#AMadoption Step 2 – Specific Items and Their Actual Cost

2021-09-01

Lee-Bath Nelson  

Formnext 2019 3d printed connectors photo by Lee-Bath Nelson

The #AMadoption series follows a general path of additive manufacturing (AM) adoption that companies have successfully been using for the past few years. After you’ve ascertained your general strategy and found your top candidate applications, it’s time to get down to the nitty gritty. The devil is in the details, especially when it comes to AM. You will observe that details are important in each and every step from here on out. This makes the group of specialists from different disciplines that you’ve identified in step 1 so important throughout this journey. Step 2 is identifying specific items to focus on and meticulously calculate their cost. For that we need to first refine the milestones and timelines.

Milestones or Millstones?

As with every program, early wins are important and can fuel progress and interest in the company. This makes the early milestones set for the AM adoption very important, if they are easy, they may fail to impress but also if they’re overambitious, and therefore take too long, they may be lackluster. Some companies find parts in their engineers’ drawers that they were not able to produce in the past and can now use AM to produce. There is always the possibility to design for AM a new part that is currently being contemplated – this is an important step to take but will take time and may not give a quick win, if that is what you want. However, including a milestone of identifying 1-2 parts that are being currently designed and will be designed initially for AM production is a great milestone if there is buy-in from the engineering/design department. Alternatively, it’s about finding an existing part where we can demonstrate that AM enables a better outcome overall for that part. Finding 2-3 parts like that and conducting a full comparison is a great initial milestone.

Part Selection Criteria

The first issue is which parts are 3D printable. There are software solutions that can help with that – 2 Israeli startups are favorites in this category: Printsyst (who are currently offering a free trial) and Castor3d. They also help with some of the cost and volume questions. However, you have to be careful to consider your own company’s experience and situation in order to choose the right 2-3 first items from the potentially many parts that pass this software sieve. Your criteria of course reflect the priorities and overall strategy of your company. It might be that fulfilment time is an issue, or maybe the ability to customize something, or service an obsolete item that is favored by influencers in your industry. I would also suggest one more direction to look into: what happened to your company during COVID-19? Where was it singed? Were there supply chain failures and if so, what were their economic consequences and how did the company overcome them? Being able to choose one of those crucial parts that cause customers to leave you for failing to deliver it can make your successful milestone very meaningful for your organization. In this case, you also need to take these economic losses in to consideration in your costing – this is a company-wide gain/loss that must also be calculated.

BMW Spare Parts Production with Additive Manufacturing

Caveat Computantis (Accountants Beware)

In this series we’ve already mentioned how important it is to calculate the total cost of a part both as it currently is and as it would be if it were produced with AM. I will give some things to notice but first also note that in today’s world the big picture should also include how much revenue we can get for the part (with the understanding that a part that is stuck somewhere will not be bought). On the cost side make sure to include for each of the existing parts and their proposed AM versions:

  • Total raw material cost (taking into account material wasted)
  • Total manufacturing cost (including the set up, molds, jigs, fixtures, etc.) – even if the part’s mold exists already it’s important to compare cost from scratch for both methods so its cost should be included in the existing part.
  • Total supply chain costs in normal times: inventory (holding, rebalancing, etc.), logistics, and obsolescence
  • Overhead or higher costs, as experienced in the 2nd to 4th quarters of 2020, beyond the “regular” numbers. These changes should be noted on the side and then included with some probability in the average cost (alternatively, perform a separate emergency calculation). For example, if increased expenses on customer retention were incurred because of supply problems that should be included in these costs.

 

On the revenue side you can consider item availability that is not possible with the current set up and what market it is underserving. Again, considering the 2nd to 4th quarters of 2020 in a sober way and seeing shortfalls in revenue attributable to part availability (as opposed, for example, to different customer habits and behaviors during COVID which affected revenues). This amount should also be considered in the final calculation.

Last But Not Least

The final item to consider is certification. What level of certification is needed for the considered parts and what are the costs for this certification in both methods. This is an important, and often overlooked, aspect of parts when moving to AM. For most companies, there should be more than 2-3 parts that fit the bill and the cost calculations will show that. However, what happens if the numbers don’t come out for AM across the board? If AM is more expensive even in the emergency situation it may be too early for you to adopt AM. But before you give up, look at the design for AM route. It’s possible that AM will allow your engineers and designers to create parts and assemblies that will make sense cost-wise.

The next step in our AM adoption path is to choose the proper AM technologies and materials for these parts – this is really a step parallel to this step 2 as the technologies and material affect the cost calculation, of course. In any case, it may be that in that step we will reach conclusions that will cause us to rethink step 1 or 2 – that’s OK, things are rarely linear. That’s coming up in the next post in this series.

For more insights and information follow us on LinkedIn or subscribe to our newsletter for weekly updates. Photos: up top 3D printed connectors at a Formnext 2019 booth (photo: Lee-Bath Nelson); BMW 3D printed spare parts.

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