3D Printing and the Global Supply Chain

Date: July 29, 2014

3D Printing and the Global Supply Chain

Few emerging technologies have caused as much of a stir as the advent of 3D printing.  Originally envisioned as an automated tool to generate product prototypes, 3D printing uses computer aided design to produce a physical, three dimensional product by building up layer upon layer of the required material,  such as plastic, ceramic, or metal powders.  Importantly, all of this can be done with little or no labor, from any location with access to 3D printing capabilities.

Although initially dismissed by skeptics as sounding like something out of a far-fetched science fiction movie, 3D printing today has advanced to the stage where its practical applications are growing by leaps and bounds.  And the seemingly improbable predictions for its revolutionary impactmight actually be within reach. 

The potential of 3D printing is so broad it cuts across almost every aspect of life, business, and economics.  Imagine being able to customize any product to suit your own needs and tastes, rather than being limited to the standardized, mass-produced products offered by your local retailers.  Yet, as remarkable as that seems, the impact of 3D printing on the global supply chain could actually be far more profound. 

In recent decades, global supply chains have become an integral part of the international trade system, and today they comprise the fastest growing component of global trade.  In a world where progressive trade liberalization has lowered tariffs substantially, the costs associated with sourcing inputs from a variety of countries and shipping them across international borders to a manufacturing hub have steadily declined. The cost-saving rationale for supply chains has become almost impossible to ignore.

Indeed, most major manufacturing companies rely, to one extent or another, on global supply chains to produce inputs for their finished products.  And for the countries along these supply chains – typically developing countries offering competitive wage rates – global supply chains are a leading source of employment and an important engine of GDP growth.

The far reaching and “game changing” potential of 3D printing on the global supply chain is therefore easy to grasp.  As the technology continues to improve, an increasing portion of inputs previously produced along the supply chain will be able to be “near sourced” – i.e., produced on-site, and on a cost competitive basis.  Additional cost savings would be realized through reduced expenses for transportation, storage and logistics. 

Under such a scenario, the economic rationale for supply chains would be compromised.  The wide network of overseas production facilities, which have been growing by leaps and bounds in recent years, could actually start to recede.

Needless to say, this would hold profound impacts not only for the structure and operations of the manufacturing companies involved, but also for the countries and employees spread out along the vast network of heretofore expanding supply chains.

As with so many new technologies introduced throughout the centuries, cost efficiencies will be realized for society as a whole -- however, at the same time, employment dislocations in particular sectors will be inevitable.

 But before we consign the global supply chain to the trash bin of history, a bit of perspective is in order.  Many new technologies have been trumpeted over the years as a revolutionary breakthrough or “the next big thing”, only to stumble and fail to live up to the hype.   Will 3D printing turn out to be just another over-sold passing fad, or will it actually revolutionize the global supply chain?

The answer will largely hinge on the extent to which 3D printing can supplant traditional manufacturing techniques on a widespread industrial basis.  And we’ll have to wait at least a few more years to get a definitive answer to that question.  The one thing that’s certain however is that the potential of 3D printing is in fact nothing short of revolutionary.

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