3D printing is an additive process that builds a printed object layer by layer using a digital file as a blueprint. Typically regarded as a new process, 3D printing was first introduced in the early-80’s but only began to gain traction in the late 2000’s as the original patents expired and the technology was more widely replicated . As additive manufacturing gained accessibility and popularity, more companies have started adopting it to produce their parts quickly and at a lower cost, specifically when they require customization. As companies begin to manufacture more parts in-house with 3D printing, companies that have traditionally provided storage and shipping for these parts within the more traditional supply chain struggle to maintain their place .
United Parcel Service (UPS) has traditionally gotten a large part of its revenue from storing and shipping parts for manufacturers. With more companies manufacturing in-house, the market for storage and shipping, specifically smaller parts, is shrinking with the potential for that step in the supply chain being completely eliminated. UPS faced a similar threat with the rise of the internet; not anticipating the impact and taking a significant hit on their document delivery business . UPS is taking a more proactive approach to the challenge that 3D printing presents, hoping to prevent another portion of their business getting cannibalized with the introduction of new technologies.
UPS’s current strategy is to welcome the challenge 3D printing presents and re-define its place in the supply chain by embracing the new technology and launching its own 3D printing services. UPS’s additive manufacturing service began in 2014 by targeting its home market and allowing customers to upload images and have the products printed and shipped to their homes or businesses. As of May 2016 their offering was expanded to include industrial-strength 3D printing. This combined with the development of a partnership with SAP allowed UPS to present itself as an end-to-end supply chain solution .
UPS’s industrial 3D printing services include mostly automated printing factories that allow for orders to be shipped as early as the same day . As of the end of 2016 this service has expanded to parts of Asia and Europe with a short-term strategy to expand its 3D printing coupled with quick delivery of the products internationally. Longer term, UPS plans to develop 3D printing capabilities to determine ways to make parts cheaper, faster and with various materials in order to expand to more industries and products such as electronics with smart phones .
However, what UPS as failed to do is differentiate itself from its competitors in 3D printing and customers who continue to expand their in-house 3D printing capabilities. UPS’s customers represent their biggest competition since most 3D printing companies do not have the delivery network and therefore delivery speed offered by UPS. However, as 3D printing expands and with UPS’s continued success, more shipping and storage companies will begin to enter the market, introducing more threatening competition. Instead of focusing entirely on international expansion, I believe UPS’s resources would better be used to capitalize on its existing competitive advantage by continuing its innovation in the speed of the additive manufacturing process as well as expansion into new geographical markets. This allows UPS to maintain its competitive advantage over other shipping companies that may enter the market. Longer term, UPS should mainly focus on advancing 3D printing technology to include various materials in the same run. As well, a focus should be placed on scaling to larger parts, expecting the industry to move that way now that most companies are comfortable with using the technology for smaller components.
The only certainty when looking at the future of the shipping business is that they must be prepared to adapt as new technologies are introduced and new competition enters the space. However, many questions are still associated with the changes, 3D printing being just one technology transforming UPS and other shipping companies’ business. When looking in the context of 3D printing, I wonder what extra services shipping companies can offer their customers that will justify the extra cost associated with outsourcing 3D printing? This is especially prevalent as as it becomes easier to bring the technology in-house. In the same context, is it in UPS’ best interest to invest in 3D printing technology advancements or develop a partnership, keeping it separate from their core business?
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