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3D Printing: Transforming the spare parts business – by Paul Guillaumot

The 3D Printing revolution is on and it will transform the spare parts business. Here are just a couple of examples of why this will happen:

Infinite Lifetime: 3D Printing will make obsolescence disappear and eliminate trade-offs between cost and availability.

Today, manufacturers manage physical warehouses, with limited quantities of spare parts in inventory and painful ways of reproducing them. Once their first mount products are discontinued or not sold anymore (with the exception of consumable parts with sufficient predictable demand) companies generally stop production of these products and their parts/components and dismantle their production lines after sourcing a “last buy order” meant to fulfill 5 years of demand on average.

But once production is stopped, shortages may, of course (indeed mostly do), occur. In this case manufacturers are very likely unable to supply another batch of parts. It may happen for multiple reasons: a lost design, a broken production tool, a supplier who has gone out of business or simply an order that did not reach the minimum order quantity (MOQ). When it reaches this stage, the product turns (officially) obsolete.

3D Printing is the solution to this lifetime problem -by implementing an agile, continuous production capability. 3D printing entails the digitization of the targeted spare parts portfolio. Every single spare part needed to be produced is “modelized” by experts to build-up a digital inventory. Once it is done, warehousing becomes essentially free -no cost of space or cost of tied up capital! Currently, 89% of manufacturing companies recognize they keep obsolete parts in their stocks and 22% say that obsolete parts account for more than 10% of those stocks. Just taking the home appliance industry as an example, there is up to 30% of inventory depreciation (write-downs or write-offs) per year. But if the design and the way of fabricating the parts are digital they can be re-used indefinitely without generating other cost than manufacturing cost.

And when it comes to fulfilling customer orders it’s not just about cost, but also about timeliness: The part must be available quickly, if not immediately. With 3D Printing it actually is: According to surveys, 47% of spare parts buyers (customers/users) have been looking into 3D Printing in order to adopt a make-to-order policy and manufacture their own parts.

3D Printing offers the possibility to print any part at short lead times -if the design is available. No need to retrieve the old mold, find the right manufacturing facility, make the part and have it travel around the world to reach its point of use. Just print on-demand and get your part wherever you need it in a matter of hours or at most days.

Using 3D Printing increases the duration of use of products, by enabling repairability forever! That’s another reason why so many customers have already looked into 3D Printing to get or manufacture their own parts.

 

Doing away with trade-offs

3D Printing is an opportunity for industrial manufacturers to enhance their service levels, show that they care about the total lifecycle of their product and, by extension, that they care about their customers. It also puts a stop to the age-old problem of having to trade off costs and availability.

Spare parts inventory levels have conventionally been defined through a trade-off between demand, supply lead time and the level of acceptable shortage (unavailability) risk to minimize overall costs. However, most of these optimization models are based on demand predictions which are essentially inaccurate and therefore inadequate. And the worst nightmare of every parts manager is naturally the shortage!

Whether you are on the supply side and you suffer loss of profit or on the demand side and feel the pain due to equipment downtime, shortages heavily impact your company. And traditional supply chain management has such an inherent complexity that shortages happen much more often than you think: Your replenishment was planned tight and your parts are retained at customs? Your production supplier didn’t reach expected quality? Or has given priority to your competitor asking for a larger order? The shortage results directly in inability to fulfill customers’ demand bringing interruption of revenue streams, damaged business reputation, customer dissatisfaction and potentially loss of business as well as contractual penalties. But reducing the shortage risk means increasing inventory levels, resulting in higher costs, often difficult to sustain. Depending on industry, shortages can reach or exceed 10% of total spare parts demand!

3D Printing provides an obvious solution through On-Demand production: First, the virtual inventory must be built up by digitizing the spare parts “catalogue”. This starts with reverse engineering (when needed) and encompasses the definition of raw materials and production system used, production instructions and tests for qualification. The system then becomes “plug and print”. Add that to the ability to produce at the closest location to your factory to shorten transportation and consequently lead times. And then you have the best supply risk coverage! Even more, 3D printing does not require to print large batches. Costs are not dependent on volume.

 

3D Printing helps manage long tail stocks

Not all parts are equal in terms of demand, don’t need to be produced in the same quantities and don’t have the same cost structures. But all must be available anytime for customers, regardless of profitability! So how do you manage your stocks? Do you keep inventory for every part in case you need it, or do you produce small batches according to demand? In other words, do you prefer losing money in oversized warehousing or buying/producing smaller size batches at higher cost per part?

What we call long tail parts (those with infrequent use or demand) are not easy to manage. By nature, there are too many of them. The long tail is composed by an average of 80% of all items and represents around 20% of total sales volumes depending on industry. And with faster and faster innovation processes, long tails are getting longer each year. The figure looks even more extreme when we consider that only 10% of items (the top sellers) account for almost 75% of sales. Naturally, with a forecast value-added for items in the tail at only one sixth of what it is for the top sellers, manufacturers prefer to focus their limited after-sales resources to ensure good supply of important top-selling items. But then how to deal with the long tail?

Producing those long tail items with 3D Printing is the way to solve this problem efficiently and with a competitive cost. Although the production cost per unit may (for the moment, still) be higher, other elements must also be considered: Free digital storage, no transportation or warehousing costs and a better customer service often makes the Total Cost of Ownership (TCO) with 3D Printing lower than the one resulting from traditional manufacturing supply chains.

And it is even less time consuming. Once a part is digitized, 3D Printing is extremely simple and fast while sourcing from traditional suppliers might require long lead times, difficult process or materials and quality alignments.

No longer then is there a need to keep oversized inventories for parts only purchased by customers a few times a year: It’s possible to print locally on-demand to supply the parts within the day.

3D Printing technology is advancing rapidly and prices are coming down quickly. While up to a couple of years ago it was all about plastic, metals are now a real possibility. Indeed, according to the authoritative Wohlers Report 2018, metal 3D Printing systems shipped grew 80% to 1768 in 2017. Among the factors driving the growth are improved process monitoring and better quality assurance procedures. The Report also noted that manufacturers are becoming increasingly aware of the benefits of metal 3D printing. Meanwhile, the number of companies now producing industrial-grade additive manufacturing (3D printing) systems increased from 97 in 2016 to 135 in 2017 and new entrants are joining the market at a fast pace. Machines are now accompanied by improved material platforms, carry lower costs and provide faster printing speeds. More and more materials are becoming available.

Exploring the possibilities of 3D Printing for spare parts manufacturing is now a must for any company.

 

Paul Guillaumot is Managing Director at Spare Parts 3D, a company providing consulting and 3D Printing solutions to industrial customers. He is currently based in Singapore.  

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