16.8 End-of-Chapter Case: Additive Manufacturing—Latest Fad or Strategic Imperative

Don Kagey was vice president of purchasing and operations at Med-Tec, a supplier of orthopedic medical implants. At Don's urging, Med-Tec had spent the past two years pursuing six-sigma quality, lean manufacturing, and global sourcing. The result: Med-Tech had established a low-cost supply network that produced the highest-quality implants. Defects were under 250 parts per million, supplier productivity was up 25%, and order fulfillment times had been reduced from seven to four days. The hectic pace had, however, taken a toll on Don's management team. Everyone was tired. Don empathized. He too was worn out.

That's when Katie McDonald, CPO at Allegiance Corp, Med-Tec's best customer, had approached Don with a request for an entirely new level of delivery performance and customer service. Katie had told Don that Allegiance wanted to partner with Med-Tec to establish a print-to-demand capability at each of Allegiance's outpatient surgery centers. At first, Don had thought Katie was joking. She quickly made it clear she wasn't. If Med-Tec didn't want to play, she would find another supplier—or maybe even insource orthopedic implants that were best suited for 3D printing.

Don wasted little time investigating the world of 3D printing. He called two friends whose companies had experimented with 3D printing. The first conversation was with Mark, a friend who worked for a major supplier in the auto industry. Mark was adamant that 3D printing was a cool tool that wasn't ready for prime time. 3D printing was still too expensive and too slow for mass production. Mark forecast that 3D printing's breakthrough to the big stage was at least a decade away. Don's second call was to Cheryl, a friend who worked as a logistics manager for a major aerospace company. Cheryl's first words were, "Without doubt, 3D printing is a big deal. That's why Amazon has applied for a patent to install 3D printers in delivery vans so they can take orders and print them on the way to the front door. On a game-changing scale of one to ten, 3D printing is an eleven." Clearly, 3D printing wasn't for everyone.

Two days after his meeting with Katie McDonald, Don had met with his management team to communicate to them Allegiance's invitation—and threat. The team had spent the next three weeks evaluating the state of 3D printing as well as Med-Tec's readiness to establish a distributed print-on-demand capability. The most important findings were summarized on a white board as follows:

• 3D printing costs had come down dramatically.

• 3D printing precision had increased.

• 3D printing had advanced way beyond the plastic trinkets Don imagined every time he heard the word "3D printing." Some printers could print in wood and metal composites as well as ceramics. A few medical scientists were trying to print human skin and organ tissue. Some day, it would be possible to print a working kidney.

• 3D printing's greatest impact had been in new-product prototyping.

• 3D printing was envisioned as a game changer in the spare parts fulfillment process.

This last point had intrigued Don. After all, implant surgery was a type of spares dilemma. Don was excited by the prospects of being a first mover and changing the rules of the implant game. However, was the technology really on the brink—just waiting for someone like Med-Tec to make the move that would make history? Don was likewise concerned that Med-Tec didn't have the commitment to make it happen. Despite the fact that Don's team couldn't put together a persuasive business case for partnering with Allegiance, Don was inclined to move forward—at least cautiously testing the options.

As Don pulled into his driveway, he asked himself, "Is 3D printing on demand just a fad or is the technology ready for prime time?" Don desperately wanted to avoid embarking on a costly dead-end journey. Yet, his competitive instincts drove him to wonder whether 3D printing could take Med-Tec to the next level of market success.

1. Is 3D printing for real—or is the hype running ahead of the real capabilities? Does your answer to this question depend on how a company pursues 3D printing?

2. What efforts would you make to assure that managers at Med-Tec did not treat 3D printing as just a piece of "shiny hardware"?

3. Suggest a framework Don could use to weigh the facts and determine whether or not to partner with Allegiance to build a 3D-print-on-demand capability.