Many supply-chain headaches can be alleviated with additive manufacturing, also known as 3-D printing. But before we put on our rose-tinted glasses, we should remind ourselves that there are perils attached to these benefits that can keep top management — and even the CEO — up at night.
Virtual or digital inventory can sometimes seem like a magical solution. It means holding digital assets in inventory and producing on demand, usually with additive manufacturing, when the item is ordered.
This cuts many costs. The expense of creating initial physical inventory is slashed almost entirely, while that of maintaining the inventory (including rebalancing, logistics, shipping, and overheads) is greatly reduced. Moreover, obsolescence and write-offs become a thing of the past.
These are the obvious benefits, but there are more. Consider the case of an equipment manufacturer that has more than one million different spare parts in its catalog. It can’t possibly hold them all in physical inventory, so customers usually wait approximately four weeks for a spare part. During that time, the equipment lies idle, or the customer holds some inventory internally.
One such customer told me that, on average, out of six production lines running at its facility, at least one is idle and waiting for a spare part at any given time. The combination of additive manufacturing and virtual inventory can shorten this wait time to just a day or two. That’s a marked improvement for customers, and one they would likely be willing to pay a premium for. All this and increased customer happiness and loyalty thrown in, too!
So why isn’t everyone using virtual inventory and reaping the rewards? As I mentioned above, there are problems and pitfalls to contend with.
The Bigger Picture
Not all parts are appropriate for production by additive manufacturing. Glass and some specialty materials are still problematic or extremely costly to produce in this manner. Machine manufacturers and material scientists are continually working on expanding the scope of additive manufacturing, so the current level of production, estimated at 5 to 15 percent of parts, will continue to grow.
Second, additive-manufacturing workflows must integrate with existing supply chains and other ecosystem players in order to become seamless and automatic, rather than forcing procurement managers to figure out which item is in virtual inventory and must be treated differently. I believe this to be critical for smooth customer adoption.
These technical challenges will be resolved naturally. Unfortunately, there are more inherent problems.
Virtual inventory is light and easy, but that’s also its vulnerability. In the case of unauthorized acquisition of a part from physical inventory, it’s the loss of revenue for that item that hurts. But when an unauthorized individual acquires the digital instructions on how to make that part, you have a much bigger problem — one that will keep the CEO up at night.
There are several reasons for this. The first is that the digital file holds the company’s intellectual property, something you can’t get from the physical part so easily. This is a major asset, and its leakage can genuinely affect the company’s value.
Second, with the unprotected digital file, the perpetrator can manufacture as many parts as it wants, causing the company a significant financial loss. This possibility is always on the radar of the CEO and CFO.
Finally, if the perpetrator cuts any corners, inferior parts with the company’s logo could find their way into the market, threatening the brand’s image and integrity. This is the worst possible scenario, with the potential to affect the top line, bottom line, and company valuation. A perfect storm, you could say.
Looking at these issues collectively, it’s no wonder that some companies are hesitating before moving to additive manufacturing in production and virtual inventory. But the benefits are so enticing — so what to do?
Ensuring the CEO Sleeps Peacefully
The answer is surprisingly simple, but requires forethought. There are in fact solutions available that allow you to protect your digital assets, enforce consistent manufacturing, and track each item being produced, thereby limiting quantities to authorized amounts.
From Day One, companies incorporating additive manufacturing into their operations need to put into place platforms and solutions that will allow them to move to production without disrupting existing policies and procedures — and without exposing their organizations to unnecessary and potentially debilitating risk.
By carefully researching and scrutinizing the available offerings, you will be better informed to ultimately select the best solution for your organization. Choose wisely, and you should be able to achieve your goal with minimal disruption and no extra installations and appliances, while adhering to supply-chain and I.T. policies and procedures.
Ilan Solel is vice president of sales at LEO Lane.