3D printers affect both the professional and consumer markets. The increased sale of these machines over the past few years has taken additive manufacturing (AM) mainstream more than any other single development. 3D printers have helped spread the technology and made it more accessible to students, researchers, do-it-yourself enthusiasts, hobbyists, inventors, and entrepreneurs." (iii)
In an effort to gain a greater understanding of the true potential locked inside 3D printers, I ordered an Ultimaker Fused Disposition Modeling (FDM) 3D Printer kit ($1800). After 6 weeks of waiting, it arrived in the mail and I built it in about 20 hours in my living-room. FDM is a process where the printer moves a controlled temperature nozzle attached to a plastic extruder around a three dimensional grid and "prints" thin layers of molten plastic to build a 3D object layer-by-layer.
Trial and error quickly demonstrated that FDM was not going to be producing industrial-grade consumer-ready parts any time soon. Additional research led to the discovery that Selective Laser Sintering (SLS) and Direct Metal Laser Sintering (DMLS), though drastically more expensive, have significantly greater potential for industrial manufacturing applications. These processes use a laser to build three dimensional objects by sintering (melting) raw material in powder form (ABS plastic, titanium, tungsten carbide, ceramic, etc.) layer-by-layer, sometimes only microns thick at a time, depending on the desired resolution of the object. One of the benefits is that little or no structural support is needed for complex objects. Each sintered layer is surrounded by unsintered powder providing support for any difficult angles the object may have. When complete, the unsintered powder can be immediately reused to build another object thus eliminating all waste in the production process. By way of development and strategic acquisition, three primary producers of these systems have risen into the spotlight: 3D Systems (NYSE: DDD), Stratasys (NASDAQ: SSYS) and Ex One (NASDAQ: XONE).
I wasn't the only one thinking about 3D printing. In May 2013 Staples was the first major US retailer to announce the availability of 3D printers, featuring the Cube[R] desktop 3D Printer from 3D Systems ($1299), for purchase online and in their stores, making the technology even more attainable for in-home use and exploration. (iv) In an effort to compete with 3D Systems' Cube[R], Stra-tasys announced on June 13, 2013 that it had completed a $403 million acquisition of leading desktop 3D printer manufacture, Makerbot. The sale also included Makerbot's online website Thingiverse.com, which boasts the largest collection of downloadable digital designs.
More recently we have seen these desktop consumer grade FDM printers show up on popular e-commerce sites like Amazon and SkyMall. Moving this technology into individual consumers' homes represents a quantum leap for the 3D printing industry. Though FDM is not geared towards industrial-grade parts production, giving individual consumers familiarity with the processes that surround 3D printing will create a launch pad for the arrival of cheaper, more advanced SLS desktop consumer-grade printers. The next iteration of these printers is destined to hit the market place in the next 12 months when key patents begin to expire early in 2014. The 2013 Wohlers Associates report, Additive Manufacturing and 3D Printing the State of the Industry, projects that:
- The industry is expected to continue strong double-digit growth over the next several years. By 2017, we believe that the sale of 3D-printing products and services will approach $6 billion worldwide. By 2021, we forecast growth to reach $10.8 billion. It took the 3D printing industry 20 years to grow to $1 billion in size. In five additional years, the industry generated its second $1 billion. It is expected to double again, to $4 billion, in 2015," (v)
INVESTORS IN 3D PROCESSES
The technology has also received attention from producers and designers for its ability to rapidly generate complex, small-scale prototypes and bring two-dimensional Computer Aided Design (CAD) images to life in a fraction of the time normally required by traditional manufacturing methods and supply chains. Two companies that have leveraged this technology in their business models, Proto Labs (NYSE:PRLB) and Shapeways, offer faster distribution of finished products and prototypes to customers by reducing production lead-times. Logistics companies are also starting to realize the potential this technology presents. On July 31, 2013, UPS distributed a press release announcing it would be the first nationwide retailer to test 3D printing services in-store in an effort to meet the demands of small businesses seeking access to the technology for prototypes, artistic renderings, and promotional materials." Now that a manufacturer can rattle off several iterations of a product prototype without being held back by the high-cost of prototypes, it can deliver superior products to the market more quickly. This also reduces the barriers to entry for small businesses and promotes greater competition in the marketplace.
To show just how serious some companies are taking this technology, on November 20, 2012 GE Aviation announced the acquisition of privately owned 3D printing company, Morris Technologies and sister company Rapid Quality Manufacturing. GE plans to use their DMLS process to produce lighter, more intricate jet engine parts to meet growing production rates over the next five years. "Morris Technologies and Rapid Quality Manufacturing are parts of our investment in emerging manufacturing technologies. Our ability to develop state of the art manufacturing processes for emerging materials and complex design geometry is critical to our future," explains Colleen Athans, general manager of GE Aviation's supply-chain operations: (vii)
UNDERSTANDING THE SUPPLY CHAIN--CURRENT AND FUTURE
When thinking about this technology in reference to the supply chain it's clear that the supply chain isn't going away; it's just going to change and become more effective. During a recent interview with Iry Varkonyi, Professor in Supply Chain Certification at APICS, we discussed the tremendous impact 3D printing could have on the traditional supply chain. Mr. Var-konyi hypothesized that 3D printing will lessen the burden placed on the Sales and Operational Planning (S&OP) processes. This will take place through balancing supply and demand by reducing dependence on forecasting as 3D manufacturing reduces the lead time to produce final products in response to consumer demand and eliminating obsolescence of expired products.
In manufacturing we build things based on how to get the lowest unit cost and benefit from economies of scale." He explained, "Often the lowest unit cost is nonresponsive or does not reflect actual customer needs, rather it is a product of S&OP calculations and anticipated demand." (viii)
During our conversation, Mr. Varkonyi referenced the book publishing industry as an example of one that experienced drastic technological change due to the invention of the Kindle and other e-reader devices. If you think about the Kindle as a 3D printer you can see the story start to unfold. He outlines that:
"It used to be that when a book was printed thousands of copies were printed at the same time and distributed to book stores, leaving any errors uncorrectable. Now with the dominance of e-books an author can go back into his work and make corrections, so that all future copies of the book sold reflect the change. The consumer meanwhile never has to leave his or her home to purchase the fully digital product through the reader device. device. 3D printing will provide manufacturers this same flexibility in prototyping, production and delivery."
This example highlights the potential course and impact the technology will have. 3D printing creates a future where we start to think about hardware in the same sense as software. It is no coincidence that e-commerce sites like Amazon have begun building large server farms and cloud-based networks. They are moving in this direction so the infrastructure will be in place when the technology demands it. In the future they may become more information based rather than supply chain oriented companies.
3D printing is one of three transformational technologies highlighted in a recent executive report, The New Software-Defined Supply Chain: Preparing for the Disruptive Transformation of Electronics Design and Manuficturing, by the IBM Institute for Business Value. In the report IBM explains that the emerging technologies of 3D printing, intelligent robotics, and open source electronics will create a manufacturing environment that is driven by digital data. "The result: a reconfigured global supply chain will emerge in the coming decade. It will radically change the nature of manufacturing in the Electronics industry, shifting global trade flows and altering the competitive landscape for both enterprise and government policy makers." They go on to explain that, "Despite the enormous press coverage that technologies like 3D printing have achieved, we found that manufacturing leaders remain ill-prepared for these transitions." (ix)
In order to understand the transition and benefits that will come from the implementation of 3D printing, we have to examine the traditional supply chain and break down its individual pieces and costs. Simply put, in a system of mass production, companies are striving to achieve the lowest possible unit cost of production. This is often done through standardization of subparts across product lines and industries. These "cheap" goods are transported from the manufacturer to a warehouse leaving a potentially large carbon foot print. The items are then stored, inventoried and managed in a warehouse until being distributed to consumers in response to actual demand. In private industry, items that are not distributed go through a cycle of markdowns and costly marketing campaigns, until no longer needed, or it is no longer cost effective to store them. They are then disposed of at a cost to the producer, representing obsolescence costs, in the process we know as reverse logistics.
Assuming S&0P is effective, transportation cost, storage time, and obsolescence will be minimal. However, this is not always the case, as production quantities are often dictated by the goal of achieving the greatest economy of scale, rather than actual demand. Customized parts and prototyping costs are are exponentially higher than standard productions and are where consumers face long lead-times, costly one-off production runs, and high transportation costs because they are unable to benefit from the system of mass production. A similar situation is faced in military acquisition when commercial parts do not meet an item's required specifications, thus driving up costs.
In calculating the effectiveness of 31) printing, we have to look at total ownership cost of a unit, rather than only considering the per-unit cost of production. The all-encompassing costs related to the item as a whole include: production, transportation, storage (warehouse costs, heating, cooling, manning), management, and potential disposal. With all of these variables in mind it is very difficult to break down costs on a per-unit level, but is the only quantifiable method of demonstrating the technology's fiscal superiority.
When assessing the viability and cost effectiveness of 3D printing supported supply chains, many of these high total-ownership costs can be reduced. 3D printing presents the potential of local manufacturing that will reduce lead-times and transportation costs. Efforts to promote standardization of subparts can be avoided because objects can be digitally altered before printing, to meet individual product line and consumer specifications, at minimal cost to the producer. When the per-unit cost is no longer a factor, we can move to a system of on-demand manufacturing where production accurately reflects consumer demand. This cures the problem of obsolescence and improves the value proposition for S&OP. On-demand manufacturing also reduces the need for warehousing, as manufacturers will be able to shift from storing end goods to raw materials and have substantially more flexibility in production, as one raw material provides access to numerous end goods. The increased capability provided by 3D printing will significantly reduce the carrying cost of an organization, simplify a complex supply chain, and reduce the number of steps it takes to move a product to the market.
I had the opportunity to speak with James Coleman, Founder and CEO of ecommerce site Makerstash, which specializes in 3D printer filaments and supplies. Mr. Coleman foresees some very interesting impacts for 3D printing technology with regard to the supply chain. He explained:
"3D printing provides a very low cost to complexity ratio and the ability to create something that is custom on the spot. This ability presents a very interesting potential in the future. When thinking about traditional e-commerce sites, Amazon's attention, for example, is focused on how they can get material to the customer quickly. They work to solve the question of how can we organize ourselves to get customers the piece of equipment when and where they need it, at a fair price to buyer and seller. When you add 3D printing to that problem set, you can start to change how you fulfill that need." (x)
According to Mr. Coleman, the supply chain will gradually change and become more flexible. He doesn't see it happening in the immediate future because of the limitations on producing the more robust parts, but it's only a matter of time before the focus shifts from moving end goods to moving strictly raw materials, a premise which he has built his business around. Much like Mr. Varkonyi, he also sees potential for a shift in the way we think about logistics and explains that:
"Rather than thinking about how much of a specific item you need to be holding, when you are moving raw materials that can be used to build many items, you create a natural flexibility and eliminate the complexity of the supply system. For example instead of managing 20 different SKUs for stainless steel bolts, you now have a printer that can produce each of these items and print on demand. Having to manage only the raw material makes the system orders of magnitude easier." (xi)
This is a fantastic idea for the future, but James recognizes that there is a substantial gap between today and where the technology will be in the future. Companies tend to ignore 3D printing because the print materials aren't broad enough yet and the costs associated with printing in metal are prohibitively high. This will all change as the industry gains traction and he further explains:
"As costs come down there will be some pretty startling impacts on the way we do business. I have a small e-commerce shop that is just getting started. What excites me about the technology is the huge potential impact. I think the technology leaves people feeling empowered to create, which is a huge deal. If you have a problem at home with a 3D printer you can now deal with it by finding a digital drawing of the object online and printing the needed part." (xii)
To stay relevant, it is imperative that companies prepare for this transition. With the Pareto Principle (80/20 rule) in mind, organizations have to examine the parts and products they use to determine those that can be manufactured using a 3D printer. The current state of technology supports production of "B" and "C" items, those items that make up about 20% of sales. Initially this volume will not have a noticeable impact on the shipping industry. There will be an increase in the distribution of raw materials that will likely offset any impact of local manufacturing. However, as the technology improves and new uses arise, we will see an even larger shift in the number of goods that are produced by 3D printers, causing greater disruption in the supply lines. Car companies like Fore (xiii) and GM (xiv) are already taking advantage of the rapid prototyping capabilities of 3D printers to reduce development costs. Auto repair shops will also benefit by making one-off components rather than waiting for suppliers.
Leading edge technology and engineering solutions companies like Alion Science and Technology are implementing 3D printing into their production processes as well. During a conversation with Eric Peterson, Chief Scientist and Program Manager at Alion's Rapid Engineering Solutions Facility, he recalled that the company began using 3D printing about eight years ago. Since then, he said, "I cannot think of a single project here (at Alion) that we haven't used a 3D printer for in one way shape or form. I don't know what we would do without it. Mr. Peterson has high hopes for the future of 3D printing in metals and explains that, "there is amazing potential in using and creating new alloys and other materials using this process. (xv)
Alloying is the addition of other elements to metal that improves strength, corrosion resistance and enhances its properties.xv In addition to alloys, he goes on to explain that, "The potential of direct printing of circuit boards has been tried with some limited success--and has really cool implications for repair and creation of replacement circuit boards for immediate use right where you need them. Imagine the progress that will happen when 3D printing gets the resolution and materials required to print not only conductors and insulators, but semiconductor devices directly as part of the printing process. It is certainly now within our realm of imagination. We can already print conductive and dielectric materials, so direct printing of things like capacitors is within our technological grasp." Mr. Peterson predicts we will see these and ocher technological advancements in less than 10 years now that the technology has pushed past the bleeding edge. (xvi)
MILITARY 3D PRINTING
The focus on development and implementation of 3D printing is not restricted to private industry. The President made it clear that he intends to push for AM technology development across the DOD. This will have significant implications for the companies and supply chains that support it. All branches of the military have been researching ways to leverage this new manufacturing capability, whether it's on the battlefield, ship, or in a hanger bay. The government recently completed the first of 15 manufacturing innovation institutes in Youngstown, Ohio, to be headed by the US military, with the purpose of harnessing the power of 3D printing technology. Five federal agencies including the Departments of Defense, Energy and Commerce; the National Science Foundation; and NASA have $45 million of combined funds to invest in the institute, with an additional $40 million to be raised from private funds. (xvii)
On the waterfront, LT Ben Kohlmann, head of the Chief of Naval Operations' Rapid Innovation Cell at the Navy Warfare Development Command, has been working tirelessly to move the Navy's AM initiative shipboard. Because of the amazing uses for 3D printers in the medical environment, he is targeting one of our Nation's Hospital ships as a test subject. (xviii) During his research, he uncovered an intricate network of engineers and supply types throughout the Navy's research and development labs, and maintenance detachments that have been working with 3D printers for over a decade. He has also connected with similar types from the Army, who are using this technology on the front-lines with the Special Operations Forces to provide units greater flexibility to produce on-demand parts for their missions. This is a unique opportunity to integrate advanced engineering distance support onto the battlefield in real time. According to LT Scott Cheney-Peters, who is assisting LT Kohlmann with the project and authored a recent Proceedings article on 3D printing in the Navy, "As additive manufacturing matures, it creates increasingly compelling logic, and exciting opportunities for far-flung supply chains such as the Navy's." (xix)
These forward thinkers recognize the extraordinary capability and future potential that this technology has to elevate the mission readiness of our armed forces. Further research, development, and implementation of 3D printing technology will help the United States maintain superiority in a fiscally constrained environment.
LEADING EDGE--THE FUTURE OF 3D PRINTING
Open source hardware designs coupled with the expiration of key patents on SLS 3D printers will open the playing field for small businesses to expand upon the current iterations of the technology. There are dozens of private companies and universities already working to develop different facets of this technology, and we are seeing some amazing results that are not limited to industrial manufacturing. Researchers at Cornell University have been working to perfect a printer that produces ready-to-eat food. Bio-printing company Organovo (NYSE: ONVO), a San Diego based firm, has developed a printer that can print human tissue with the intention of furthering medical research and eventually printing replacement organs. Made In Space is working with NASA to enable the future of space exploration by being the first company to develop a 31) printer that will work in zero gravity. MAKE XYZ is increasing access to 3D printers by building online networks of local manufacturers that allow users to leverage the technology, without owning it, to have parts manufactured and delivered the same day. Implementation of this technology reduces the complexity of traditional supply chains enabling businesses to stay relevant and competitive in the global marketplace. With this understanding in mind, it is realistic to predict that we will see disruption to the way traditional supply chains operate in the next 18 months, with substantial changes taking place in the next decade. Is your company ready For this transformation?
(1.) Moore's Law--The number of transistors incorporated in a chip will approximately double every 24 months. Continuing Moore's Law means the rate of progress in the semiconductor industry will far surpass that of nearly all other industries. (Gordon Moore, Intel co-founder) It is becoming clear that 3D printing technology will experience the same rapid exponential growth in hardware, software and materials.
(iv.) http://investor.staples.com/phoenix.zhtml?c=96244&p=irol-newsArticle&ID=1814995&highlight=3D%20 Print, Staples First Major U.S. Retailer to Announce Availability of 3D Printers, May 3, 2013
(v.) http://wohlersassociates.com/blog/, Terry Wohlers May 25, 2013
(vii.) http://www.geaviation.com/press/other/other_20121120.html, GE Aviation acquires Morris Technologies and Rapid Quality Manufacturing
(viii.) Interview with Iry Varkonyi
(ix.) The New Software-Defined Supply Chain, IBM Better Business Value, Paul Brody and Veena Pureswaran
(x.) Interview with James Coleman xi Interview with James Coleman
(xii.) Interview with James Coleman
(xv.) Interview with Eric Peterson
(xvi.) Interview with Eric Peterson
(xviii.) Interview with LT Ben Kohlmann
(xvix.) Interview with LT Scott Cheney-Peters
Lieutenant Ray is a Contract Specialist at Naval Sea Systems Command and serves on the Board of Directors for the NDTA Washington, DC Chapter He is also an MBA Candidate at the F.W. Olin Graduate School of Business, Babson College. Prior to earning his commission as a Supply Officer in the United States Navy, he graduated from Trinity College, Harford, CT with a bachelor's degree in Economics. To request more information on this article or to discuss the topic further he can be contacted at JasonTRay@gmail.com or via LinkedIn at www.linkedin.com/in/JasonTRay/
By LT Jason T. Ray, SC, USN
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|Author:||Ray, Jason T.|
|Publication:||Defense Transportation Journal|
|Date:||Oct 1, 2013|
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