It is a well-known fact: the sequence of all activities required to bring a product to a customer is called a value stream and despite the name, value does not flow smoothly nor swiftly along streamlined processes. Value streams are cluttered with non-added value processes, tasks and steps, so-called wastes.
Traditional manufacturing processes aren’t very efficient especially when several different techniques are required e.g. cutting, lathing, milling, drilling, welding, deburring, assembling, painting, etc.
All these machines require energy and floor space. The more complex the process, the more energy and space is required.
This remains true even if the process is partly subcontracted, which adds more transportation and management costs, maybe additional quality controls.
In such processes there are many hands-off and transportations between machines and work posts, the different operation require different skills, thus a staff of qualified workers.
Production is launched in batches in order to have some economies of scale but with carryover costs and all the trouble related to WIP and inventories.
Of course lead time is dependent on the number of operations and the process’ efficiency. Measured in time ratio, the added-value time to total Lead time ratio is often around 2% (poor efficiency) and around 10% (?) at best.
Customers pay for all this as until recently there was no alternative. Yet a tremendous change will affect some industries / businesses with additive manufacturing.
With these new techniques, when relevant and possible, the part or product is created in a single process by adding (“3D printing”) material one thin layer after another.
So how much non-added value additive manufacturing can take out of actual processes?
Well, considering the examples given above, I’d say a lot of handling, storing, energy, floor space, capital frozen in inventories and WIP, manpower costs, a large share of overhead, capital for different machines, lot of floor space and related costs (heating, cooling, light, locker rooms and other “social” rooms).
For the industries and businesses that will be threatened by the rise of these new manufacturing techniques, the disruption can be tsunami-like. Think of all the barriers to entry suddenly disappearing for new challengers and the irony of established companies, if caught unprepared, being suddenly locked-out from their own markets!
Some companies may not be able to switch quickly from traditional to additive manufacturing. It will probably take them some time to get the new know-how, find a suitable business model and get rid of assets that became a burden; machines, buildings and… some of the workforce. If additive manufacturing techniques supersedes traditional ones, companies that couldn’t manage the turnaround will be pushed out of their markets.
For customers it should be good news: cost and lead time should drop significantly while customization makes a giant leap.
Sad for those who will lose.
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You may also be interested in reading more posts about the factory of the future, like How disruptive 3D printing can be or Will 3D printing revitalize strategic analysis?