Embracing 3D printing technology benefits MRO spare parts suppliers

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By: Vijith Bhargavan -- Research Analyst, Capex and MRO

19 July, 2017

Embracing 3D printing technology benefits MRO spare parts suppliers
ARTICLE

Abstract

Inventory management has become challenging with issues such as lack of spares and excessive storage of infrequently used parts which may lead to obsolescence. These issues also impact the company’s balance sheet and discourage potential shareholders. With the advent of 3D printing technology, these problems can be solved to a great extent. 3D printing is an additive manufacturing process wherein parts are developed by adding one layer onto another and then supplied on an on-demand basis. This helps the customers to completely relax on the inventory management front and tackle obsolescence which affects cash flow and production. It is unlike the conventional method where the raw materials are molded and their composition changed drastically by a measured detachment process until the final product is produced.  

Market Overview

Future of 3D Printing  

Experts believe that by 2020, around 10 percent of industrial operations will integrate robotic 3D printing technologies into the manufacturing of parts. The analysis takes into account the fact that 3D printing has transformed from a mere prototyping concept to a viable model suitable for making quick-to-market products using specialized design and low volume production run.

As per Gartner Research’s estimate 5.7 million 3D printers will be sold annually in 2019 as compared to 500,000 3D printers in 2016. The main reason for this exponential growth is that 3DP can develop complex designs which conventional manufacturing cannot facilitate. So moving forward, spare parts manufacturing and meeting customers’ needs is soon going to change with the emergence of 3D printing which has been quietly evolving in sectors such as Automotive, Healthcare, and Aerospace. It has shown great promise as it holds more than 25% of the market share. As per Gartner estimates, the 3D Printing market will exceed growth of CAGR of 121% by 2019 with $14.6 billion.

3D Printing Technology

There are five major 3D printing technologies available to facilitate the additive manufacturing process to attain spares and products for the production lines of customers:

  • Electron Beam Melting
  • Fuse Filament Fabrication
  • Selective Laser melting
  • Selective Laser sintering
  • Stereo lithography

Let us look at a few prominently used 3D printing technologies and its operation cycle:

Source: www.strategyand.pwc.com

Impact on MRO spare parts business

In the current scenario, spare part supply as per customers’ demand is not being met in terms of timely delivery and quality. Suppliers find it a challenge to supply spare parts at different locations while maintaining a high level of service and keeping the costs down. More over the supply chain that has to be followed to meet customers’ needs is complicated, all of which requires strategic decision making as follows:

  • Whether to make or buy the part ordered by customers
  • Whether to make to stock (calls for efficient inventory management) or make to order
  • Where to manufacture the part
  • What service levels to offer the customers
  • Whether to continue making the part or discontinue to avoid obsolescence (generally obsolescence contributes around 10 percent of stocked spare parts)

So to avoid obsolete spare parts which have a hit on the inventory cost most suppliers are going for make to order rather than make to stock. However, strategizing on make to order results in a longer lead time which could make customers unhappy. Many experts believe that lower service levels result in lost opportunity as this could hamper supplier-customer relationship and future orders for the supplier. It has become a tough task for MRO suppliers in terms of channelizing an efficient strategic approach to meet customers’ needs. Almost 40 percent of these customers buying MRO spare parts are looking at 3D printing as a viable option to meet their demands. The main constraint for customers would be to gain the right level of skills to understand this technology and implement it efficiently in their operations. About 45 percent of suppliers have initiated the prototyping phase and pilot phase to regain market share.

3D printing simplifies supply chain and TCO

The comparison clearly shows the reason for the inclination towards additive manufacturing. It is not only the effort reduced by simplifying the supply chain but also the value it can provide in terms of quality, reduced wastage and service. Less complexity in manufacturing can augur better maintenance service and ultimately optimize the Total Cost of ownership for customers.

The figure shows a clear consensus on how significant the services market is becoming and the ever increasing demand for spare parts and related services. 3D printing service providers can support customers based on the cloud of services. However, there needs to be clarity on aspects such as:

  • What is the software preference e.g. Autodesk, Dassault systems based development?
  • Will the modelling be done by customer and the execution by service providers like Voxeljet who have the equipment to get it done?
  • Will the prototyping be done at customer-end or should service providers do it e.g. Imageware?
  • Which 3D printing material would customer choose to pick for making spare parts? Materials like Metal alloy polymers are needed to make the parts. Incumbent material suppliers currently available in the market are DSM Somos and Innovative polymers

Looking at the 3D printing ecosystem, it is very encouraging for customers since there are plenty of services to choose from -- be it in the design phase or parts preparation phase. It all boils down to how they want to negotiate and get the work done in the most effective way to meet their goals.

3D Printing Case Study

A) Industry: Aerospace & Defense

3DP is at the forefront in the manufacturing of aerospace parts at GE. The main appeal among big conglomerates in this industry is due to its low volume high value production.

Benefits

Using this technology instead of conventional methods yields faster products and spares that are lighter (better weight to thrust ratio), less wasteful (more fuel efficient) and more financially sustainable.

Key Takeaway

With this new approach to design and make fuel nozzles using 3DP, the life expectancy is designed to last five times more than conventionally made nozzles.

B) Industry: Health Care

Close to 25 percent of 3DP market is amassed by Health Care industry. US hearing aid production converted completely to 3DP in less than 500 days.

Benefits

The main reason for the implementation of this technology is to convert a highly labor intensive industry into an automated one. 

Key Takeaway

3DP implementation can help save costs of labor and manual operations. These savings can be used for improving quality and offering customized prosthetics and dentistry related-medicine which benefit patients. 

3D Printing for Procurement

3D printing is set to redefine the way spares are manufactured and shipped on time to customers. While it has evolved in certain industries, it is set to gain traction in other sectors such as Oil & Gas. At present the tide has not fully shifted to other sectors apart from Aerospace, Automotive and Healthcare because mass production using 3D printing is a major challenge due to the limitation of raw materials.

Currently, 3D printers can work with close to 100 diverse raw materials. However, it is less than the range of raw materials available with conventional methods. As for the future of 3D printing, experts believe that within the next 5 years, 85 percent of spare part suppliers will incorporate 3D printing and make it a significant part of their complementary manufacturing method.   




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