Making Business Sense of 3D Printing Technology jump starts opportunities for mass customization, on-demand production and long-tail support Introduction In recent years, there has been a sudden spike in both interest and technology maturation of 3D printing. While the platform technologies of 3D printing are more than 30 years old, 2012 was the first year in which 3D printers became inexpensive enough to be used by hobbyists and smaller businesses to craft physical objects. Simultaneously, two supportive groups evolved: online 3D printing services, such as ShapeWays, and open source 3D communities. These groups make it possible to easily and affordably create items in a variety of materials, ranging from low-quality plastics to metals and ceramics. Nonetheless, any company with a supply chain or a store front should keep close tabs on this burgeoning technology. Why? The business opportunities become more apparent when companies consider how 3D printing could facilitate mass customization, unlock new revenue streams through on-demand production, and extend support for the long tail for products or parts that consumers buy at low volumes. At this point, we are intrigued by the opportunities 3D printing may introduce, and we are monitoring the development of the technology to assess for enterprise readiness. These possibilities also feed into our latest thinking on how At the same time, these technology is interwoven with advancements bring inevitable business, as highlighted in seven questions about whether or not key trends covered in the Accenture 3D printers could eventually be Technology Vision 2013. Specifically, as ubiquitous as paper printers, 3D printing represents a real-world and raise concerns about how example of how technology can these devices could dismantle the help companies build relationships manufacturing industry. Like many at scale—essentially returning to other hyped-up or early-phase technologies, some of the predictions treating consumers as individuals are far-fetched. For the present and through more direct, customized interactions and tailored services. immediate future, 3D printers will In addition, 3D printing provides a be more like woodworking tools or mechanism for helping companies knitting needles—powerful in the design for analytics by collecting hands of dedicated hobbyists, but feedback from customers to support potentially frustrating for the nonproduct design improvements or expert 3D printer user. fuel product innovation. 1 The true opportunity of 3D printing is the ability for companies to produce a wide range of objects on demand, with little or no inventory costs. 2 One definition of 3D printing is the additive process of slowly building a physical model out of a polymer material, layer by layer. A primer on 3D printing What is 3D printing? One description is the additive process of slowly building a physical model out of a polymer material, layer by layer. In simpler terms, think of it as building with blocks, one level at a time, to form a finished structure. Unlike rudimentary blocks, however, 3D printing uses precise modeling technology, semiautomated printing and a variety of materials to create a final product. For those who have any knowledge of additive manufacturing, 3D printing is not a new concept. The platform for 3D printing began with the 30-year old technology called rapid prototyping. In this process, the goal was to build a draft of a particular part before investing in creating an expensive mold for a production line. Rapid prototyping allowed manufacturers to attain a physical estimate of what a part or a complete product could look like, and how it might behave. Although there were cost-saving benefits to rapid prototyping, there were also two major limitations: 1. The material science supporting rapid prototyping restricted prototypes to one or two different materials, and the resulting object was a very rough draft that required manual sanding, painting and finishing. Even after manual modification, the physical limitations of rapid prototyping materials would not allow true testing of the part because prototyping materials were typically a polymer that would melt, scar or break. 3 2. In addition to physical material limitations, the equipment required to produce a rapid prototype was approximately the size of a car and fairly expensive. The barriers to owning a machine were usually too large for rapid prototyping to become attractive to low-budget innovators, or small- to midsized companies. In the mid-1980s and 1990s, some companies bit the cost bullet anyway and bought equipment to offer rapid prototyping services. Although this was a sufficient solution for some organizations, introducing a third party increased production time, thus muting the benefits of rapid prototyping. Fast forward to 2013. Hardware and software advancements have modernized rapid prototyping, allowing 3D printing companies to enter the market. Today’s 3D printers provide more accuracy and precision than rapid prototyping because the design of the object is created separately in 3D software. High-end 3D printers actually allow multiple materials to be fused together in one print. For instance, companies could create a custom tennis racket handle—both a rigid, supportive core on the inside and a soft, textured grip on the outside—all in one printing session. Although less powerful, we expect prosumer versions of 3D printers from companies such as Makerbot® Industries, LLC will still help to catalyze the industry, and impact how businesses perceive and eventually use 3D printing. Given these factors, it is clear that 3D printing could have broad business implications and drive substantial cost savings in areas like consumer research, product development, testing (product, production, consumer, QA), and packaging and shipping logistics. New business opportunities from 3D printing Based on these developments, 3D printing looks like an exciting business prospect for many industries, including automotive, electronics, industrial products and consumer goods manufacturers, as well as retailers and other organizations that depend on a supply chain. However, the real innovations materialize when companies consider how 3D printing can jump start new business opportunities. Before delving into these, it makes sense to briefly review a few current manufacturing realities and the restrictions they impose, starting with the general rule that massproduced objects are much cheaper when made in large quantities. Ordinary toothbrush handles can be injection molded, and metal screws can be extruded and threaded more quickly and cost effectively than they can be 3D printed. Yet, this efficiency—delivered through repetition and uniformity—has a downside. To paraphrase Henry Ford, customers can get whatever they want, as long as they want what the machine makes. For many products, standardization and industrialization is an adequate and even preferred trait. But there are also hundreds of products, ranging from door knobs to prosthetic limbs, where customization is beneficial. The second limitation to mass production is that conventional methods produce literally millions of objects—frames, toys, coffee cups, headphones, lawn chairs and the like—that need to be stored, which can lead to high inventory costs. Not surprisingly, it is simply too expensive to mass produce many objects, such as spare parts to legacy products, because the demand is never large enough to warrant the production costs—along with the ensuing inventory maintenance. Even in cases where customers would be willing to pay a premium, the start-up tooling costs inhibit one-off production runs. This creates customer frustration with older products, and establishes a culture that thinks in terms of disposal rather than maintenance. As you might have guessed, 3D printers are capable of addressing these problems. The ability to produce objects with minimal retooling costs means that the same platform can produce an infinite range of objects and customizations. The only costs would be the raw material and production time. In other words, a single 3D printer could produce a custom tennis racket grip and a replacement part for a household oven. This is the true opportunity of 3D printing: the ability for companies to produce a wide range of objects on demand, with little or no inventory costs. Below are three scenarios to illustrate the opportunity:mass customization, ondemand production and the very long tail. Mass customization Most of the products consumers buy are parameterized in some way. Shirt sleeves are a certain length. A golf club grip is a specific diameter. A drawer handle has a standard width and spacing between the screws that fasten it to the drawer. In most cases, these parameters are established for the average person, which means that they are equally inadequate for most people. Imagine a world where, for a small premium, customers could set these parameters to whatever they need or want. In this scenario, customers in the middle of a kitchen remodel could select their favorite drawer handles, and then tweak the length to better match the style of the kitchen, or perhaps widen the grip to accommodate larger hands. If re-facing the cabinets, these same customers might simply change the screw spacing to match the holes in their current cabinets. After the selections are made and ordered, a supplier would then 3D print the custom drawer handles, in the specified material and finish, for next-day delivery. This scenario is well within the realm of possibility because of 3D printers. In the case of plastic objects, the printers could be located today at retail stores or thirdparty parts and fulfillment suppliers, ready to print items in a matter of hours. For metal and other materials, the printer could either be placed in the onsite location or at a more specialized offsite facility. In either case, the 3D printing production is relatively straightforward, and the final cost to customers could be well within what they would be willing to pay for a customized product. However, like many technology advances, organizations must carefully consider the dependencies and new processes that mass customization necessitates. For starters, the ability to mass customize requires the designer to parameterize the product. In this scenario, it is not enough to design the object and send the computer-aided design (CAD) file to the manufacturer. Instead the designer must decide which attributes can be parameterized, how those factors relate to each other, and the limits for each parameter. While this creates higher development costs, it also opens the door to a new revenue stream from customization, greater differentiation and perhaps a longer shelf life for the product. As a bonus, when companies enable customization, they can reduce the need to create dozens of variations of the product, thereby shrinking production and inventory costs. 4 On-demand production Many objects exist that are standard but obsolete, or that are in extremely low demand but necessary to maintain a product. For instance, a refrigerator that costs thousands of dollars can be rendered useless if a small plastic door stop breaks. And a classic car could lose significant value if the heater lever bends. Due to this need, some specialty suppliers maintain an inventory of small parts to support maintenance or other demands. When such a part is ordered, the supplier needs to find, package and ship the item. For many such parts, the associated costs outweigh the benefits of keeping them in storage, leading to shorter lifetimes for unmaintainable products—and fueling consumer beliefs that it is cheaper to toss an item than to fix it. Instead, imagine that the parts catalog for an object is entirely virtual, made up of sets of 3D files that can be printed on demand. Because the inventory is virtual, it would cost very little to offer customers an everexpanding catalog of older parts. When customers needed a part, they would select the product online or in a store. Suppliers would then print and send the ordered parts directly to the customers with no storage costs or shrinkage due to loss or inefficient sorting. This is a win-win situation, as customers would have access to a much wider assortment of products and a means to fix broken objects, while suppliers would save on both production and storage costs. On a percentage basis, the production costs might be dramatically more expensive than a mass-produced version, but the overall costs would still be within the bounds of what customers would expect to pay for an obsolete part. 5 Similar to mass customization, the major shift for companies is in how the content is managed. For many businesses, the transition from warehousing to on-demand production requires changes in how they think about their products and how they provide access to the files that describe those products. On-demand production also represents at least a partial switch from a distribution center- to a production centermindset, and also introduces opportunities to move production closer to the endpoint. For instance, an industrial equipment manufacturer could send a 3D printer into the field to produce objects as needed, rather than handling logistics and incurring shipping costs for regularly mailing plastic or metal replacement parts. The very long tail The term ‘long tail’ was coined to represent the large set of products that consumers buy at very low volumes. The Internet is credited with making it possible and economical to distribute these items. Amazon.com, Inc and eBay Inc. are two of the many conduits to connect buyers with low-volume products in ways that stores and paper catalogs cannot. With the rapid advancement of 3D printing, we are entering an era in which it is possible and economical to produce products at a low volume and with mass customization. In other words, 3D printing can make the long tail much longer and reduce distribution costs in the process. In doing so, 3D printers have the capacity to change the definition of obsolescence, as well as the level of control that customers have over their products. This is similar to recent shifts in digital goods. For example, eBooks have transformed publishing so that it no longer makes sense for a book to go out of print; digital music gives consumers greater control over their music library and personalized playlists without having to store CDs. The ability to produce on demand, and to customize the product when needed, shows how those same ideas can now be applied to the world of physical products. The concept of the very long tail has two ramifications on the business side.First, organizations would need to identify which products make sense to print and then define a business process to fulfill occasional requests. This might require handing over CAD files or legacy product catalogs to a third-party supplier for 3D printing and distribution.Second, on the product development side, businesses have an opportunity shift towards sustainable design practices—moving from designing for complete part replacement, to designing for part component replacement. In this latter option, new lucrative revenue streams might emerge. For example, a computer or tablet manufacturer could partner with a national retail chain to supply 3D printing and repair services that would not only extend a product lifetime but also reduce electronic waste. Be ready for 3D printing advancements At the moment, 3D printing is a specialized and emerging technology, being experimented with by a few Fortune 500 companies but largely still a hobbyistdriven movement supported by small, entrepreneurial companies like ShapeWays, Inc. and communities like Makerbot’s Thingiverse a Makerbot® Industries, LLC creation. However, the potential impact of these converging ideas to the business community is tangibly developing quicker than companies may think. In time, 3D printing could essentially turn manufacturing paradigms on their head—moving from mass production and little personalization, to mass customization and on-demand production at scale. In response, manufacturers should be exploring the business benefits of 3D printing and its impact on all stages of the supply chain, as well as how to incorporate 3D printing into the manufacturing model. Designers should be thinking about how to put more power in the hands of customers where appropriate, to not only support custom needs but also allow customers to take products in entirely new directions. And businesses should be thinking about the very long tail and what obsolescence means in terms of the environmental impact of their products. For the conceivable future, the bulk of the products consumers buy will continue to be mass produced. Mass customization will be reserved for the special cases, where the customer is looking for more personalization in a new product or longevity in an old one. However, it is these special cases that drive brand loyalty, build deeper customer relationships and delight the customer in unexpected ways. In time, 3D printing could turn manufacturing paradigms on their head—moving from mass production and little personalization, to mass customization and on-demand production at scale. Lastly, unlike traditional production processes, 3D printing has a lower entry cost for new players. A business that does not support a long tail of products may eventually be beaten by a long line of competitors, or perhaps even a community of hobbyists who are moonlighting as peerto-peer service providers. 6 Contacts About Accenture Kelly Dempski [email protected] Accenture is a global management consulting, technology services and outsourcing company, with approximately 259,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com. Sunny Webb [email protected] About Accenture Technology Labs Accenture Technology Labs, the dedicated technology research and development (R&D) organization within Accenture, has been turning technology innovation into business results for more than 20 years. Our R&D team explores new and emerging technologies to create a vision of how technology will shape the future and invent the next wave of cutting-edge business solutions. Working closely with Accenture’s global network of specialists, Accenture Technology Labs help clients innovate to achieve high performance. The Labs are located in Silicon Valley, California; Sophia Antipolis, France; Arlington, Virginia; Beijing, China and Bangalore, India. For more information, please visit: www.accenture.com/accenturetechlabs. Copyright © 2013 Accenture All rights reserved. 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