When you think about United Parcel Service (if you ever do), you like think about the big brown truck that brings boxes to your house. But UPS does much more than deliver e-commerce purchases to residential addresses. They also have a significant business handling supply chain logistics. That business is potentially threatened by the evolving technology of additive manufacturing. Who needs a logistic purveyor when parts and components can be reduced to a file, sent around the world, and then printed at its point of use?
That concern has led UPS to experiment with 3D printing, investing in a start up and setting up a facility at UPS’s hub in Louisville. They currently have 100 printers and are planing to to expand to 900 (UPS Tests a 3-D Printing Service, Wall Street Journal, Sep 18). Just what are they doing with these printers?
UPS expects more companies will migrate some production to 3-D printing from traditional manufacturing on an aggressive growth curve, according to Rimas Kapeskas, head of UPS’s strategic enterprise fund. And UPS is also talking with customers about taking on a bigger role as a light manufacturer using 3-D printers. …
Late last month, the operation received an order for 40 mounting brackets for paper towel dispensers from a division of Georgia-Pacific LLC that makes dispensers, Dixie cups and cutlery. CloudDDM printed the mounts and UPS shipped them to a Georgia-Pacific engineer by the next morning. The brackets were slated for a month-long “stress test,” said Michael Dunn, senior vice president of innovation development for Georgia-Pacific.
Whirlpool turned to the operation recently when its own 3-D printers were all occupied. The maker of Maytag and KitchenAid products uses the printing method for prototypes of items like trays for refrigerators and venting systems for dryers, as a way to test parts on smaller scale.
The article also reports that UPS has used the service itself to produce parts for its fleet of planes.
Additive manufacturing is just cool technology to think about, but it faces some challenges. As we have posted about before, it (at least currently) has higher variable costs than most conventional production methods. Consequently, it is hard to imagine that, say, Lego will ever use 3D printing to pump out its standard blocks. Rather, additive manufacturing sweet spot is low volume applications because it is more flexible and has lower set up costs (e.g., you don’t need to make a mold). That means that prototypes and replacement parts are likely a big part of 3D printing’s future.
Thus it makes some sense that UPS is sweating this. Rapidly delivery of smaller shipments (in contrast to a containerful of standard parts) is likely a pretty profitable service and what is most at risk from 3D printing. One question may be why would anyone rely on UPS as opposed to doing things in-house. As the cost of the equipment falls (as it inevitably will) and expertise in using it spreads, why should a customer go to UPS instead of printing things themselves?
I can see a couple of factors in play. First, UPS is likely to build out a network of printing facilities (the article says they are thinking about this). A client that has more limited facilities may find it more convenient to let UPS produce the product where it is ultimately needed. This could be especially true for replacement parts. Second, it may simply be a question of using UPS as surge capacity as with Whirpool example above. Doing work in-house might be their first choice but UPS could be Plan B when its own resources are backed up.