3D Printing: A Disruptive Force

As 3D printing gets cheaper, it will disrupt many markets that have long depended on scale as a key part of their business models. The assembly line manufacturing method relies on producing same products in order to lower costs. This traditional manufacturing method narrows many markets for a couple of reasons. First, testing out a non-software product is very risky and costly because a small order for a test product does not have scale and would be priced much higher than would an established product; therefore, many potentially great concepts will not even see the market. Second, because in many markets prices greatly affect demands, companies have tried to lower product prices by producing a small number of products that roughly meet the needs of an entire market rather than producing many differentiated products that closely meet the needs of sub market segments.

With 3D printing, these compromises are no longer necessary because the unit cost for a batch of one is not much different from that for a batch of many. Because of this new found freedom from scale, it’s now possible to produce differentiated products for niches of customers as well as testing out new innovative products. Mass production is now replaced by mass customization. How will this drastic shift disrupt the current system?

First, we need to have a more accurate assessment of the shift. I don’t believe that economy of scale will disappear. At the factory, it’ll still exist, not at the product/model level but at the total production level, i.e., a big factory would still have a lower unit cost than a smaller one, at least due to its market power. At the point of consumption, I am sure it’s still a little costlier to print at home than it is at a factory, but the real comparison is between the cost of printing at home vs. the cost of printing at the factory plus other costs of getting the products to the consumers, including delayed gratification cost.

(to be continued)

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