Additive manufacturing, or 3D printing, has come a long way from its roots in the production of simple plastic prototypes.
Today, 3D printers can not only handle materials from titanium to human cartilage but also produce fully functional components, including complex mechanisms, batteries, transistors and LEDs.
The capabilities of 3D printing hardware are evolving rapidly, too. It can build larger components and achieve greater precision at higher speeds and lower costs.
These advances have brought the technology to a tipping point - it appears ready to emerge from its niche status and become a viable alternative to conventional manufacturing.
Should this happen, the technology would transform manufacturing flexibility - by allowing companies to slash development time, eliminate tooling costs and simplify production runs - while making it possible to create complex structures that were not feasible before.
Additive manufacturing would also help companies eliminate waste that accrues in traditional (subtractive) manufacturing. The economic implications of 3D printing are significant. McKinsey Global Institute research suggests that it could have an impact of up to US$550 billion (S$696 billion) a year by 2025.
Here is what senior executives should begin preparing for:
QUICKER DEVELOPMENT CYCLES
The ability to make prototypes without tooling lets companies quickly test multiple configurations to determine customer preferences, reducing product-launch risk and time to market.
We expect that the use of such techniques will contribute to significant reductions in product development cycle times over the next decade.
Over time, 3D printing will begin to affect how companies think about R&D, given how the technology enhances the ability to crowdsource ideas through remote cooperation.
NEW WAYS OF MANUFACTURING
As at 2011, only about 25 per cent of the additive manufacturing market involved the direct manufacture of end products. However, with a 60 per cent annual growth rate, that is the industry's fastest-growing sector.
As costs continue to fall and the capabilities of 3D printers increase, the range of parts that can be manufactured economically using additive techniques will broaden dramatically.
Boeing, for example, now uses printers to make some 200 parts for 10 different types of aircraft, and medical products companies are using them to create offerings such as hip replacements.
But not every component will be a candidate for the technology. Companies should understand the characteristics that help determine which ones are.
These include components with a high labour-cost element, such as time-consuming assembly and secondary machining processes, complex tooling requirements or relatively low volumes and thus high tooling costs or high obsolescence or scrap rates.
SHIFTING SOURCES OF PROFIT
Additive manufacturing technologies could alter the way that companies add value to their products and services. The outsourcing of conventional manufacturing helped spur companies such as Nike to rely more on their design skills.
Likewise, 3D printing techniques could reduce the cost and complexity of other kinds of production and force companies to differentiate their products in other ways.
These could include everything from making products more easily repairable and thus longer lived, to creating personalised designs.
Reducing reliance on hard tooling creates an opportunity to offer customised or bespoke designs at lower cost - and to a far broader range of customers. The additive manufacture of individualised orthodontic braces is just one example of the potential of these technologies.
The combination of mass customisation and new design possibilities will up the ante for many companies, and could prove very disruptive to traditional players in some segments.
Getting the most out of additive manufacturing techniques also involves technical challenges, which include setting environmental parameters to prevent shape distortion, optimising the speed of printing and adjusting the properties of novel materials.
Indeed, tuning materials is quite a challenge. While plastics are relatively straightforward to work with, metals are more difficult. Slurries and gels, such as living tissue or the material for printed zinc-air batteries, are extremely difficult.
The most successful players will understand these challenges. Some are already creating centres of excellence and hiring engineers with strong experience in additive manufacturing.
Many benefits of 3D printing could cut the cost of market entry for new players. The direct manufacturing of end products greatly simplifies and reduces the work of a designer who would only have to take products from the computer screen to commercial viability.
New businesses are already popping up to offer highly customised or collaboratively designed products.
Initially, these new competitors will be niche players, operating where consumers are willing to pay a premium for a bespoke design, complex geometry or rapid delivery.
Over the longer term, however, they could transform industries in unexpected ways, moving the source of competitive advantage away from the ability to manufacture in high volumes at low cost and towards other areas of the value chain, such as design or even the ownership of customer networks.
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