Leading logistics providers are constantly exploring new possibilities to become more efficient, more locally focused and more connected globally in order to achieve greater success, including 3D printing technology. The relationship between the 3D printing and logistics industries is fascinating for a multitude of reasons. In some ways, the integration of 3D printing into the logistics and supply chain management field seems like a natural, almost inevitable, progression. After all, 3D printing has proven itself as a revolutionary innovation to manufacturing, so the exploration of its potential applications in the distribution process seems like a logical step forward.
Even the most prominent specialists in logistics and supply chain management, such as DB Schenker and DHL, are closely studying the influence that 3D printing will have on how these services are provided to customers. 3D printing has had a substantial impact on the arenas of logistics and supply chain management, and will continue to play a major role in these fields as more companies learn the optimal ways to adjust to and implement the technology.
The Research & Development Tax Credit
Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
- New or improved products, processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 18, 2015, President Obama signed the bill making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax and startup businesses can utilize the credit against $250,000 per year in payroll taxes.
Over the last few years, DB Schenker has taken strides to develop digital business models to integrate 3D printing as a key part of their warehousing and supply chain services, while also maintaining the existing proficiencies of the DB group such as engineering. They have been evaluating methods to combine their extensive logistics portfolio with the plethora of new opportunities that 3D printing can open. For example, spare parts will be increasingly seen as a service with a clearly defined lead time. The aspect of managing the complexities behind this service is just one area where 3D printing shines. This will add value to customers by reducing complexity and allowing DB Schenker to leverage their capabilities more effectively.
Based in Amsterdam, DiManEx has been dedicated to the optimatization of supply chains through digitization ever since the company’s inception in 2015. They have extended their realm of expertise to include the utilization of 3D printing to help identify areas of potential savings and improved cost management. Through their research into digital stock, DiManEx found that approximately 80% of the products in a warehouse will be sold only twice per year, which subsequently leads to numerous write-offs, scrapping, and ultimately, wasted materials. This is an absurdly high cost to stock products to answer incidental demand.
In order to help alleviate this cost, DiManEx has explored the utilizing of digital stock and consequently, they have also aimed to identify spare or legacy parts in their existing database that can be 3D printed. In fact, their studies have shown that by simply 3D printing merely 2% of existing parts, companies can experience an increase in their EBITDA of nearly 6%. One of DiManEx’s clients was able to reduce its total cost of ownership for the production of spare parts by almost 80% simply by utilizing 3D printing rather than traditional production processes.
Aside from the significant effects on cost and EBITDA, the integration of 3D printing has provided companies with benefits in a variety of other aspects as well. As 3D printing has been more widely adopted, firms have experienced improved customer service, increased availability of parts, and substantially lower environmental footprints due to the drop in waste and logistics miles traveled.
The United Parcel Service (UPS) has acknowledged the versatility of 3D printing as a tool to support supply chains. Over the last few years, UPS has expanded 3D printing to reach a nationwide scope to meet the increasing demands of small businesses. They have successfully launched an on-demand network linking its global logistics network to 3D printers at over 60 different The UPS Store locations across the country. In 2016, UPS announced an agreement with SAP to create an end-to-end industrial solution. UPS has integrated SAP’s extended supply chains into their manufacturing cycle and global logistics network in order to simplify and improve each aspect of the supply chain, from manufacturing to digitization, certification, and delivery. This network has provided substantial benefits to all customers, including the reduction of inventory for slow-moving parts, the cost-effective customization of products, and the acceleration of the delivery of high-quality prototypes for industrial designers and engineers.
Even DHL, the world’s number one market leader in the logistics industry, has been incredibly vocal about the prominent impact that 3D printing will have on spare parts logistics and individualized parts manufacturing. They have conducted extensive research over the last few years regarding the quality of 3D printed spare parts compared to the existing injection molded spare parts, and through their testing, DHL has concluded the 3D printed parts are nearly equal in quality, or in some cases, they even exceed the quality of the alternative. As a global leader in the supply chain management industry, DHL has taken initiative by analyzing further applications and benefits of 3D printing in all facets of logistics including but not limited to the manufacturing of complex products as well as the increase in decentralized and on-demand manufacturing. They strongly urge firms to partner with logistics providers to create a network of 3D printers anywhere possible to promote the growth of the industry on a global scale.
There is a wide array of ways that 3D printers can benefit the supply chain. Even at the most basic concrete level, 3D printing has the potential to substantially reduce manufacturing lead times and times-to-market for new designs, as well as expedite the ability to meet customer demand. In addition, the logistics field will naturally adjust to print-on-demand, which eliminates the need to carry inventory. Several firms have already experienced massive benefits of their respective efforts to implement the ever-growing technology of 3D printing into their repertoire.
Logistics companies that utilize 3D printers to consistently develop and improve their products and processes should also be able to draw on R&D Tax Credits to help implement these value-added functions. As we delve deeper into the applications of 3D printing in logistics and supply chain management, these industries will continue to advance as more companies explore the vast realm of possibilities that 3D printing technology can open up.
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Charles Goulding and Tyler Gianchetta of R&D Tax Savers discuss 3D printing and logistics.