Hybrid AM Supply Chains: The Future of Manufacturing?

A map of proposed metal AM hubs based on demand patterns across the United States.

The proportion of the manufacturing market that can be addressed by 3D printing technology is growing by the day. Improvements in underlying additive processes have brought economic feasibility to applications across the entire spectrum of 3D-printable materials, but the trend has been most pronounced in metals. Up to now, metal AM’s strong ability to occupy an important place in the value chain for OEMs of all sizes hasn’t matched up with its relatively low levels of adoption. The issue can be summarized thus: the massive business advantages that incorporating AM might unlock remain off limits for most companies because the costs associated with bringing the technology in-house remains prohibitive.

Inspired by this challenge, a new research effort published earlier this summer in Additive Manufacturingtook a close look at a practical way to make the value of metal AM accessible to more companies. The paper, titled “Hybrid manufacturing—integrating traditional manufacturers with additive manufacturing (AM) supply chain,” imagines what it would look like to develop a system in which additive manufacturing “hubs” throughout the country were brought online by independent providers. These hubs would then be accessible as vendors for those OEMs that might have niche uses for metal 3D printing, but are unable to make the technology investment on their own. The study paints a tantalizing picture of how a hybridized supply chain might propel the manufacturing sector forward by democratizing access to this revolutionary technology.

Metal AM—a Bottom-Line Booster?

To understand why modernizing this supply chain is a worthwhile priority, it’s first necessary to understand the economics of metal 3D printing. Traditionally, metal printed parts have existed primarily in the product development cycle as prototypes. The ability to print highly complex components with less tooling and waste than with traditional methods has been a major advantage for metal AM. Now, however, falling material costs and improved printers have made full production runs of some high-value parts good business.

A visual representation of the hybridized supply chain the study proposes.

Less than half of manufacturers incorporate AM into their processes today. This is bad for the economy. Metal printed parts often enable significant design improvements, such as better strength-to-weight ratios that raise efficiency. The track record of production-scale parts being implemented to offer better end products and improved business results is lengthening. Enabling the design improvements made possible through metal AM to benefit as many firms as possible is good for both consumers (who get better products) and the competitiveness of the economy. Needless to say, this makes integrating traditional manufacturing supply chains with AM hubs a compelling idea.

Surface Finish Synergies

The value created by such an arrangement wouldn’t all seep toward OEMs, however. A challenge that producers of 3D printed metal parts have long struggled with involves surface finish. Because metal AM produces far rougher finishes than methods like injection molding or CNC machining [roughness averages (Ra) of 200-500 versus 20-100], the cost savings of the technique can be nullified by postprocessing needs. Components that are going into, say, jet engines must have exact material qualities and dimensional tolerances. Any additional friction might throw off the entire dynamic.

Postprocessing techniques like grinding, heat treatment or machining have rarely been the purview of metal AM part providers. That responsibility has fallen to the traditional manufacturers that have the necessary experience and equipment. A hybrid supply chain, according to the research team, institutionalizes this trend toward specialization by more clearly defining roles.

In such a system, the AM hubs wouldn’t have to apologize for not providing postprocessing services because the parts they produce will go directly to OEMs that have the capacity to provide this as a value-added service. To this point, the study found that 94 percentof OEMs reported an interest in offering such services. Linking organizations more directly to their core competencies within the value chain could improve the efficiency of the entire system.

Summarizing the Upside

The advantages of broadening streamlined access to metal AM for more manufacturers through this model can be grouped into three categories. First, as discussed above, a higher proportion of AM parts finding their way into small- or medium-sized businesses would better utilize the excess finishing capacity that many of these organizations already have. This could maximize their collective return on invested capital and minimize a challenge many AM service providers currently face.

Next, there’s clear evidence that metal AM can improve the operational efficiency and product quality of traditional manufacturers. In addition to better functionality through weight reduction and improved designs, AM can often shorten go-to-market times dramatically and produce complex components more cheaply. Access to this technology via third parties distributes these advantages equally, which could foster greater competition and innovation.

Finally, strategically located AM hubs as proposed by the study could improve the consumer experience by reducing costs and lead times. Improved products that incorporate AM-produced metal parts would become cheaper to make because of wider access to third-party AM services. Because this process also wouldn’t require expensive, cross-country shipment of parts to the OEM, shipping costs and lead times would both be reduced. Consumers of these end-use products would be able to pay less for them and obtain them more quickly than they can today. The increased demand this would create would likely strengthen the manufacturing ecosystem as a whole.

Locating AM Hubs Throughout the Country—Methodologies

The study’s principal contribution came through its modeling of AM demand allocations and hub sites to estimate optimal distribution of the hubs nationwide. The first technique used by the team was an uncapacitated facility location (UFL) model incorporating the factors of “demand, location, fixed cost, production cost and transportation cost” to isolate the most favorable counties in the U.S. to house metal 3D printing centers. Using data from the North American Industry Classification System (NAICS) Association for machine shop locations across 3,109 counties, the model sought to balance post-processing capacity and demand for metal AM parts by region.

The paper used actual market pricing based on up-to-date quotes from AM providers to more accurately gauge demand. In addition, the UFL model assumed AM-produced metal component usage at proportions of 5 percent and 10 percent. Sales volume by county was calculated using total machine shop sales volume per year and average unit prices. To weigh this demand against the cost of bringing AM hubs online, the researchers used real market data to estimate the fixed costs of operating such facilities at differing volumes. They found, for example, that a facility with 10 AM machines operating at 90 percent capacity would come with $3.96 million in fixed costs annually.

In the UFL model, as demand increased, the fixed costs of adding more machines to a single location became exorbitantly high—in the order of billions of dollars annually. To gauge the economic efficiency of this pattern, the researchers also applied a p-median model that used an average fixed cost limit of $40 million annually. This technique yielded 22 optimal AM hub locations at 5 percent average demand and 44 at 10 percent.

Key Findings

The UFL model initially run by the study demonstrated that a single, infinite-capacity hub that added capacity as demand increased would not be feasible. The fixed costs of such a location began to rise exponentially past certain demand levels, and it was found to be much more efficient to distribute the hubs based on the p-median modeling. Anecdotally, the UFL model found the ideal location for an AM hub to be Washington County, Ill., which also happens to be very near the population centroid of the U.S.

Both the p-median and UFL models found similar annual cost breakdowns, but with the uncapacitated system producing higher total costs.

In the p-median model, increases in demand did not suggest increasing capacity at a single hub but rather distributing these increases among new hubs at a rate of approximately 4-5 hubs per each 1 percent increase in demand. Importantly, falling machine costs (which are likely to occur over time) did not affect hub locations in the study, demonstrating that this model could be efficient in real terms today. At current demand rates, the cost analysis presented by the study suggests that adding capacity to existing locations could be most efficient, but even a slight uptick in demand shifts the model’s preference toward opening new hubs.

The 22 actual AM hub locations proposed under the p-median model at current levels of demand (roughly 5 percent of total)

Hybridizing the AM supply chain in the manner suggested by these facility location models would produce big advantages by linking metal 3D-printed part producers with the smaller machine shops that could post-process and use them. Ultimately, as demand for these parts continues to rise, modernizing the manufacturing ecosystem by bringing AM hubs to regions of the country closest to high demand just makes sense. It’s a win-win for organizations (or potential investors) that provide AM production services today, and for the many thousands more businesses that might benefit from better access to the high-value parts they enable. This study offers a realistic framework, based on current market data, for bringing the technology to more businesses while simultaneously taking better advantage of existing resources.