Smarter Operations: The Role of Additive Manufacturing in Production of the Future

Smarter Operations: The Value Chain’s Vital Role in Digital Evolution Chapter 3 The Role of Additive Manufacturing in Production of the Future 1Role of Additive Manufacturing Industrial Demand Return on Investment Conclusions and Key Takeaways Introduction A four-part series helping manufacturers make progress today while building for tomorrow Concepts Thought leaders envisioning the digital future of manufacturing production have put names to different movements or strategies. For consistency, the following definitions are being applied. Digital Transformation (DX) Technology analyst and advisory firm IDC defines DX as transforming decision-making with technology. Manufacturers must look at DX as a mechanism to deliver the next level of value for the organization through the use of digital technologies. Industry 4.0 This fourth Industrial Revolution is the next wave of disruptive technology that will enable manufacturers to make great leaps in productivity, efficiency and innovation. Smart Operations A step forward from Smart Manufacturing to the digital connectivity of machines, facilities and people outside a factory’s walls. Smart Operations helps integrate processes both upstream and downstream to improve visibility and enable flexibility in both planned and unplanned changes. Trading Partners Businesses contributing at any point in the value chain to the manufacture and delivery of products. Value Chain The unique internal and external contributors to a manufacturer’s end-to-end supply chain that add value to the product being supplied to customers. Modern digital technology is transforming every industry, including manufacturing. Yet in The Rise of Smart Operations, a survey of machinery manufacturers conducted by UPS and IDC, roughly one-half of the respondents said their digital or “smart” operations were lagging the competition or were at a significant disadvantage. This four-part series continues to explore the building blocks required to create a smarter, more digital operation. Manufacturers will also find practical solutions they can consider implementing today to incorporate smarter operations in their production processes of the future. Smarter Operations: The Value Chain’s Vital Role in Digital Evolution 2Role of Additive Manufacturing Industrial Demand Return on Investment Conclusions and Key Takeaways Bold predictions have been made about the disruptive power of Additive Manufacturing (AM), commonly called 3D Printing. However, instead of being the death knell of traditional, subtractive manufacturing, the reality is quite the opposite. This method of depositing layers of material per precise digital specifications may be the most readily available production technology today — and perhaps the most underutilized. We see companies using AM more often for product development via prototyping or proof of concept. A recent study of over 900 3D Printing users supports that view. Twenty- eight percent said their top AM priority is accelerating product development, whereas 19% or less said their companies’ top AM priorities included product customization, production flexibility, spare parts management or reducing tooling expense. Among Industrial Goods manufacturers, just 14% said that AM permeates all or most of their programs, compared to 26% of all respondents. Are manufacturers underutilizing Additive Manufacturing? Yes, without a doubt. But the flip-side is that tremendous opportunity awaits those who incorporate its power both upstream and downstream in the value chain. For the past few years, I’ve been closely involved in the UPS-Fast Radius solution which provides on-demand AM services in a range of materials. These “Additive Micro Factories” of commercial-grade machines produce everything from single prototypes and replacement parts to large lots of mass customized products. If digital plans are submitted early enough, products can often ship out the same day for delivery the next morning in the U.S., and the next day to anyplace around the globe. The solution is there for the taking without investment in capital, expertise and training. This leads to my own bold prediction: For manufacturers to answer the growing cry for efficiency, speed and innovation, they must begin incorporating AM into their production processes now. Looking into AM can be as simple as an exploratory meeting or submitting digital parts information for production design and testing. Tomorrow, those with digitally connected operations and analytics-based business rules could automatically route small batch custom orders to an Additive Micro Factory, leaving high volume production of non-custom parts to subtractive manufacturing facilities. I also want to emphasize the importance of evaluating AM return on investment holistically across the enterprise. For example, what impact could lowering inventory and out-of-production parts by 5% have on the bottom line? What if on- demand AM production of repair parts, tools, jigs or fixtures could get a machine line running in two days instead of two months? What service advantages could be gained by offering customers more options for product customization? Over the last two years the time and cost of AM have plummeted while quality has increased. We see this trend accelerating with new technologies and materials ready to be introduced over the next year. Smart manufacturers will not only take notice, they will take action. They know that relentless change in the industrial sphere is turning bystanders into dinosaurs. When building toward the future, the advantage lies with those who embrace the expertise and infrastructure that resides outside of their own four walls in order to keep up or get ahead of their customers’ expectations. Introduction by Alan Amling Vice President, UPS Corporate Strategy Introduction 3Introduction Industrial Demand Return on Investment Conclusions and Key Takeaways Additive manufacturing (AM) is the process of adding layers of material — most commonly plastics or resins, and increasingly metals — to produce products according to precise digital plans. The technology introduces a fundamentally different approach to making products when compared to the traditional, subtractive manufacturing process of reducing material to get to the final product. With AM, products are produced using only the material necessary, therefore minimizing scrap. While the technology is over 30 years old, it has now reached mainstream manufacturing largely for early stage product development. Manufacturers will likely realize the full potential of AM as they continue building the pillars of a more digitally connected operation (Figure 1). Current AM adoption rates are far from eye-popping. Alan Amling noted in his Introduction that only 14% of Industrial Goods manufacturers say AM is permeating part or all of their operations. However, as manufacturing operations become more digitally integrated and automated, and when captured data is analyzed into productive insights, the power of AM will only be magnified. Role of Additive Manufacturing DIGITAL OPERATIONS AUTOMATED OPERATIONS INTEGRATED OPERATIONS INSTRUMENTED OPERATIONS Sensors capture data about operations and facilities to better understand operations and identify opportunities for improvement. Enables the organization to break down the traditional silos of insight and create alignment across the end-to-end value chain. Automation technology and robotics help drive eciency, productivity, and quality improvements throughout the operation. A digital representation (digital twin) of products and processes enables modeling and simulation to help drive operational improvements. Access to Enterprise technology and so‚ware currently used for corporate or administrative purposes Corporate Vendors Global value chain visibility Contract manufacturing, warehousing and distribution Established partnerships with technology providers Logistics & 3PLs Product innovation Shared services Investment in tech for mutual bene…t Industry best practices Suppliers Advance Smart Operations with Support from Value Chain Partners Figure 1 The Role of Additive Manufacturing in Production of the Future 4Introduction Industrial Demand Return on Investment Conclusions and Key Takeaways Notable AM Advantages Realistic AM Challenges Role of Additive Manufacturing Faster prototyping has the potential to speed up product innovation. It can also position final production closer to the point of need to better meet time- sensitive service- level agreements. Additive Manufacturing is the common name for a range of additive printing methods. For simplicity, this paper will not discuss the pros and cons of each. The important point is that making capital investments in rapidly emerging technologies is clearly a risk. Testing AM through third-party providers can be a wise choice in the short-term. AM is often a more efficient solution for producing customized and variable products or for production of small lots. AM enables the manufacture of highly complex geometries and can help reduce the time and expense of retooling. Sending any files digitally across the internet comes with inherent risks. Work with trusted suppliers and verify that they can provide secure transmission and storage of plans. All manufacturing processes result in waste but the volume of waste from AM is notably lower, helping to reduce scrap and the expense of waste removal. On-demand AM can help reduce or eliminate the need to carry safety stock, and can reduce the inventory burden of aftersales service. No one knows what, if any, limitations may be imposed when Additive Manufacturing is implemented across borders. In time, increased adoption rates may prompt issues related to data privacy and customs compliance. Speed Investing in rapidly evolving technologies Flexibility Protection of Intellectual Property Rights Waste Reduction Inventory Reduction Global considerations Customization The Role of Additive Manufacturing in Production of the Future (continued) 5Role of Additive Manufacturing Introduction Return on Investment Conclusions and Key Takeaways Chapter 3: The Role of Additive Manufacturing in Production of the Future Industrial Demand Despite its relatively limited use throughout the manufacturing enterprise, interest in AM has been growing. A recent IDC survey found that over 44% of machinery manufacturers were either evaluating, implementing or already using AM in their organizations (Figure 2). Of those using AM, the most common use was for prototypes (59.7%) followed by production of parts and/or tools (42.6%). The next closest use, at 23.2%, was for mass customized products such as cell phone covers, prosthetics and dental appliances. AM adoption rates will increase as the technology advances in speed, scale and the variety of available materials. Correspondingly, the supply chain for AM printed products will change. To start, storage and transportation requirements will be different from those used with traditionally manufactured products. Some raw materials, often metal sheets and containers of parts, will be replaced by AM plastic or resin “ink” wound like speaker wire around large spools. AM-driven disruptions can be found in every sector. In some cases, an engineer may be the de facto manufacturer simply by transmitting the design plans in a compatible format to a remote print facility. For obvious reasons, AM is also disrupting ancillary service providers such as aftersales services and outsourced manufacturing. Now that manufacturers can digitally “push” the manufacturing process closer to customers, there is also potential to reduce the complexity and expense of international tariffs and duties. Industrial Demand 3D Printing — Which statement best describes your current position for the following technologies and solutions? Already in use in my organization Currently implementing Currently evaluating Will evaluate in the next 6–12 months Will evaluate in the next 1–3 years Not considering Not applicable for my organization 3D Printing in Manufacturing 14.2% 15.4% 19.4% 13.9% 11.2% 13.3% 12.6% Figure 2 Of those using AM, the most common use was for prototypes (59.7%) followed by end-user parts and/or tools (42.6%). The next closest use, at 23.2%, was for mass customized products such as cell phone covers, prosthetics and dental appliances. 6Role of Additive Manufacturing Introduction Industrial Demand Conclusions and Key Takeaways Chapter 3: The Role of Additive Manufacturing in Production of the Future Return on Investment Additive Manufacturing is a viable production tool that can be applied in many ways throughout the value chain. However, with its use still largely concentrated in early product development, and given the long delay between prototype and product-driven revenue, it is fairer to look at ROI from a broader perspective. Specifically, AM should be considered part of a holistic enterprise operating plan that enables more optimal deployment of assets and resources to meet key performance indicators. To evaluate AM costs in isolation risks shortchanging the tool that seems poised to become as vital to manufacturing’s future as machining has been for the past two centuries. Following are some opportunities to consider: 1 2 3 4 Return on Investment (ROI) Potential to reduce complexity, weight and production cost of products Potential to consolidate parts by AM printing a unit that was previously made up of multiple assembled parts Competitive advantages • Faster product development • More customized products • Faster delivery of vital service parts Reduced inventory holding and management costs 7Role of Additive Manufacturing Introduction Industrial Demand Return on InvestmentChapter 3: The Role of Additive Manufacturing in Production of the Future Conclusions and Key Takeaways Additive Manufacturing clearly holds great promise for the future of manufacturing production. Though it is still being used most for prototyping, compelling arguments have emerged for making AM an integral part of a holistic and forward-looking production process. Manufacturers should engage their operations leaders and value chain partners in a discussion of where and how Additive Manufacturing can benefit the operations now — and in the future. Suggested steps: • Engage partners. At a time of overwhelming change, getting insights from companies that know your business can be invaluable. Also, value chain partners can offer unique access to technology and solutions that will be difficult to find or afford on the open market. • Test and learn. Some AM technologies appear to be frontrunners in an increasingly crowded space, but it is too early to know for sure. Further, no single AM production method is right for all products. As an alternative to investing in technology and expertise, there are third-parties who can offer consultation services and provide on- demand printing as well. Learn more about the UPS-Fast Radius solution here. • Explore AM as a differentiator. As part of a holistic enterprise strategy, Additive Manufacturing can help manufacturers allocate resources more efficiently at nearly every point in the value chain. Among the resulting benefits may be faster product development and innovation, faster repairs or lower inventory costs. Any or all may be turned into hard-to-achieve differentiators with customers. • Consider Additive Manufacturing as a long-term strategy. The hype surrounding AM could easily make the technology seem like a fad. All evidence so far points in the opposite direction. As the technology evolves, and as manufacturers build their digital ecosystems, AM is poised to play an even bigger role in creating the production process of the future. Conclusions and Key Takeaways 8Role of Additive Manufacturing Introduction Industrial Demand Return on InvestmentChapter 3: The Role of Additive Manufacturing in Production of the Future Conclusions and Key Takeaways Learn more about the ways UPS can help you progress toward Digital Transformation. INSTRUMENTED OPERATIONS INTEGRATED OPERATIONS AUTOMATED OPERATIONS DIGITAL OPERATIONS UPS Logistics Supporting Smarter Operations Corporate Strategy & Innovation • Supply chain consultation to help identify short-term and long-term steps toward smarter operations • Financial and insurance products from UPS Capital to enable growth and investment while mitigating risk Operations • Advanced operating capabilities through contract warehousing, distribution and field stocking locations • Order intake, processing, shipment and delivery • On-demand Additive Manufacturing (3D Printing) services • Package Engineering Inbound/Outbound Logistics • Integrated global transportation network: ground, air, ocean, rail • Multimodal visibility into inbound and outbound UPS shipments • Trade Management and Customs Compliance • Global Freight Forwarding Post-Sales Services & Solutions • Returns solutions to streamline customer experience and better manage inventory utilization and costs • Test, repair and refurbishment services • Critical MRO order fulfillment • 27,000 drop-off and pick-up sites Conclusions and Key Takeaways (continued) Coming Soon: Chapter 4 | Production of the Future – Conclusions and Guidance