Saturday, September 29, 2012

3D Printing - Don't Reduce Costs - Eliminate Them!

You have heard me say over and over again that the ultimate goal is not just cost reduction it is the actual elimination of costs.  Think e-books and iTunes® and think of all the costs which just were  totally eliminated.  No one figured out how to "reduce" the costs of shipping books rather they just eliminated the shipment all together.

An early trend I am watching now is the idea of 3D printing.  This may even be too early to call it a "Mega-trend" however I think it is something we should be aware of.  Just like the elimination of shipments of things which have been digitized (books and music) the next frontier are physical "hard" parts.

At the end of this post is a neat little video which explains this technology.  Think of it this way:  If you need to make something which is made out of one material you could just load the material, load the digital specs and the printer does the rest. The key for Logistics people is the part is printed at the point of use and on demand.  This has two implications.

First, as this gets better and better and costs come down for the machines more and more product will be made this way.  This means less product is made at some far away factory and shipped.  This will result in a continued headwind on shipping volumes.

Second, this will also dramatically reduce or even eliminate inventory.  No need to stock 30 days supply of something when you can "print on demand".  This also puts downward pressure on freight demands as less and less distribution will be needed (also has huge implications for warehousing).

3D Printers from Tasman Machinery

To the left you can see what these machines look like.  I just found these off the Tasman Machinery website (no endorsement just a good picture).  Like all electronic machines during their infant stage there is a lot more development to happen and I am sure it will happen.

Here is a picture of actual wearable shoes made with 3D printers and above is a picture of a model / replica of a ship made with 3D printers.

You may look at these products and say there is nothing to worry about as it will take a long time for these types of products to be brought into production.  Of course, I would have to remind you this is what people say about all disruptive and new technologies at the beginning.

 I think this will develop rapidly and this could be the "new normal" for a lot of manufacturing of sub assemblies and parts.  As I said above, this will eliminate the need to ship this product and, of course, lessen the demand for transportation.  One can clearly imagine a day when you walk into a store, need a basic product and rather than the hassle of inventory and distribution, the store clerk will just "print on demand" for you in the store.  Huge implications for freight costs and demand, inventory and warehousing and S&OP processes. 

According to a blog post by Richard Gottlieb at Global Toy News we may be at a tipping point as it relates to the use of 3D printing in the toy industry.  He rightfully highlights the implications and benefits of this technology by saying:
  • If you own enough 3D printers, why would you need to own any inventory?  You could print out on demand.  It’s JIT (Just in Time) in its truest sense.
  • If you can print out small batches without the need for molds or factories?  Anyone can enter the marketplace with a new item.  The only cost is for the material.  
  • If the need for factories and engineers declines, what happens to people who currently hold those jobs?

Again, this is pre "mega trend" stage but watch it closely as these types of technologies have a way of taking off.

Below is a great little video explaining what this is all about:

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