THE IMPLICATIONS OF 3D PRINTING FOR THE GLOBAL

LOGISTICS INDUSTRY
JOHN MANNERS-BELL, CEO, TRANSPORT INTELLIGENCE LTD
KEN LYON, CEO, VIRTUAL-PARTNERS LTD
3D Printing, or additive manufacturing as it is also known, has the potential to become the biggest
single disruptive phenomenon to impact global industry since assembly lines were introduced in early
twentieth century America.
New technologies which are currently being developed could revolutionise production techniques,
resulting in a significant proportion of manufacturing becoming automated and removing reliance on large
and costly work forces. This in turn could lead to a reversal of the trend of globalisation which has
characterised industry and consumption over the last few decades, itself predicated on the trade-off
between transportation and labour costs.
Globalisation has benefited shipping lines, airlines and freight forwarders enormously as vast quantities of
consumer goods are moved internationally to Western markets from the Far East. Consequently any
challenge to globalisation must be viewed as a threat to the global transportation industry. However, as
with all disruptive technologies, it also offers opportunities. This briefing takes a look at the new
technology, assesses the chances of its widespread adoption and examines its implications for the
logistics industry.

WHAT IS 3D PRINTING?
3D Printing was originally developed as an automated method of producing prototypes. Although there
are several competing technologies, most work on the basis of building up layers of material (sometimes
plastic, ceramics or even metal powders) using a computer aided design. Hence, it is referred to as an
additive process; each layer is printed until a three dimensional product is created.
The logic for using 3D Printing for prototypes is compelling. Traditional reductive manufacturing
techniques (where materials are removed) can take longer and are much more expensive. Mechanical
parts, shoes, fashion items and accessories and other consumer goods, can all be printed for review by
the designer or engineers, and revisions printed equally as easily. Whereas mass production is viable due
to economies of scale, it is uneconomical for 'one offs' and prototypes. 3D Printing will remove this
differential, where every item produced is an original (or perfect copy) and tooling for one is as cheap as
tooling for many.

Aug 2012 Transport Intelligence Ltd

The final 3D Printed product also has other benefits. Products can be lighter, but just as strong. There is
also less wastage. In comparison traditional reductive manufacturing is highly inefficient in the use of
materials.
The way in which each product is individually manufactured means that it is ideal for mass customisation
techniques. Consumers will, in theory, be able to have a much greater say in the final format of the
product which they are buying, and have it manufactured to their precise specifications.

CAN 3D PRINTING REVOLUTIONISE GLOBAL INDUSTRY?

There is obviously an enormous leap between a manufacturing process which can presently produce
one-offs and one that can replace large scale manufacturing. However, in theory, there is no reason why
advances in technology could not increase the speed of production and reduce unit costs.
If this were to happen there would be many consequences, bringing about relatively minor (and then
potentially major) changes to the global manufacturing industry.
For instance, 3D Printing is already very good at producing products (even with moving parts) which
previously would have required the assembly of multiple components. By eliminating the assembly phase
there will be huge savings for the manufacturer in terms of labour costs, but also potentially in the
removal of storage, handling and distribution costs involved in bringing together the relevant components.
However systemic change will only occur if the automation of production rebalances global supply chain
costs. The falling proportion of total costs made up by labour in the West would take away the rationale
for producing goods in remote, low cost markets (as relative transportation costs rise).
Instead these manufacturing facilities could be sited close to the customer in Europe or North America
where there would be fewer quality control issues and more responsiveness to market needs. Lower
batch quantities would consolidate these benefits.
3D Printing, combined with efficient manufacturing, will revolutionise the principles established in the first
Industrial Revolution. Not only will local manufacturing re-establish itself close to end markets, but it will
allow the flexibility to reconfigure in response to changing consumer demands. The nature of
manufacturing will be very different from traditional models in which it takes established production plants
months (or even years) to retool.
The philosophy of manufacturing in which products are made precisely to customer demand could have
big implications in certain sectors. For instance, in the healthcare vertical small 'one-off' production runs of
drugs/compounds will reduce inventory holding costs. But this capability will also enable the rapid
transport of entire production plants to areas where large amounts of drugs may be needed in times of
emergency (i.e. pandemics or natural disasters).

Aug 2012 Transport Intelligence Ltd

Looking even further into the future, some household products could actually be manufactured in the
consumers home, once the cost of 3D printing technology has become affordable. This would have even
greater implications for the logistics industry this time on a domestic rather than international basis. This
is not as far off as may be thought. 3D Printers for consumers can already be purchased for just a few
hundred dollars.

WHAT ARE THE IMPLICATIONS FOR THE LOGISTICS INDUSTRY?

The implications of this new manufacturing technology for the logistics industry could be massive:

Potentially a proportion of goods which were previously produced in China or other Asia markets
could be near-sourced to North America and Europe. This would reduce shipping and air cargo
volumes.

The mass customisation of products would mean that inventory levels fall, as goods are made to
order. This would have the effect of reducing warehousing requirements.

There would be fewer opportunities for logistics suppliers to be involved in companies upstream
supply chains, as manufacturing processes are increasingly re-bundled within a single facility.
Tiers of component suppliers are done away with, as is the need for supplier villages, line side
supply etc.

Downstream logistics would also be affected. Build-to-order production strategies could

fundamentally impact the manufacturer-wholesaler-retailer relationship. In the future the shopping
experience could also be vastly different. In some sectors, retailers will either cease to exist or
become shop windows for manufacturers, keeping no stock of their own. Orders are fulfilled
directly by the manufacturer, and delivered to the home of the consumer.

A major new sector of the logistics industry would emerge dealing with the storage and
movement of the raw materials which feed the 3D Printers. As 3D Printers become more
affordable to the general public, the home delivery market of these materials would increase.

The Service Parts Logistics sector would be one of the first to be affected. At present billions are
spent on holding stock to supply products as diverse as cars to x-ray machines. In some cases
huge amount of redundancy is built into supply chains to enable parts to be dispatched in a very
short timescale to get machines up and running again as fast as possible. It doesnt take much
imagination to understand the benefits for a service parts engineer of being able to download a
part design from an online library, 3D Print it and then fit it within a very short time window. This
would make global and national parts warehouses as well as forward stock locations
unnecessary to fulfilling customer needs.

Aug 2012 Transport Intelligence Ltd

THE LOGISTICS COMPANY OF THE FUTURE

The changing supply chain dynamics will lead to the evolution of a new type of logistics company
resembling a 4PL, or service management company, as much as anything else. Their businesses will
comprise a mix of software development, delivery services, partner relationship management, contract
management and brainpower.
The new logistics company will design solutions comprising demand planning, manufacturing, delivery,
market monitoring, service parts management and return and recycling services. In essence, they will
become Product Life-Cycle Management service providers.
This is a big opportunity for the major industry players that have the resources to establish these new
organisations.
The Service Parts Logistics industry will be either transformed or decimated by 3D manufacturing - or
perhaps both! With small 3D Printing machines available, operations in remote locations or even in an
engineers van will only need electronic libraries of designs available to them on a local computer. They
can then call up the design of the spare part required and immediately print it. Obsolete parts could
simply be scanned in 3D, fixed in the computers memory and the new part printed. The implications for
inventory are clear.

CONCLUSION
If the new technology is to completely transform global industry, 3D Printing must be able to mass
produce goods in the same volumes as traditional manufacturing techniques. At present the jury is still
out on whether this is feasible. Some in the sector (such as GE) foresee a time when a whole engine, for
example, could be printed. Others believe that at least in the medium term, hybrid solutions will develop,
which combine new technologies with more traditional techniques.
However what 3D Printing is certainly not is science fiction. Its ability to create strong but light parts has
been identified by the aerospace sector; components for the automotive sector are already being printed
and the technology is being adopted by the mobile telecoms sector.
It has been estimated that in 2012 up to 30% of finished products already involve some kind of 3D
printing. By 2016, this is expected to rise to 50% and by 2020 potentially up to 80%.

Aug 2012 Transport Intelligence Ltd

At the moment the following areas are in line for transformation:

NOW

Production Prototypes

Small manufacturing runs of High Value/High Complexity products

Dental/Aural healthcare forms/aids

SOON

Almost all service parts

Complex high volume/high value forms

Products related to fashion/trends that have a high volume/short lifespan profile

LATER

Mass produced fast moving consumer goods

It is difficult to see that industry will undergo complete transformation for many years probably decades
to come. What could happen, though, is that that some sectors are penetrated by the technology at a
much earlier stage, such as the manufacture of spare parts. In this case, the most enlightened logistics
companies could even become early adopters of the technologies investing in the 3D Printers and
providing facilities for engineers rather than kicking against the progress. This would also provide a way
of leveraging their capital and their own technological capabilities.
It is clear that if the larger logistics companies delay or ignore the implications of this trend, they are
vulnerable to new kinds of organisations or associations that will match or leap ahead of their capabilities
for very little outlay.

Aug 2012 Transport Intelligence Ltd

THE AUTHORS
John Manners-Bell MSc FCILT, CEO of Transport Intelligence, has over two decades experience working
in and analysing the global logistics industry. He is a member of the World Economic Forums Logistics
and Supply Chain Global Agenda Council and has advised a wide range of governmental organisations
and industry bodies.
Ken Lyon is a long term innovator in the development of collaborative supply chain networks and
communities. He is a recognised industry expert, experienced public speaker, government advisor and
technology consultant.
For more information contact John Manners-Bell on [email protected]
About Transport Intelligence
With a research organisation spanning the worlds key markets, Ti is the leading provider of expert
analysis dedicated to the global logistics industry. Ti has developed a range of market leading web-based
products, reports, profiles and services used by all of the worlds leading logistics suppliers,
manufacturers, consultancies and banks.
www.transportintelligence.com

Aug 2012 Transport Intelligence Ltd