At Formnext this year, Dr. Wilderich Heising (Partner and Co-leader of BCG’s Additive Manufacturing unit in operations for Europe) and Dr. Thomas Kruger (Project Manager in BCG’s Additive Manufacturing unit) presented their perspective on why the industry needs an ecosystem approach to grow and meet expectations in terms of market development, and how to implement this approach. Indeed, just a few years ago, analysts had forecast that the additive manufacturing (AM) industry would hit the $20 billion mark by 2020. Yet despite expectations, the reality based on BCG estimates is that the industry is still very much a niche market, at a little under $12 billion for 2019.
Their perspective is that end-users have not increasingly adopted industrial AM, largely due to the impacts from ‘intense competition’ between players in and across the value chain in the AM industry. To address this impact, there is a need for businesses in the AM industry to come together and collaborate, as the most effective approach to driving adoption and growing the current market. Indeed, across industries, the firm found that the term ‘ecosystem’ occurred 13 times more often in company annual reports than a decade ago, highlighting the increasing importance given to this approach as market conditions have evolved.
Yet the ecosystem approach is not as obvious as it may seem. The uncertain and volatile business environment for the AM industry, as well as the industry’s current modularity and need for coordination, are conditions for which the ecosystem approach is most suitable for growth, as per BCG Henderson Institute’s “Do you need a Business Ecosystem?” perspective. Within the ecosystem approach, there are two types the institute identifies: solution ecosystems, such as Google Home or Windows, where a group of largely independent players in different roles present a coherent solution to the customer together; and transaction ecosystems, which are two-sided platforms such as eBay or Uber.
Ecosystems typically provide key benefits for companies in their access to new capabilities, network effects, ability to scale fast, and in their ability to be flexible and resilient. Yet an ecosystem approach benefits the industry only in certain market conditions: its modularity and need for coordination, which impact whether an industry takes an ecosystem, hierarchical supply chain, vertically-integrated, or open market approach. The modular structure typical to ecosystems makes it easy and efficient to add partners to it. We’ve seen strong examples of the open ecosystem approach in the additive manufacturing industry already in the last few years with GE, DSM, HP, BASF, EOS, and Siemens in the partnerships and networks they have developed, for example. We’ve also seen ecosystem platforms develop, as that provided by JellyPipe, orchestrating and connecting end-users with a network of solution providers.
The ecosystem approach has already been adopted by several players across the AM value chain, and this is all the more evident when we take a look at the current additive manufacturing industry landscape. In additive manufacturing, the ecosystem approach looks to bring together software and equipment providers, material and component suppliers, global industrial manufacturers, small cutting-edge technology pioneers and end-users, service bureaus and professional services, public and private sectors. These parties coalesce in a coordinated effort to jointly develop solutions to current problems end-users face.
In the AM industry, as per BCG experts, the role of the orchestrator has typically been taken by industrial OEMs in driving and developing the ecosystem approach. In fact, a good example of this approach was presented at Formnext, where Siemens, EOS, and DyeMansion showcased a footwear solution that united distinct expertise in industrial automation and digital workflows, production 3D printing platforms, and post-processing solutions from each of the three companies respectively. Going forward, the increase in collaboration towards a shared goal enables the development of real-world use-cases for industrial applications at scale, and allows players to focus together on growing the market.
Currently, the industry is still quite fragmented, yet has recognized the need to partner and collaborate in order to grow. Research surveys from Essentium, a specialized supplier of industrial AM systems, showed early this year, that 99% of executives believe an open ecosystem is key to advancing AM at scale, with the industry expected to grow at 15-20% in the next five years, to reach nearly $33 billion by 2025, as projected by SmarTech analysis.
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