Even before Covid came into the picture, an emerging technology was already creating a platform for disrupting Globalization of Manufacturing. The technology is 3D Printing.
Originally developed as an automated method for developing product prototypes, 3D printing has the capability to significantly disrupt the Supply Chain by automating a significant proportion of manufacturing, eliminating need of parts suppliers and possibly reversal of the trend of manufacturing globalization.
However, the adoption of this technology has been slower than expected, one of the primary drivers being the high cost per part for parts manufactured. With advances in this technology happening on a daily basis, the cost will soon go low enough to justify the use of this technology since companies will also be able to get rid of the massive amount of inventory they need to hold due to long lead times. The other obvious benefit is the elimination of freight cost for moving parts from overseas.
In this article, we will review the different stages of evolution of the disruption 3D printing or additive manufacturing can bring to the Supply Chain Networks using a generic Supply Chain network example..
Supply Chain transformation from 3D Printing
In order to understand, at a high level, how 3D printing can disrupt of transform Supply Chain networks, we will use the network shown in the illustration below.
It shows a typical Manufacturing and Distribution Supply Chain Network, with tiers of suppliers and multi-echelons of distribution networks.
Some high level aspects of the network shown in the illustration above:
(1) Multiple tiers of suppliers that supply to each other as well as to the Original Equipment Manufacturer (OEM). Significant amount of regional transportation happens in this stage.
(2) OEM or the contract manufacturer does the final assembly and ships the final assembly to the next node, which is typically a Distribution Center (DC). If done overseas, this leg of shipment is generally Ocean or Air.
(3) The product, once it reaches North America or Europe, is moved in-land and then stored and distributed through multiple echelons of distribution network.
Phase One of 3D Printing evolution
In phase 1, many of the existing semi-fabricated goods suppliers are replaced by 3D printing plants, as shown in the illustration below. Few key strategic suppliers will still remain.
Phase Two of 3D Printing evolution
In this phase, the assembly plant also incorporates the technology, thereby reducing a decent size labor pool and most of the semi-fabricated goods suppliers.
Phase Three of 3D Printing evolution
In this phase of evolution, the final assembly plant transforms into kind of semi-finished goods assembly. Once the product reaches the final destination region, many primary DCs in these regions will also double up as 3D printer plants for spare parts, using their proximity to the customer and service engineers to meet tight service level agreements.
Phase Four – The Final phase of 3D Printing evolution
Global manufacturers are able to exploit the technology to produce goods without the need for large labor forces. Hence the low cost countries will lose their competitive advantage as manufacturing location and the production will be ‘re-shored’.
Raw materials will still be imported from other Global regions to 3D printing plants in Asia and Europe.
Despite having the capacity to disrupt Supply Chains in a significant way, 3D printing has not been able to take off as expected due to the following reasons:
(1) Cost per part is still relatively high
(2) Talent pool with the right know how is still limited
(3) Lack of enthusiasm on the part of major manufactures to adopt the technology due to factors like fear of failures, regulatory burdens, concerns over Intellectual Property (IP) etc.
These issues need to be addressed for mass adoption of 3D printing, which in turn is becoming critical in this age of tariff wars, nationalism and protectionism and now Covid19, to mitigate the risks associated with global manufacturing footprint.
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