Additive Manufacturing Is Poised to Disrupt Conventional Manufacturing

STRATConsider that there now exists a single technology from which almost everything can be produced. In the near future, people will be able to simply print out objects on demand—at home and in factories. Parts and products will no longer need to be mass produced in China or other far away countries and then stored for years in warehouses. They can be produced close to the end consumer exactly when they are needed.

Manufacturing will once again flourish in America and Europe, and also in Africa, Costa Rica and Greenland. Waste from production and supply chains—both in materials, water and fuel—will be reduced by up to 50 percent. Mass consumer products will be made one at a time, customized for individuals, millions of times over.

In the last few months, my colleague Mitch Free and I have spoken with more than a dozen Fortune 500 CEOs about 3D printing, also referred to as “additive manufacturing.” The response has been shocking. Not only was every single executive we spoke with excited about the potential for additive manufacturing, but each one pointed us to a senior executive charged with managing the monumental transition to this emerging technology. In other words, the largest companies in the world are already dedicating substantial resources toward a historic shift away from conventional manufacturing. The coming era of additive manufacturing is not a question of if, but when.

“Mass consumer products will be made one at a time, customized for individuals, millions of times over.”

Truth be told, manufacturing hasn’t experienced a global paradigm shift since Henry Ford ushered in the world of modern production, pumping out Model-Ts at a price that almost any working person could afford by pushing scale and standardization to unprecedent-ed levels. This model of conventional manufacturing is now pervasive in almost every aspect of modern life. Hierarchies, companies, industries, even governments have all been built around this simple principal of production. 3D printing is now poised to change it all.

With additive manufacturing, there are no design limitations, what some refer to as a “complexity tax.” You can produce a seamless ball with a hollow core or drill the proverbial “curved hole.” Since each object can be made individually, additive manufacturing enables limitless customization—both in product and production location—which makes scale industrial production look restrictive and grey. These and other advantages are leading some experts to predict that industrial 3D printing may reduce average unit production costs by an astounding 25 percent, while reducing barriers to entry by up to 90 percent. Rarely has a technology generated so much promise—and such a threat—as 3D printing.

As with most new technologies, the quality of 3D printed objects was initially low, while the costs per unit were much higher than with conventional production. From 1990 to 2000, the quality of the printers increased, the costs decreased and, for the first time, the application of 3D printing in industry became feasible. Since then, 3D printing has been used primarily for rapid prototyping, a process that allows designers or engineers to quickly create a physical representation of the object they are designing. The market for 3D printing used for rapid prototyping has grown quickly to $1 billion in the U.S. alone.

Additive manufacturing promises freedom from the constraints of conventional manufacturing but—until recently—it has not been a cost-effective alternative for anything other than prototyping. However, history tells us that world-changing technologies often take time to develop. In 1811, trains were overweight, smelly novelties that often exploded; 30 years later they had remade the UK—and made their companies fantastically rich. Additive manufacturing is now poised for a similar leap. For the first time, 3D printing is now a viable alternative for certain areas of conventional manufacturing.

As time passes, improvements in quality and reductions in cost will accelerate. Industrial 3D printers are already producing thermoplastic parts with characteristics and tolerances comparable to conventional manufacturing. Companies across a range of industries have begun experimenting with this technology for small production runs, such as for spare parts, rapid iteration and customization. Meanwhile, revenues from the production of end-use parts have quietly grown from three percent in 2003 to more than 35 percent of the entire market for additive manufacturing services in 2013. Over the next several decades, more and more of the conventional manufacturing value chain will become vulnerable to the superior design flexibility,
customization and logistics available through 3D printing.

Businesses will be created and destroyed by the thousands. The implications of this great shift will be measured in the trillions of dollars. For example:
■ Products never before imagined will be created and personally customized.
■ Inventory and warehousing will be replaced by just-in-time production.
■ Replacement parts will be stored digitally in the “iTunes of Things,” where consumers can look up and print at home nearly any object on demand.
■ The global supply chain will be fundamentally different.

Industrial 3D printing is quickly ushering in a historic disruption in global manufacturing. How will your company be impacted? How will your operations and supply chain be re-crafted? What opportunities and threats will emerge that impact your customers?

Will you be the windshield, or the bug?