Sep 19, 2016 | By Alec

If you can’t beat ‘em, join ‘em. That is, in a nutshell, what UPS must’ve been thinking. They have been interested in the concept of 3D printing for some time, and have been extensively experimenting with 3D printing on-demand services in the US. But now it has come to light that 3D printing also threatens a modest, but solid, portion of UPS’s income: the storage and shipping of spare parts, the demand for which is expected to decrease as 3D printing grows. In response, UPS is now planning to expand its 3D printing services to Asia and Europe.

The shipping and storage of spare and replacement parts represents just a small portion of the United Parcel Service business model, but every business loves security. As more and more companies are switching to in-house 3D printing, that ‘secure’ portion is expected to shrink over the coming years. “3D printing is a great opportunity for us, but it's also a threat,” said Alan Amling, UPS vice president for corporate strategy.

Nonetheless, the exact figures for this competition from 3D printing are not known. UPS does not disclose its profits from supply chain services, such as warehouse storage. In 2015, they did reveal that they earned about $6 billion from ‘forwarding and logistics’ services (which includes warehousing operations) – about ten percent of their total sales.

While many companies would respond to such market changes by fighting them tooth and nail, UPS has thus chosen to get on board with 3D printing. They are envisioning a 3D printing service that supplies plastic components for every possible size, shape and quality category, and delivers them all over the world. This obviously requires the setting up of new 3D printing factories in Europe and Asia, with Singapore and Japan being contenders to house those factories in the Far East. Amling further revealed that UPS’s European HQ in Cologne, Germany, is the number one option for the Europe factory.

Those services could very well be modeled after UPS’s solution for the US market, which is covered by a collaboration with 3D printing service Fast Radius. The service launched in May and relies on a 3D printing factory at UPS’s hub in Louisville, Kentucky. Users can upload their own designs to the service, which are 3D printed in Louisville or in any of the sixty UPS stores throughout the US that are already offering industrial thermoplastic 3D printing services.

While Fast Radius calls it a digital manufacturing factory, the Louisville service is relatively modest and features a handful of 3D printers operating around the clock. According to Fast Radius CEO Rick Smith, it offers a glimpse of how 3D printing is about to transform manufacturing. Especially prototypes for various industrial applications are being 3D printed in Louisville, which exactly illustrates the field in which 3D printing can make a difference. GoPro is also a regular client, and uses the service to 3D print mock-ups of new fittings. “3D printing allows you to fail quicker or to stumble on moments of genius,” GoPro product designer Ryan Harrison told Reuters.

But UPS are not the only delivery service to see 3D printing as a threat. German service DHL, part of Deutsche Post AG, previously warned about the effects 3D printing could have on the traditional supply chain, which heavily relies on delivery services. Low-cost 3D printed drones are also appearing as viable delivery options – as Flirtey recently proved by delivering a warm pizza via drone. It seems obvious that those technologies that can disrupt manufacturing can also disrupt delivery services. Morningstar analyst Keith Schoonmaker rightly pointed out that, though 3D printing is still in its infancy, it can definitely “supplement or replace [UPS’s] services.”

But the real question is: can it be economically viable? As 3D printing continues to drop in price and increase in quality, more and more professional clients are adopting the technology for themselves. This would obviously also affect UPS’s target market. “Why wait a day for a part to arrive (from UPS) when you'll be able to innovate six times a day on your own?” Professor of Strategy at the Tuck School of Business Richard D'Aveni wondered. Time will tell.

Posted in 3D Printing Application

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