APICS is the premier professional association for supply chain management.

New Dimensions

By Julie Kim and David Robb | July/August 2014 | 24 | 4

How 3D printing may change the scope of industry

It was only a few years ago that we heard the term “3D printing” for the very first time. The idea that an object could literally be printed into existence seemed far-fetched to say the least—much like something out of a science fiction movie. Skip ahead to today, and 3D printing has become a common topic of conversation, with the business implications of this controversial manufacturing tool suggestive of a significant and global impact. In fact, the McKinsey Global Institute predicts that, by 2025, the economic influence of 3D printing could reach between $230 billion and $550 billion per year.

In a recent APICS magazine department, “Relevant Research” author Richard Crandall, PhD, CFPIM, CIRM, CSCP, states that the technology has great potential to help manufacturers produce locally and respond quickly to changes in demand; yet, it is still in the early phases. Limitations he cites include slow production speed, weak bonding of layers, and the need for improvements in printing accuracy. These constraints are improving, but issues still exist. Commercial 3D printers on the market today are cheap and accessible, but users are highly restricted in terms of what they can actually make with them due to technological limitations.

Looking ahead, the greatest potential is likely with industrial 3D printers and their effect on the global supply chain. 3D printers use additive manufacturing processes to build 3D objects layer upon layer. These printers have become so advanced in recent years that experts from a variety of backgrounds and industries have found game-changing practical applications that can significantly influence society.

Just last year, NASA announced plans to launch the world’s first 3D printer in space. The expectation is that future space missions will enjoy significant cost savings and be able to print tools, components, and replacement parts. Meanwhile, research in bio printing has led companies to come very close to printing a transplantable human liver. Intricate mapping of the architecture of a liver is encapsulated in computer-aided design (CAD) software and then printed via an additive manufacturing process. These breakthrough applications of 3D printing highlight its advanced capabilities and offer a glimpse of what is to come.

What does this mean for supply chain and operations management professionals? A 2013 infographic in Industry Week by Jones Lang LaSalle Research illustrates the impact on supply chains by comparing traditional with 3D printing supply chains. The long lead times, high transportation costs, overloaded inventories, and large carbon footprints of traditional supply chains are major issues, which can be alleviated with 3D printing technology. Following are some explanations of these opportunities.

Long lead times are a result of a combination of factors. As traditional manufacturing typically involves mass production, custom tooling, machine reconfiguration, and materials and components from external sources, end customer wait times can be significant. Because 3D printers basically eliminate the need for each of these elements, lead times can be greatly reduced.

High transportation costs relate to the location of manufacturing plants. Price-driven strategies have led companies to mass-produce in countries that offer cheaper labor and raw materials. This takes away manufacturing from the final customer and leads to high transportation cost. Thus, another key advantage of 3D printing is the enabling of local production. This manufacturing process is heavily automated, operating directly from instructions within CAD files. Localization of production reduces transportation costs, as it takes place close to the end customer and contributes to shortened lead times.

Take, for example, the small, remote country of New Zealand. The long distance to markets and limited market power on a global level make it very difficult for New Zealand companies to reach scale and compete globally. In particular, lead times and transportation costs tend to be far greater. 3D printing technology brings new opportunities and offers a way to remain competitive.

Traditional manufacturing methods achieve cost reduction via mass and push production systems, which can lead to overloaded inventories. Holding excess inventory can be incredibly costly for a business and can hide a number of operational inefficiencies. As 3D printing technology has essentially the same cost per unit, regardless of how many units are produced, pull production systems tend to be more appropriate.

The environmental benefits of 3D printing are apparent. Additive manufacturing and less excess inventory reduce waste, and localization of production reduces transportation and, thus, an organization’s carbon footprint.

When to apply additive manufacturing

There are five key conditions that comprise an appropriate environment for implementing 3D printing technology as a manufacturing method. They include the following:

1. High level of customization. As a result of their additive processing, 3D printers have the ability to print highly complex geometric shapes with very little restriction and no direct impact on the cost of manufacturing the product. The cost is, for the most part, determined by the amount of raw materials used. Furthermore, minimal machine reconfiguration and custom tooling requirements enable production to take place efficiently and economically at the last minute. The ability to switch from product to product with little-to-no delay makes it much easier to offer consumers modifications or options that tailor an item to their particular specifications.

2. Low-volume production. Traditional manufacturing methods allow for cost-efficient mass production. This is not the case for 3D printing. One of the major disadvantages of today’s 3D printers is slow production speed. Building a 3D object layer by layer is time-consuming, so small production volumes are more appropriate. Another reason for low-volume production links back to item number 1: As 3D printers offer high levels of customization and flexibility, pull (or demand-driven) production proves more cost effective. Where customer orders vary significantly, standardized production of large volumes is no longer advantageous.

3. Unpredictable demand. The technological advantage of 3D printers is that they require very little reconfiguration and setup effort. Regardless of the shape or materials required, the process is essentially the same—meaning that printers can switch between designs with limited delay. As such, 3D printers are a highly useful manufacturing tool in unpredictable environments. The transition cost is far greater in the case of traditional manufacturing machinery, which necessitates custom tooling, manual reconfiguration of machine parts, and specific knowledge unique to different materials and products.

4. Remote distance to market. Geographic location has long been considered a critical factor when it comes to competitiveness and success in the global market. Michael Porter writes in Economic Development Quarterly, “Close linkages with buyers, suppliers, and other institutions are important, not only to efficiency but also to the rate of improvement and innovation.” However, he also notes that new technologies and the growth of the online network have gradually “diminished many of the traditional roles of location.” 3D printing is one such technology contributing to this shift. As in the previous example about New Zealand, remote countries face a huge challenge when trying to compete on a global scale due to high transportation costs and long lead times. 3D printing enables simplification of the supply chain and can eliminate a large portion of the transportation and waiting time involved with offshoring.

5. High barriers to entry. The process of taking an idea and turning it into a physical product involves a substantial investment, and, in many cases, this cost is simply too high. What 3D printing offers is an alternative, more affordable option to manufacture not only a prototype, but also continuous runs of finished goods.

Opening doors

Highly innovative businesses have so much to gain from 3D printing. It has the potential to become an integral part of every manufacturing site and to support the entire production process—from prototyping to supplying key component and replacement parts. Smart supply chain and operations management professionals can benefit from the accessibility of 3D printers, and small or remote countries now have a simpler entry to market. As it is still a relatively new technology, the world no doubt has yet to see the full potential.

Julie Kim is a supply chain graduate at Goodman Fielder New Zealand. She received her bachelor of commerce from The University of Auckland Business School. Kim may be contacted at julie.kim@goodmanfielder.co.nz.

David Robb is professor of operations and supply chain management in the Graduate School of Management at the University of Auckland Business School. He may be contacted at d.robb@auckland.ac.nz.


Is 3D Printing Right for Your Business?

3D printers use additive manufacturing processes to build objects layer upon layer. This type of manufacturing is appropriate when one or more of the following hold:

  • Customization is a key business strategy.
  • Production volume requirements are low.
  • Demand is constantly changing and difficult to predict.
  • Remoteness leads to high transport costs and long lead times.
  • The cost of traditional manufacturing makes for a significant barrier to entry.

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