3D printing to move manufacturing closer to the customer

Chemical companies

Internet of things15 years ago, it was fashionable to dismiss eBusiness as a fairy story.  I remember those days well, as I had just raised $25m from major companies to fund its development in the chemical industry.  Today, of course, eBusiness is everywhere.  Nobody would dream of shaking their heads and dismissing the whole concept, as many did pre-2000.

Which takes us to the latest stage of eBusiness development, 3D printing.  This is similarly set to revolutionise the role of manufacturing in ways that currently seem unimaginable.

For example, when you bump your car in a car-park in 2020, will the garage still order a new bumper from the factory?  Why wouldn’t it simply download the design, and print out the part in its workshop before fitting it to your car?

Equally, why wouldn’t local shops provide 3D printing services for a whole range of modern needs?

‘Why not?’ seems the likely answer to these questions.

3D PRINTING IS ALREADY HAPPENING AT ENTERPRISE LEVEL
Gartner have been providing a reliable guide to all things internet for a long time, and one of their most valuable insights is the annual Hype Cycle chart above:

  • The idea is that Innovation starts with an idea, which is usually ignored by almost everyone
  • Over time, sometimes slowly and sometimes quickly, people begin talking about it
  • Current examples today are the concepts of ‘Consumer 3D printing’ and ‘Big Data’
  • Everyone is talking about them, but few people have any real idea about what they might mean
  • So they will soon move from today’s ‘Peak of Inflated Expectations’ to the ‘Trough of Disillusionment’
  • At this point it will become fashionable to dismiss them as ‘just talk’.

But if we take a closer look at this year’s Hype Cycle, what do we see?  Products such as ‘3D Scanners’ and ‘Enterprise 3D printing’ are now moving steadily up the ‘Slope of Enlightenment’ to the ‘Plateau of Productivity’.  Gartner marks them with a light-blue dot, indicating that they are within 2-5 years of widespread acceptance.

Before you laugh, consider this headline from the Financial Times last year, Rolls-Royce plans 3D printing for jet engine parts.  And there are many car and aviation companies for whom 3D printing has now become routine.

Similar developments are also spreading across the pharma industry.  If companies only need to manufacture 400 tonnes of high-strength Active Pharmaceutical Ingredients, why would they continue to do this on a large central site?

Instead, new business models are being developed based on the idea of giving local pharmacists the ability to manufacture drugs.  This is a logical move, given that genetic testing means doctors will increasingly only prescribe drugs which testing confirms as being suitable for the individual patient.

INVITE Aug13

MANUFACTURING WILL SEE MAJOR CHANGE
These changes in business models have potentially major implications for most areas of manufacturing, as we discussed in chapter 9 of Boom, Gloom and the New Normal.

The issue is simple.  In recent decades, plants have got bigger and bigger.  In chemicals, world-scale used to mean 200kt – 250kt.  Today it can mean 2 million tonnes, a 10-fold increase.   We have thus reached the point where new plants effectively create major dis-economies of scale   The sums involved also create major financial risk for sponsors.

It also means companies are moving vast quantities of raw materials and semi-manufactured goods around the world. This makes little sense in terms of cost or quality, particularly when market needs can change quite quickly.

China is already moving away from its previous role as the ‘manufacturing capital of the world’.  As China Daily has noted, President Xi Jinping’s drive towards the New Normal is now taking China in a completely new direction:

“In terms of structure, as supply of capital, land and other factors is on the decline and resource and environmental restriction become more serious. The proportion of the first and second industries, which consume capital, land and energy heavily and pollute the environment, will fall. The service industry, which relies less on capital, land and energy, will grow fast. The industrial structure will thus be optimized.”

The US has still to confront this reality, however.  Its natural excitement over shale gas has blinded it, so far, to the clear risk that much of its planned $140bn of investment may fail to make the expected returns.  It still believes, as the baseball movie ‘Field of Dreams’ suggested, that “if you build it, demand will appear”.

Yet in reality, it is adding new capacity in products such as ethylene where it is highly likely that new demand will not appear.  One clear sign of this is that current production is actually lower than 10 years ago.

Instead, companies might gain more benefit from looking at low-risk new concepts, such as Bayer’s ‘Factory of the Future’, pictured above.  As I noted last year, this enables up to 40% reduction in capital costs, and up to 20% reduction in operating costs – whilst providing major environmental benefits in terms of reduced waste and pollution.

 

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