For nearly three decades, just-in-time manufacturing has been the norm. Suppliers and customers rely on it to streamline processes and reduce inventory that “sits” along the supply chain. Instead of receiving goods in advance, companies receive goods exactly when needed.
“But just-in-time manufacturing was a risk from the very beginning,” explains Dennis Unkovic, business advisor, author, and international attorney at Meyer, Unkovic & Scott LLP. “When it first became popular, the risk wasn’t there because the world wasn’t that upset.”
Today, however, the story may be changing. The last few years have created the perfect storm: a rare combination of circumstances like natural disasters, inflation, and mergers and acquisitions has disturbed just-in-time manufacturing — and supply chain processes in general.
The Biggest Supply Chain Challenges
Although many point to factors like port congestion, COVID-19, and material shortages as the most significant supply chain challenges, Unkovic says the storm has been brewing for years. These factors simply serve as accelerants.
For starters, he points to a leadership shift in the 1980s. Instead of manufacturers being managed by people responsible for producing goods, financial experts trained to focus on EBITDA (earnings before interest, taxes, depreciation, and amortization) moved into leadership roles.
“I don’t think enough of today’s C-level execs or boards of directors recognize that their company’s risk component is largely dependent upon the supply chain,” he explains.
This leadership transformation drove the shift to just-in-time manufacturing. The transition to EBITDA-focused operations also pushed labor overseas to countries like China, which was more cost-effective at the time.
These challenges are also intensified by talent shortages. Much like other industries, the supply chain is feeling the effects of not being able to attract and retain workers. More than three-quarters (81%) of supply chain professionals are looking to fill open jobs in the next 12 months. Leaving these positions vacant could negatively impact the U.S. economy by more than $1 trillion by 2030.
Addressing These Supply Chain Challenges
To cope with these challenges, many supply chain professionals are looking for ways to reshape how products are designed, manufactured, and sold. While 59% of companies have adopted supply-chain risk management practices like new software and processes, there’s ample room to address emerging weaknesses.
In late 2021, 82.7% of organizations reported that management’s commitment to supply chain risk is now “medium” or “high.” One way to put this commitment into practice, according to Unkovic and Maya Eckstein, partner at Hunton Andrews Kurth LLP, could be found in new manufacturing approaches like 3D printing.
What Makes 3D Printing Different?
3D printing (additive manufacturing) improves traditional manufacturing, which uses a subtractive process. For example, to build a carburetor or manifold, the material is removed from a block of metal; several parts are then welded or assembled.
But 3D printing uses a computer, software, and special equipment to build material in layers until the desired object is created. This eliminates waste, decreases raw material costs, removes the need for molds and tools, and requires fewer labor resources.
Because it’s faster than traditional manufacturing, 3D printing also supports efficient design and prototype work, allowing products to be manufactured more rapidly so they can be released to the market sooner.
3D Printing’s Move to the Supply Chain
Supply chain officials report that their most critical priorities in 2022 are increasing efficiency, reducing costs, and automating processes. 3D printing can help them do all three.
As Eckstein points out, "3D printing also consolidates the number of components and processes required for manufacturing, which should have a significant impact on global supply chains. Fewer parts mean fewer links in the supply chain." This consolidation makes for a more efficient supply chain.
In addition, 3D printing can lower the cost variance between local and overseas manufacturing, helping bring production closer to home to reduce transportation costs and delays.
She points to some companies already incorporating 3D printing into manufacturing processes. HP, for example, printed millions of medical components during the COVID-19 pandemic, including parts for ventilators, nasal swabs, hands-free door openers, and masks.
“3D printing is also used to manufacture implants, hearing aids, orthotic insoles, and prosthetics,” says Eckstein, “all of which can be personalized with 3D printing in a way that cannot be accomplished with inventory-based manufacturing.”
To generate faster lead times, reduce overhead, and improve cash flow, 3D printing can also support on-demand manufacturing. Unkovic uses belay devices as an example. Crucial for rock climbers and rappelers, the devices must be well made — but they don’t need to be manufactured in large quantities. Products like this could be made on the fly as orders are placed.
“3D printing’s layered approach assures structural integrity,” says Unkovic. “It offers the ability to design components that are just as strong — yet lighter.” Every pound or ounce you can shave off a plane, automobile, or safety device, like a belay, is critical.
He says 3D printing can also help manufacturers skirt material shortages and delays. Recently, when a U.S. manufacturer couldn’t source a $15 part needed for 1,200 components sitting in a warehouse, Unkovic says it turned to 3D printing. As a result, the company was finally able to complete manufacturing and ship the components.
The Future of 3D Printing and the Supply Chain
As leaders become more aware of supply chain challenges and their impact on business development, Eckstein believes that “there are too many benefits to 3D printing, including reduced costs and simpler logistics, for manufacturing to not shift in this direction. The costs associated with 3D printing have also reduced, making it more affordable.”
For supply chain officials focused on addressing critical priorities in 2022 and beyond, 3D printing is well-positioned to increase supply chain efficiency, reduce costs, and automate processes.