Business leaders must prepare to take advantage of a “new era” in 3D printing, writes Richard A D’Aveni for Harvard Business Review.
If manufacturing is central to your business, 3D printing or “additive manufacturing” will have been a talking point for some time now. But in the last few years the technology has improved to such an extent that it has started to play a central role for a number of industries.
It now possible to manufacture a wide range of products cheaply, quickly and in high volume, and the 3D printing “ecosystem” has expanded to contractors, consultants and makers and suppliers of printers and materials.
Not only is 3D printing now able to compete with conventional manufacturing, but it is also becoming a “competitive weapon”, according to Richard A D’Aveni, Bakala Professor of Strategy at Dartmouth College’s Tuck School of Business and author of The Pan Industrial Revolution: How New Manufacturing Titans Will Transform the World.
Major players including BMW, Boeing, General Electric and Sumitomo have started buying high quantities of 3D printers.
“The field has entered a virtuous cycle: a larger ecosystem leads to more applications and lower costs, inducing more manufacturers to adopt the technology, which attracts even more players into the ecosystem,” writes D’Aveni.
It is time you realised the potential of 3D printing and started to prepare for the future.
For both B2B and B2C businesses, six business models have emerged:
1) Mass customisation. This model involves creating bespoke products for individual customers by uploading a digital file containing their personal information into a 3D printer. It can be used in markets where standardised products don’t cut it.
Markets where mass customisation has been used include hearing aids, orthodontic braces, prostheses, sunglasses, car and motorcycle accessories and Christmas tree decorations.
The challenge is collecting customer information at low cost, but thanks to new technology such as smartphone apps and in-store 3D scanners, mass customisation is “poised to take off”.
2) Mass variety. This model can be adopted if your customers demand choice but don’t require products adjusted to personal specifications.
For example, jewellery manufacturers are able to cheaply produce 3D printed display models of a wide variety of designs and wait for demand before producing the items using precious metals.
The possibility of offering such a wide range of products is an obvious plus point, but you must avoid overwhelming your customers with too much choice and be willing and able to develop new designs and jettison old designs in response to changes in the market.
3) Mass segmentation. This business model involves producing a limited variety of products, usually in batches rather than one off. It is best suited to B2B manufacturers, but it can be used if you plan to cater to “seasonal, cyclical, or short-term fad markets”.
Mass segmentation has been adopted by both RaceWare Direct, a UK company specialising in the production of accessories for cyclists, and automobile manufacturer Daimler.
4) Mass modularisation. This model involves producing a 3D printed base unit and a range of interchangeable modules that can be inserted into it.
Suited to electronic devices, so far mass modularisation has only been adopted by the military and some niche automobile manufacturers, but others are realising its potential. Facebook has purchased modular electronics-creation platform Nascent Objects to produce modular versions of its VR headsets.
5) Mass complexity. This model takes advantage of 3D printing’s ability to produce products with complex designs.
Boeing uses 3D printing to build supports for airplane fuselages and Adidas uses 3D printing to make lattice structures for its running shoes.
6) Mass standardisation. With this model, 3D printing “attacks traditional manufacturing on its home turf” i.e., the production of standard products in high volume at low cost.
OLED screens for cell phones are already being produced using 3D printing, and television manufacturers are trialling the technology.
“The technology is still emerging in this area, but it could become a game changer,” writes D’Aveni.
When you have developed 3D printing capabilities and chosen the best business model, or models, for you, it is time to take on your rivals. Here are five ways 3D printing can be used to gain competitive advantage:
1) Block potential competitors. If rivals start to target specific segments of your business, you can use 3D printing to expand your product line and counterattack.
Under attack from foreign companies producing premium chocolate, US chocolate manufacturer Hershey used 3D printing to economically create its own range of premium chocolate.
2) Dethrone the market leader. The market leader is likely to produce a few standard products in high volume, so use 3D printing to produce variations on those products, gauge customer interest and develop new products catering to their specific tastes.
3) Restrict the market leader. If you are not able to dethrone the market leader, you can still compete. Focus on your product variety to avoid direct competition and look out for new opportunities – spot them first and you can restrict your rivals growth.
4) Create a new supply chain. If you rival has a strong value chain but is dependent on complex supply or distribution chains, you can gain a competitive advantage by using 3D printing to create new, less complex, supply chains.
3D printing also provides protection against supply and distribution risk. If a material or part becomes scarce, you can use the technology to cheaply and quickly redesign your product.
5) Capture new markets. You can use 3D printing to create, test and modify new products cheaply and quickly, enabling startups to move into completely new markets and avoid competing with the market leaders.
INTO THE PAN-INDUSTRIAL AGE
In 2015, General Electric opened a new factory in Pune, India, where products are produced using 3D printing. GE’s traditional factories each serve a single division of its business – e.g. aviation, health care or power generation – but thanks to 3D printing, the new factory could respond to demand.
When demand for jet engines is high, the Pune factory focuses on the production of jet engines. When demand slows, it is able to redirect its energies to the production of a product that is in greater demand.
For D’Aveni, GE’s Pune factory signals the arrival of “pan-industrial” manufacturing and increases the likelihood of “a new era of competition among giant industrial companies”.
RISK AND REWARD
When it comes to 3D printing, the rewards far outweigh the risks. “Now is the time to take it seriously as an option for large-scale commercial production,” writes D’Aveni. “Companies should move off the sidelines, get familiar with the new techniques, and explore how they might alter the competitive landscape.”