How to make additive manufacturing work for spare parts
Spare parts are important for manufacturing companies since they generate higher margins than the original equipment business. Therefore, it is important to secure or even expand this business.
Spare parts are generally manufactured by using conventional production technologies, such as milling, turning or welding. With the advent of additive manufacturing(AM), a viable alternative is arising that promises tangible benefits, such as waste reduction and improved design.
In addition, AM offers an opportunity to radically change the traditional spare parts business model. Spare parts can be procured or produced on-demand without affecting production schedules. Moreover, it is possible to manufacture spare parts onsite, such as at 3D printing service providers in close proximity to customers or even at their location.
Original equipment manufacturers (OEM) will benefit from these changes in two ways:
- The new product manufacturing process will be largely relieved of the need to procure spare parts, leading to better manufacturing planning and execution
- The spare parts inventory will be reduced, thereby saving capital cost
Alternative business models to manage AM-powered spare parts
Nevertheless, the question remains what a business model for spare parts employing additive manufacturing should look like. Atos recently supported a research study that examined the future of AM-based spare parts in the manufacturing industry. The study identified four feasible business models:
Spare parts generate higher margins than the original equipment business. With the advent of additive manufacturing, a viable alternative is arising that delivers tangible benefits, such as waste reduction and improved design.
- Model 1: OEM with local AM printing centers
In this model, OEMs set-up local or regional AM printing centers. Customers order spare parts from the OEM, which are printed at their closest local printing center. The parts are then either delivered by a logistics provider or picked up by the customer.
- Model 2: OEM-owned printers at customer premises
Instead of employing local printing centers, the OEM installs and operates 3D printers at the customer site, and the parts are picked up by the customer.
- Model 3: Delivery via external AM service providers
The customer orders spare parts through an OEM, who forwards the order to the closest third-party 3D printing service provider. The parts are then either delivered by a logistics provider or picked up by the customer. Parts quality is ensured by regular certification of the provider by the OEM.
- Model 4: Customer-owned printers
In this model, the spare part will be printed on-premise by the customer with its own printers. Based on the order, the OEM will grant the customer access to the 3D models of the parts to be printed. The customer is regularly audited by the OEM to maintain the defined quality standards.
So, which model is the best fit for a successful spare parts business? To answer the question, these models were evaluated based on factors such as cost/investment, intellectual property protection, equipment downtime and procurement time (from order placement to part availability). In addition, statements from company representatives who were interviewed during the research study were integrated into the evaluation.
There is no "one-size-fits-all" model
The benefits that the models generate differ substantially when it comes to the players involved. Based on the results of the research study, the following figure summarizes the pros and cons of each model:
- From the perspective of an OEM, models 3 and 4 provide the best benefits from an investment and operational cost standpoint, since no investments in printers are required and the OEM only sells the 3D models of their spare parts. Nevertheless, the risk of IP violation remains, which can be countered by applying IP protection solutions (such as based on blockchain). Furthermore, customers and/or printing service partners must be audited to ensure quality standards are met.
- Model 2 is the least likely option, since the OEM bears all the investments and operational cost. This model is only feasible if the customer has a steady demand for AM manufactured spare parts or from service partners like OEM-owned auto repair shops.
- Model 1 is a compromise between investment, control over the process and throughput of spare parts, since it can serve several clients within a defined region. Daimler EvoBus is testing this model by implementing their first regional printing center in a movable container.
- From the customer’s perspective, models 2 and 4 best serve their need for speedy availability of spare parts. Also, the investment and the operational cost they would have to bear will be on the low side. Nevertheless, investing in their own printing capacities will only make sense if there is substantial demand for AM manufactured spare parts. Therefore, model 3 could be a feasible compromise between part availability and cost.
In general, all these models require close collaboration between all parties involved, preferably supported by a common platform that manages all necessary activities like order processing and execution, assigning service providers and printing capacities, protecting IP, and invoicing.
By Stephan Zimmermann, Global Head of Incubator Portfolio Industry Manufacturing
Posted on October 21 2021