We’ve heard for several years that AM has “arrived,” but we’ve only recently seen it moving beyond lab applications in a meaningful way. What’s different now?
Vinod: That’s true. Until a couple of years ago, the hype around AM had outpaced the reality of its applicability. There were many reasons for it: technical, functional, economical, speed, quality, etc. But now, highly capitalized and R&D-rich companies like HP and GE are doubling down on AM and digital manufacturing, so we’re finally seeing a paradigm shift. The entire industry has received a shot in the arm. And at the same time that AM has been advancing, complementary technologies like IoT, AR/VR, and data analytics have matured significantly. Together with AM, these digital technologies are driving the evolution to Industry 4.0. It’s safe to say that AM at scale is finally and really here.
Is the case for adopting AM primarily financially-driven?
Vinod: It can be. But a side-by-side cost-based analysis of AM vs. other technologies is a myopic, old-school way of evaluating the value of AM. While cost is undoubtedly an important factor, there are other elements that play a significant role as well. For example, one huge advantage of AM is in product design and innovation. Product designers and engineers can make products lighter and create more efficient forms for the same (or better) function. This one AM attribute alone, if done right, can be a game changer and will disrupt markets.
The truth is, there are still some executives who try to define their AM strategy and investments using cost as the primary driver—this will likely change as more creative executives take leadership in product innovation.
Isn’t the definition of innovation shifting? We’re clearly entering an era of personalization, one where innovation means different things to different people…
Vinod: It does, and that’s music to the ears of anyone who’s involved in AM. At the fundamental level, AM is just another way of making things—there’s nothing earth-shattering about that. But think about what’s happening in the online world: We are moving towards greater and greater personalization and customization. And while the same desire for personalization is rapidly growing in the offline world (physical products), it has been difficult to meet that demand with traditional methods. That’s where AM comes in, bringing personalization and customization at scale without the cost or complexity that has been traditionally associated with such a strategy. I fully expect that within the next five to ten years, AM will become the leading source of differentiation and innovation for physical products.
That’s great. We’ve seen companies innovate well, but lose that advantage by not moving fast enough in getting those innovative products to market. Does that dynamic continue?
Vinod: Excellent strategies typically fail due to poor execution. In the situation you’re describing, fast-followers with hyper-efficient supply chains outpace an innovative company and gain an edge in the market. Again, AM can play an important role because it’s not just about making innovative products—it’s also about delivering them faster. Traditionally, product operations would need to be significantly ramped up—an expensive and time-consuming task—before products could be made available to customers. AM lets us execute bridge production quickly and inexpensively. Companies can start making parts and products closer to the customer at smaller scales to satisfy the early adopters faster. Again, this is why it’s important to consider the value of AM holistically, not in pockets of applications.
Got it. But adopting a holistic strategy can be a time-consuming endeavor. Where are you seeing companies focus for their early wins?
Vinod: That’s a great point. We live in a “what’ve you done for me lately?” world. As companies build out their AM roadmaps beyond prototyping and tooling, we help them identify several near-term proof points. One of the emerging applications on most roadmaps is in the spare parts and service business. When you look at any industrialized business, the lifecycles of products can last for decades, resulting in incredible carrying costs for inventory, tools, and molds. AM minimizes and potentially eliminates these extremely high costs. It allows companies to keep longtail customers happy without the corresponding drag on costs associated with them. In fact, it’s likely that inventory could be outsourced to service bureaus who can print parts on demand, with the qualification of those parts happening either at the service bureau or with the original equipment manufacturer. Achieving even partial success in this effort could result in millions of dollars in net benefit, which is clearly a win.
With all the recent talk of trade wars and tariff changes, we’re wondering how AM will be affected—especially in the United States. Are these changes helping or hurting the opportunity for AM?
Vinod: They absolutely help, and here’s why. I recently spoke with my colleagues Brian Pinto and Kristine Dozier* who explained that AM provides a great opportunity for companies to potentially reduce tariffs for goods that would otherwise require import. Although AM is just now starting to impact supply chains, finance leaders should absolutely be thinking about the opportunities, risks, and unanswered questions surrounding it. As AM continues to flatten supply chains—resulting in less need for warehousing and distribution—intercompany transfer pricing will have to change. In addition, impact on indirect taxes should be considered. Tangible goods may no longer be crossing borders and values of goods may be shifting from tangible to intangible. These are just some of the things that need to be considered when we manage potential risks and unlock the opportunities associated with AM.
How can we learn more?
Vinod: AM at scale is here, and every day, we’re focused on helping clients build and realize their AM strategy. We have more information on our website. And
if you’d like to chat, please reach out to us directly through the form below.
Learn how additive manufacturing can transform your organization or contact us here.
*Brian Pinto, Global Business Change Leader, Deloitte Tax LLP and Kristine Dozier, principal, Global Trade Advisory, Deloitte Tax LLP
