Additive manufacturing (AM)—also known as 3D printing—has transformed innovation in the engineering and manufacturing industry, with applications ranging from aerospace; medical devices and implants such as custom hearing aids that can be produced rapidly and cheaply, and supply chain advantages in remote locations
AM’s roots go back nearly three decades. Its importance is derived from its ability to break existing performance trade-offs in two fundamental ways. First, AM reduces the capital required to achieve economies of scale. Second, it increases flexibility and reduces the capital required to achieve scope.
Capital versus scale: Considerations of minimum efficient scale can shape supply chains. AM has the potential to reduce the capital required to reach minimum efficient scale for production, thus lowering the manufacturing barriers to entry for a given location.
Capital versus scope: Economies of scope influence how and what products can be made. The flexibility of AM facilitates an increase in the variety of products a unit of capital can produce, reducing the costs associated with production changeovers and customization and, thus, the overall amount of required capital.
Changing the capital versus scale relationship has the potential to impact how supply chains are configured, and changing the capital versus scope relationship has the potential to impact product designs. These impacts present companies with choices on how to deploy AM across their businesses.
Companies pursuing AM capabilities choose between divergent paths
Path I: Companies do not seek radical alterations in either supply chains or products, but they may explore AM technologies to improve value delivery for current products within existing supply chains.
Path II: Companies take advantage of scale economics offered by AM as a potential enabler of supply chain transformation for the products they offer.
Path III: Companies take advantage of the scope economics offered by AM technologies to achieve new levels of performance or innovation in the products they offer.
Path IV: Companies alter both supply chains and products in pursuit of new business models.