Additive Manufacturing – Powering the Long Tail
The long tail business concept was created in the early 2000s to define a set of products with low demand and specific characteristics, as opposed to the set of commoditized products with high volumes (known as the head). Long tail products are a growing part of the manufacturing business because they add differentiation to the product portfolio, as well as higher unit margin and profitability. Today, the long tail is becoming increasingly relevant, thanks to massive product customization trends and customer demand for distinctive, high-performance items.
However, manufacturers and distributors face several challenges managing the long tail, which is composed of a huge number of items with intermittent and unpredictable demand.
The rapid proliferation of new products, increasing customization and stringent service levels are significantly increasing supply chain complexity and causing a serious excess stock problem — leading to extra costs, waste and obsolescence.
Looking to the future: Customized, on-site and on-demand manufacturing
Additive manufacturing is unquestionably an effective way to supply long tail items on-demand, providing an opportunity to take eliminate stock in the network, therefore avoiding waste and obsolescence. In addition, additive manufacturing allows massive customization of products and improved performance through optimized redesign.
The increasing number of customized and specific products demanded by the market is impacting the supply chain dramatically. Additive manufacturing is an important lever for manufacturers to sustainably eliminate these cost and service pressures.
The main benefits of investing in this new strategy are:
- Reduced inventory levels and related costs
- Elimination of costs related to manufacturing molds and tools
- Reduced lot size and minimum order quantity (MOQ) enabled by unitary production
- Smaller carbon footprint for the supply chain
Some implementation recommendations for manufacturers
Given that the long tail is an unstoppable trend with increasing relevance for manufacturers and consumers, what can be done to manage it in a completely different and sustainable way using additive manufacturing?
Identify which long-tail items can be used
First, manufacturers must determine which long tail items can be produced with additive manufacturing by applying a set of criteria — such as the availability of 3D models and suitable materials. When calculating the production costs and the business case, we recommend considering the whole group of items suitable for additive manufacturing, instead of estimating item-by-item.
Focus on the ecosystem collaboration
Next, manufacturers need to work out methods to enable the new on-demand supply chain from the design office to the end customer — whether they will relying on their own means of production, on 3D printing service providers, or on the end customer’s 3D printing capabilities. Orchestrating the new additive manufacturing ecosystem and processes will be a key success factor, as well as protecting the intellectual property of the designs being managed.
The progressive adoption of additive manufacturing to manage and to supply non-commoditized products is the most promising way for manufacturers to successfully deliver an enormous and increasing number of different products sustainably and efficiently.
So, be selective who you partner with to ensure:
- you are using the latest tech / tried & tested / incorporates the necessary expertise,
- to define the right strategy for your product catalogue,
- to obtain a documented and prioritized inventory of End2End AM use cases consistent with your existing digitalization plans,
- and finally to have a clear view of gap of capabilities, level of investments required and ROI to be expected.
Learn more on how to address these here.