What additive manufacturing could mean for supply chains

One of the visions for future supply chains outlined in a recently released Deutsche Post DHL study, Delivering Tomorrow: Logistics 2050, pictures a world of customized lifestyles. In this scenario (one of five in the report), three-dimensional printers manufacture one-of-a-kind products for individual consumers.

In a world where 3-D printers handle much of the production (an approach called "additive," "rapid," or "direct digital" manufacturing), companies that make customized goods would be more likely to move raw materials than finished products. The report predicts that the implications for logistics would include a greatly reduced need for long-distance transportation of finished and semi-finished goods. Since additive manufacturing would revive local production, it also would necessitate stronger regional logistics capabilities and high-quality, last-mile networks. (For more about this production method, see "How rapid manufacturing could transform supply chains" in the Quarter 4/2008 issue of CSCMP's Supply Chain Quarterly.)

I agree with the report's authors that additive manufacturing will bring about more customized production, but this technique won't be appropriate for everything. It might be cost-effective for items like decorative housewares; a homeowner could, for example, order something that fits a particular color scheme. But certain types of low-value products, like garden hoses, would continue to be made in huge quantities in countries where labor costs are cheap. Hence, the need for long-distance transportation would decline but would not go away.

I do think the report understates the potential impact of this type of manufacturing on retailing. The rise of additive manufacturing would only serve to expand the growth of online retailing, turning shopping malls into ghost towns. A consumer in this world would either order a custom-made product over the Internet or pay a visit to a local producer—perhaps someone in the neighborhood who has a 3-D printer. In either case, the volume of truckload movements of finished goods to retail outlets would surely fall.

Admittedly, additive manufacturing is in its early stages. Still, supply chain managers should keep an eye on this important manufacturing trend. Low-cost country sourcing in a global economy has resulted in complex international supply chains. But if in decades to come the economy is dominated by 3-D "printed" manufacturing, then we can expect to see regional supply chains expand at the expense of global ones.