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February 21, 2017
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Research confirms that three-dimensional printing is already revolutionizing supply chains. Here's what is actually happening in the market, along with10 considerations for anyone who's exploring adoption of this technology.

Three-dimensional printing (3DP) has been heralded as a manufacturing revolution, even to the extent that it will rival the impact of Henry Ford's assembly line.1 This evolving technology can significantly change supply chains by moving production closer to consumers, reducing inventory, rationalizing stock-keeping units (SKUs), shortening product lifecycles, and reducing transportation costs and carbon emissions—name a supply chain performance metric, and 3DP can likely improve your score.

In 2008, CSCMP's Supply Chain Quarterly was not alone in exploring the possibilities of what 3DP could mean for the supply chain; an article by the U.K.-based proponent Phil Reeves predicted that 3DP would dramatically lower costs, increase product availability, and even create new markets that were previously unknown or unavailable.2 However, five years later, another article in Supply Chain Quarterly, by IBM executive Paul Brody, reported that supply chain leaders were failing to see how technologies like 3DP will revolutionize supply chains.3

Article Figures
[Figure 1] 3DP analysis timeline
[Figure 1] 3DP analysis timeline Enlarge this image
[Figure 2] Supply chain impacts by industry and product type
[Figure 2] Supply chain impacts by industry and product type Enlarge this image

So which is it: a revolution or a non-event? To help answer that question, in this article we summarize research from the University of North Florida (UNF) that examined recent implementations of 3DP in supply chains, specifically looking at those that are currently using 3DP to print a product that is already for sale. We also provide information about the current state of 3DP usefulness and assess the accuracy of some of the predictions made in earlier articles. This information allows us to gauge the types of changes that are occurring and provide information supply chain managers can use to understand the capabilities and possibilities of this new technology. Finally, we offer 10 considerations to think about before adopting this technology.

An introduction to 3DP research
Three-dimensional printing, also termed additive manufacturing, direct digital manufacturing, and rapid manufacturing, is a revolutionary technology that allows a material such as plastic, metal, or foam to be applied in layers to manufacture an item based on a digital representation, such as a computer-aided design (CAD) drawing or a digital photograph. Some versions of 3DP can even make products with moving parts without requiring assembly. Using this technology, it is possible to manufacture thousands of different products physically closer to the time and place of consumption, thereby eliminating inventory, transportation, and waste. Furthermore, consumers can manufacture their own products using 3-D printers in their homes. When products are produced in this way, eliminating many layers of processes and inventory, supply chains are significantly changed.

Previous researchers have observed that often innovation becomes integrated in the marketplace as a process that takes place over a period of time, rather than as a cataclysmic event.4 For that reason, with most new technologies we overestimate their potential in the short term and underestimate it in the long term.5 We also know that even when they take hold over time and as a process, technological innovations do not always have a monumental impact on a market. In 2012, Barry Berman of Hofstra University predicted that 3DP would follow a three-phase evolutionary process: First, it will be used for prototypes. Second, 3DP will be used for finished-goods manufacturing. And lastly, 3DP will be carried out by end consumers in their homes.6 All of these uses for 3DP are active in the marketplace today.

To identify and understand the recent and evolving uses of 3DP technology in the supply chain, we examined newspaper articles and company announcements that highlighted 3DP innovations between May 2014 and March 2016. Supply chains that were directly impacted by 3DP were identified if three criteria were present in the article or announcement: it mentioned a specific company, it mentioned a specific product, and the product was already available for purchase or for use in manufacturing another item that was available for purchase. Implementations for prototyping were not considered "impactful" since 3DP wasn't used to directly manufacture products. We did not examine announcements about 3-D-printed products that will be available for purchase in the future.

Our research uncovered a total of 201 supply chains (5.1 percent of a total of 3,929 press announcements examined) where 3-D printing was significantly changing the supply or distribution of a product. We also found that the number of companies using 3DP is quickly increasing. Figure 1 shows the number of supply chain impacts tabulated both by month and cumulatively. The line indicates the percentage of the total press announcements examined that indicated an impacted supply chain.

Who's using 3DP to change supply chains?
In his 2008 article, Reeves suggested that the new supply chain structure that would be enabled by 3DP might eliminate many parts of the traditional supply chain, possibly impacting lead times, inventory management, and logistics costs. Consistent with Reeves and another forecast published in the Journal of Business Logistics in 2014,7 the University of North Florida analysis finds that 3DP technologies are particularly relevant where:

  • Production volumes are low. For example, consumers are designing and manufacturing single pairs of custom-fitted shoes.
  • The geometries of the parts and their assembly are complex. For example, surgeons are manufacturing items that replace certain body parts.
  • There is a need for shorter lead times. For example, the U.S. Navy manufactures some spare parts on its ships. This eliminates the need to store a large inventory of SKUs on board or make deliveries to the ships by helicopter.
  • There is an opportunity to differentiate by offering unique, personalized products, such as consumer-designed and printed engagement rings.

We examined the evidence in the press announcements in light of those particular considerations and found some interesting results. Research shows that the rate of supply chain change from 3DP has increased, from three to five supply chains impacted per month in mid-2014 to upwards of 20 per month in mid-2015. This number has continued to increase into 2016 at a slightly slower rate. While these absolute numbers may seem low relative to the total number of supply chains in the world, they reflect only those supply chain innovations that have been announced in the media, a group that is also relatively small.

Reeves suggests that 3DP will be especially applicable in supply chains that service highly customized finished goods and low-velocity items. And indeed, we found that 77 percent of the announced 3DP innovations since 2015 were for highly customized finished goods. For example, dental crowns can be 3-D printed by dentists while the patient is in the chair instead of at an offsite dental laboratory utilizing conventional molds. Other examples of custom-fitted products include earbuds printed from photos of someone's ear and bone replacements printed from a computerized tomography (CT) scan.

We also examined evidence of innovative 3DP processes used to supply low-velocity products, which we found in 84 percent of the impacted supply chains. Many of these types of innovations relate to spare parts that are needed for repairs (for example, an x-ray machine or a missing component for a 1981 DeLorean automobile). In most instances, highly customized products designed by consumers are low-velocity items. Consumers do not usually need multiple sets of custom-fitted hearing aids or self-designed engagement rings, for example.

As shown in Figure 2, 3DP applications are primarily affecting supply chain changes in five industries, including consumer products, medical, industrial, government, and entertainment. Products in the consumer goods category accounted for 51 percent of all 3DP innovations. Not surprisingly, this category has the most varied subclassifications, including fashion, food, electronics, musical instruments, automotive, fixtures, and others. Products in the medical and industrial categories each accounted for 21 percent of all 3DP innovations. The latter category includes commercial aerospace, general manufacturing, construction, and agriculture. Products in the government category accounted for 5 percent of all 3DP innovations, and those in the entertainment category accounted for 2 percent.

Ten considerations for supply chain managers
This research reveals important considerations that can help supply chain managers understand the capabilities and potential impacts of 3DP on their strategic positions. The following 10 implications are worth considering before adopting 3-D printing. We also suggest these managerial implications as future topics for supply chain researchers.

1. Innovations in 3-D printers and materials are contributing to the increasing rate of 3DP adoption. Recently patented 3DP materials now extend beyond plastic to include foam, multiple types of metal (including platinum and gold), and even edible materials like chocolate. This positive correlation with the availability and variety of complementary materials will continue. Therefore, managers should monitor the evolution and development of complementary materials that may improve the viability of 3DP in the markets they serve. Similarly, as 3DP technology supports more and varied production processes, the pace of supply chain adoption will increase. Finally, the falling cost of printers and materials are likely helping to fuel growth.

2. It is still possible to gain competitive advantages from early adoption. Some companies are using 3DP innovations to improve their performance in an existing market, while others are using them to enter emerging markets. We find that both strategic objectives can be successfully achieved. However, 3DP will only become relevant to investors and senior management when the manufacturing capabilities of the technology are demonstrated and final consumers find value.

3. Whether or not 3-D printing is "highly disruptive" is a matter of opinion. Managers should consider that the invention of 3DP was a major event, but it's not disruptive by itself. What's more important is that how and where 3DP ultimately is used may or may not impact supply chains and alter the competitive landscape in highly disruptive ways. Keep in mind that predictions about new technologies do not always come true. Consider the case of radio frequency identification (RFID), a significant innovation that also entered the marketplace with exceptional hype. RFID has since improved many data-collection processes, lowering costs and improving accuracy, but whether RFID has had a game-changing, disruptive impact on supply chains is debatable.

4. Innovations that changed the way products were provided or delivered were the result of a change in a product, a process, or both. In the announcements we examined, sometimes the lines between product and process were blurred. For example, is a femur replacement that is 3-D printed in the hospital emergency room a new product or just a change in the process of surgery?

5. Innovations are having an impact beyond the product or service that is directly affected. It is easy to focus attention on the products that are being 3-D printed, but supply chain managers know that their operations are interconnected and share resources, and therefore must be managed as a system. Sasson and Johnson observe in their 2016 article in the International Journal of Physical Distribution & Logistics Management that when 3DP manufacturing removes low-volume products from production lines, that change will also reduce production costs and lead times of the other products that still use the production line.8 We found evidence of this in our study. Over 80 percent of the impacted supply chains involve low-velocity items that, until recently, were manufactured by conventional means. This is an extraordinarily large percentage, suggesting that manufacturers are gaining efficiencies from larger batch sizes of fewer SKUs.

6. 3DP could lead to more inventory shrinkage. Managers should be cognizant of the security-related risks involved with digital supply chains. Now that physical products are represented digitally and inventory can essentially be e-mailed or posted on the Internet, product theft (through the unauthorized sharing of product design, for example) and piracy (such as the printing of "black market" products that will reduce demand for the rightful owners of those products) will become more prevalent.

7. Some elements of product quality will become more important. Product quality will now encompass data integrity and digital design. For example, an Internet search for free, downloadable designs for 3-D-printed prosthetic hands will turn up several options for print-savvy consumers. However, most consumers will not be well trained in engineering and ergonomic design principles, so the quality of the products manufactured by those shareware designs and their ability to meet an individual's requirements are likely to be quite different. Supply chain managers should remain cognizant that consumers will buy rapidly delivered, less expensive, and customized products only if those products continue to meet their expectations of quality.

8. Product liability could become a big issue. There is interdependence among technology advancement, market need, regulation, and litigation. The risks associated with 3-D printing will more clearly materialize as the technology continues to progress and businesses and individuals increasingly utilize it. Our research findings suggest that unaddressed professional and product liability may exist. When a 3-D-printed product causes harm, who is responsible? This new technology carries with it newly involved players, such as the product designers and the organizations that either sell the designs or make them available for free. There are manufacturers and/or sellers of finished products, material suppliers, and printer manufacturers. All of these players will have changing roles and responsibilities as 3DP becomes more widely used in the supply chain. Furthermore, if consumers elect to use good equipment and materials to manufacture something they know could be harmful, shouldn't the consumer (which is also the manufacturer) be at least partially responsible? These concerns will have to be addressed and investigated if the use of 3DP is to grow.

9. Interesting discoveries come from partnerships between industry and the public sector. We observed that public-private collaboration fostered innovation. For example, academic institutions and government labs such as the U.S. Department of Energy's Oak Ridge National Laboratory collaborated to produce innovations like a natural-gas-powered hybrid electric vehicle with a solar-powered building, creating a unique, integrated energy system; a replica of a 1965 Shelby Cobra automobile; and the Strati—the world's first 3-D-printed electric car. Now more than ever, new research and discovery are informing critical industrial and commercial interests, while a fast-moving marketplace informs the questions that scientists must ask of their research.

10. Information is the new inventory. It has been said that information can be a substitute for inventory. For 3DP-supplied products, it seems that information is the new inventory. This can be the case throughout the entire product lifecycle, beginning with the supply of raw materials and culminating at the time consumers need it. This idea, perhaps more than any other, encapsulates the potential of 3DP for supply chain managers.

Moving into the mainstream
For nearly a decade, supply chain managers have been hearing about the potential of 3-D printing to change the way products are made available to consumers and other end users. However, it has been difficult to separate the hype from what might actually be transformational.

Our research found that 3-D printing is in fact advancing well beyond the planning and prototyping phase. We also have confirmed that companies are using 3DP to transform their supply chains now, and that their numbers are quickly growing. It is clear that this technology is already revolutionizing supply chains, altering practices and expanding market potential by eliminating layers of processes, moving production closer to consumers, reducing inventory, rationalizing SKUs, shortening product lifecycles, eliminating manufacturing waste and carbon emissions, and reducing transportation costs.

In short, 3-D printing is helping many companies reduce their costs and increase their sales, potentially in market-disrupting ways. Regardless of which industry you are in, now is the time to explore what 3-D printing could mean for your company's supply chain.

Notes:
1. PricewaterhouseCoopers,"3DP and the new shape of industrial manufacturing" (June 2014).
2. Phil Reeves, "How rapid manufacturing could transform supply chains," CSCMP's Supply Chain Quarterly, Quarter 4 2008.
3. Paul Brody, "Get ready for the 'software-defined supply chain,'" CSCMP's Supply Chain Quarterly (Quarter 4 2013).
4. Clayton M. Christensen, "The ongoing process of building a theory of disruption," Journal of Product Innovation Management (2006), Vol. 23 No. 1, 39-55; Dan Yu and Chang Chieh Hang, "A reflective review of disruptive innovation theory," International Journal of Management Reviews (2010), Vol. 12 No. 4, 435-452.
5. Jan Kietzmann, Leyland F. Pitt, and Pierre R. Berthon, "Disruptions, decisions, and destinations: Enter the age of 3-D printing and additive manufacturing," Business Horizons (2015), Vol. 58 No. 2, 209-215.
6. Barry Berman, "3-D printing: The new industrial revolution," Business Horizons (2012), Vol. 55 No. 2, 155-162.
7. Stanley E. Fawcett and Matthew A. Waller, "Supply Chain Game Changers—Mega, Nano, and Virtual Trends—and Forces That Impede Supply Chain Design (i.e., Building a Winning Team)," Journal of Business Logistics (2014), Vol. 35 No. 3, 157-164.
8. Amir Sasson and John Chandler Johnson, "The 3D printing order: variability, supercenters and supply chain reconfigurations," International Journal of Physical Distribution & Logistics Management, (2016), Vol. 46 No. 1, 82-94.

David Swanson is assistant professor of transportation and logistics at University of North Florida. Kristoffer Francisco is a research associate at University of North Florida. Jiyun Huang is a research associate at University of North Florida.

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