3D Printing Cost Savings: Low Hanging Fruit – Always Critical, Never Obvious
Additive Industries hosted yet another Additive World Conference last month. This is becoming a tradition, and it’s a good way to draw people’s attention to the state of the art in metal 3D printing, as well as to the Eindhoven region with companies like ASML and of course Additive Industries’ own MetalFab1 machines.
There were a number of interesting presentations, but it’s worth circling back to the main subject of the conference, the MetalFab1. What is special about this machine is that it eliminates human involvement in the process steps from downloading the printer file to the machine to getting the build plate out. This means that inserting the build plate, loading the powder, printing the models, vacuum cleaning the builds, annealing (stress releasing) and storing them are done by the machine itself.
Since those phases all have different cycle times, a clever twist is added: the most expensive part of the machine, the lasers and the optics, are centralized for multiple build chambers, and so are the reheat furnace and the storage unit. As Florian Mauerer from Oerlikon Metco pointed out, the math isn’t that obvious, but it’s easy to see that once you decouple the laser and optics from the build chambers you can start scaling the system to fit your needs.
This being said, Additive Industries is taking a step back from the decoupling idea, going back to “one build chamber, one laser unit,” to create a “Starter’s Kit,” which gets you half the bang for 2/3 of your buck.
Talking about bucks. With myself coming from the hollow glass industry, it was staggering to note the machine’s price compared to its production capacity. A machine selling at $1.5-2M would produce roughly 5 tons of salable bottles per hour. In the case of the MetalFab1, for the same kind of money you get that output per year.
I definitely needed a session with my beloved Excel to get my brain around those figures. Choosing a write-off period of 5 years (which for something high-tech like this seems reasonable), I then assumed an average part weight of 500 grams, which would give 10,000 salable parts per year, 50,000 parts over the amortization period. So, the contribution per part towards the write-off would have to be $1.5M/50K=$30, which is not unreasonable given the market prices of AM manufactured metal parts at the moment.
I have been talking to different companies to find out their conversion rate from RFQ to order and their pre-sales routines. Basically, there are two approaches: High investment in networking and high conversion rates (say 1/3), and lower investment in networking and lower conversion rates (say 1/10).
Imagine now that ‘Hi-Hi’ firms have an advertising budget of $1M per year. Apart from that, they have sales engineers’ costs to handle the RFQ’s and orders. Projecting that on the 10,000 salable parts per year, this translates to: 10K x 3 =30K quotes @ $100 cost per quote, totaling $3M in sales engineering costs. Hence, the cost of being able just to sell comes to $400 per part.
With the advertising budget for ‘Lo-Lo’ firms at $100K per year (mainly social media), coupled with much lower conversion rate, and assuming the sales engineers’ costs are the same, the math leads us to the higher costs overall needed to process higher number of RFQs in order to arrive at 10K parts per year shipped. As such, the part, even before it had a chance to be produced, costs $1,010.
The above sounds absurd, and it is, because the ultimate purpose should be moving toward batch/serial production.
Even if ‘Hi-Hi’ firms get an average of 100 copies per order, they still need to process 300 RFQs. With sales engineers’ costs at constant, the sales cost per part is still high at $103 (especially if compared to $30/part cost of financing the machine). As to ‘Lo-Lo’ firms, projecting their copies-per-order stats at 10, we also arrive at high $110 per part in sales costs.
The calculations above in a spreadsheet:
Now, what if the sales engineering cost per order were to be under 1 US dollar?
Well, this is how it happens:
The companies with the low costs for sales and relatively short runs now have a write off costs/sales overhead which is more or less in line with what in the glass industry would be considered normal. In fact, they save a million bucks per year. Which, by the way, is roughly twenty times more than they save on professional labor by buying the MetalFab1.
This leads up to the following conclusion: Companies who think about bringing costs per part down by investing into the payroll saving industrial equipment, should first consider their sales overheads. They will have enough money, and some to spare, to go for the comparatively marginal benefits of automated build plate handling AFTER they pick ‘the low hanging fruit’ of automating time-draining tasks of handling RFQs and orders. DigiFabster, as a prime example, can effortlessly make that a reality! Discuss in the Cost Savings forum at 3DPB.com.
Peter van der Zouwen is the Co-Founder and CPO of DigiFabster, Inc.
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