3D printing presents opportunities, threats in the aftermarket supply chain

Parts availability, especially for low-demand SKUs and items for older vehicles, continues to be a problem even in the best-run supply chains. But what if you could just produce those parts on demand when customers wanted them in batches of one or two? That's what could be possible in the aftermarket thanks to 3D printing and additive manufacturing technologies.

3D printers and other types of additive manufacturing devices lay down thin layers of material (usually plastic or metal) using data from CAD and other types of digital files. As the layers are built up, they create a three-dimensional object.

According to research from Markets and Markets, the 3D printing market is expected to grow at a compound annual growth rate of 23 percent from 2013 to 2020, reaching $8.41 billion. According to Gartner, worldwide shipments of sub-$100,000 3D printers will grow 49 percent in 2013, and grow to 75 percent in 2014. There is a lot of buzz around the technology, especially since falling prices have made it possible for small manufacturers to produce everything from toys to jewelry to homemade firearms using the printers.

3D printing was also on the agenda at the recent Automotive Aftermarket Suppliers Association (AASA) Technology Council (ATC) fall conference in October, where additive manufacturing was the subject of a keynote address by 3D Systems vice president Greg Elfering.

The notion that parts could be produced on demand, anywhere, could potentially eliminate a lot of supply chain bottlenecks. But the industry has mixed feelings about it. "At the conference, I asked the participants in our discussion groups, who were primarily manufacturers, if they felt additive manufacturing was more of an opportunity or a threat," says Chris Gardner, vice president of programs and member services at AASA. "Overwhelmingly, more of them thought it was a threat than an opportunity, as they understand it today."

Moving the point of manufacture

The automotive industry has used 3D printing technology for years, primarily to create prototype parts and models. With costs dropping and material improving, though, it's now possible to build production parts this way. With the arrival of desktop 3D printers aimed at consumers and businesses, every distributor, repairer and vehicle owner could conceivably have the same capabilities at their fingertips.

"3D printing is not cheap, and it's not for high-volume parts, but for low-volume runs it can be an affordable option," says Warren Smith, global industry director at software provider Infor.

Where the major opportunity in 3D printing may lie is in solving the problem of supporting an ever-expanding mix of SKUs to support an aging vehicle population. By printing parts on demand, it could be easier to meet customer needs without carrying excess inventory or expediting special orders. For low-demand parts, being able to produce a lot of one item could eliminate a significant amount of waste and redundancy in the parts supply chain.

"When we're at the point where you can print viable, sound products, the printing older parts or hard-to-find parts is an obvious area of opportunity," Gardner says. "Another one would be very expensive parts. For example, something that is expensive to buy and takes a long time to ship could be printed instead. You could also print out a copy and test it for fitment before buying the actual part."

"When you're talking about older service parts, maintaining old tooling and maintaining slow-moving inventory can be costly," Smith says. "Now we can say, if you need a 1965 Ford Mustang thermostat housing cap, you don't need to carry inventory on those. You could make them one-off, and customers would be willing to pay a premium for that."

But where, exactly, would that on-demand production capacity sit? For complex parts or metal parts created using expensive equipment, it would most likely still be at the manufacture/supplier level, where the additive manufacturing equipment would augment existing lines.

"There are reduced tooling expenses associated with that," Gardner says. "You don't have to create a dye or mold or tool for every part, and even possibly reduce inventory on hand."

"But with the price coming down low enough, you could place these machines at the point of sale," Smith says. "You could walk right into NAPA and have a part produced in four hours instead of waiting a few days for it to be shipped."

Moving the capability to the distributor level, or even the retail store, raises competitive issues, as well as questions about intellectual property security and safety/liability issues. It could also impact sales for manufacturers.

Quality control is another problem. "You're talking about having companies and entities producing parts that never produced them before," Gardner says. "How do you know the part was produced correctly? You have to work out a way to ensure the quality and safety of the part. If the company printing the part doesn't follow the specifications correctly and sells it, will the manufacturer be held liable for any damaged caused by the faulty part? That has to be addressed before 3D printing can be widespread in this industry."

The idea of licensing part designs for 3D printing was discussed at the ATC conference. OEMs already do this with contract manufacturers, so the business model exists. "Manufacturers could sell the license down channel or to a third party or contract manufacturer," Gardner says. "They sell the license to the CAD files, and then let them print old or seldom-purchased parts. That way the manufacturing doesn't have to be in the business of keeping the tooling and the inventory on hand to provide one part every third year or so. Somebody else can do that for them."

Another potential solution would be for the manufacturers to remotely control the printing equipment at their licensees' locations. "You place designate those machines as a manufacturing work cell within the ERP system," Smith says. "You can send a job directly to a remote machine, and guarantee that it only produces a certain number of parts. We're looking at different ways of doing that, and deleting the electronic file once the part is made."

According to Gardner, the concept would have a lot of utility in the specialty equipment and accessories space. It would also lend itself well to small, low-cost items like plastic clips, gaskets, interior trim pieces, etc. It's conceivable that a high-volume auto repair shop might some day keep a 3D printer on hand to produce small parts rather than wait hours or days for a shipment to arrive. Custom accessories and parts are another potentially lucrative market for 3D printing.

3D printing could also simplify some complex parts. "We're seeing that in the aerospace industry already, where instead of a part with multiple subcomponents, you can print that as one part," Gardner says. "That's good for whoever develops that capability, but it's also a threat to subcomponent suppliers."

But 3D printing is still slow and expensive, even though material and printer prices have dropped. It can take hours to create even a fairly small object, let alone a more complex part. But for short-run, expensive products, the cost and wait time may be irrelevant.

3D scanning technology has also dropped in price, which means it's cheaper and easier than ever to digitize physical parts and copy them. That makes the already challenging problem of counterfeit parts even more difficult for manufacturers to address. 3D printer company MakerBot, for example, has introduced a $1,500 3D scanner. Other companies have offered lower cost portable scanners.

"How do you prevent widespread counterfeiting?" Smith says. "Engineers are going to have to look at designing the products using 3D engineering to prevent counterfeiting, maybe by introducing internal structural elements in the part that can't be seen or scanned on the outside. You could also start serializing all parts so you have true lot control."

Gardner emphasizes that it will be several years before it's clear how 3D printing will affect the aftermarket. "There's still not a practical business model yet. The technology is amazing," Gardner says. "But it opens up a lot of issues and potentially unintended consequences."

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