Lean and Mean: Why On-Demand is In-Demand for Supply Chain Managers

2019-12-11

Lee-Bath Nelson  

Ford parts produced on Carbon at Rapid + TCT 2019

In the last couple of months, we published two columns written by Lee-Bath Nelson, LEO Lane co-founder and VP Business, examining the efficiency-enhancing benefits of AM adoption from the perspective of the supply chain manager. The previous column discussed the benefits of virtual inventories and how, by pulling parts from a digital (rather than physical) inventory and then quickly and seamlessly 3D printing these parts, supply chain efficiencies can be significantly improved. Here is the 3rd installment in the series. The series was first published by online magazine Supply and Demand Chain Executive, you can find the original article here.

The benefits of additive manufacturing (AM) in conjunction with virtual inventories are further demonstrated in the enablement of on-demand manufacturing – most notably with respect to batch-size. In most traditional manufacturing technologies, the minimal batch size is quite large (tens- or hundreds- of thousands, and sometimes millions of items in a single manufacturing run). Think about it – with conventional production methods, there is a large cost of switching what the line produces and therefore manufacturers typically produce in one run for current and future expected future demands. This creates a physical inventory of spare parts that may or may not be used in the future. However, this is expensive to produce, store and manage, particularly when there is no guarantee the parts will actually be used.

Consider spare parts for the automotive sector, for example. Parts that can be produced using AM give automakers the ability to produce on-demand from a virtual inventory (below AM spare parts, EOS for Daimler Buses – photo by Tobias Hase, up top Ford parts produced by Carbon at Rapid+TCT 2019). This eliminates inventory storage and management costs. If production is close to the customer, the transport and logistics costs are further reduced, which is good news all around: for the brands and for the environment… really good news, in fact.

EOS -Additively Manufactured Automotive Daimler Buses Spare Parts - Photo by Tobias Hase

With US companies reportedly spending a record $1.5 trillion on shipping costs in 2017 as demand and prices for logistics services increased, it’s no wonder why. In fact, on a global scale, this is predicted to reach $10.6 trillion by next year, with transportation costs accounting for 70%. 3D printing directly addresses this problem, transforming the traditional supply chain and chipping away at transportation costs. Digital inventory converted into physical inventory, as and when you need it, wherever you need and in the exact quantity required, equals true on-demand production with no waste (below Carbon – rearview camera backup housing – Formnext 2019).

Carbon - Rear View Camera Backup Housing - Formnext 2019

So, on-demand manufacturing is both advantageous from a pure cost perspective and a box-ticker if you consider the environmental aspect, which has both ethical and cost benefits to it. The cost-benefit goes beyond the transportation in that we eliminate the need to get rid of obsolete parts. Only parts that are demanded are produced. This is a huge win for the environment and a clear cost saving to the brand.

On-demand manufacturing has yet another benefit: since the part is produced just in time, it can be the most up to date part available, rather than serving up an outdated part we need to get out of our physical inventory. While this may not add to the overall cost savings, it certainly provides better customer service and presumably happier customers. Happy customers are loyal customers and that’s what every brand wants (below additively manufactured rail parts – allows manufacturing numerous part types, small batches and retrofitted parts – Clarinet at Formnext 2019).

Clariant Rail Parts Formnext 2019-

The one wrinkle that needs to be addressed with on-demand AM, but not with traditional manufacturing lines is consistency. In on-demand, items are produced in many locations and at many times and consistency must be maintained across time and locations. Luckily, there are software solutions that can help ensure this consistency across the board, so on-demand we go!

Each part and person in the AM ecosystem has its own unique perspective, what’s yours? Tell us about it in the comments below or email us. For more insights and information follow us on LinkedIn or subscribe to our newsletter for weekly updates.

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