Align Technology (AT) is a manufacturer of 3D digital scanners and clear aligners (marketed through the brand ‘Invisalign’) used in orthodontics. AT is perhaps the most prolific user of an additive manufacturing (AM) process called stereolithography that converts liquid materials in solids through layering and selective curing using a light process called photopolymerization.[i] Through this process AM has created, ‘the largest mass customization operation in the world’[ii] and because of its scale, earnt the company inclusion on the S&P 500 index.[iii] Similar to the braces many of us endured as teenagers, the end product works like a traditional metal brace by exerting soft pressure on individual teeth to move them into a desired position. AM has allowed the company to prototype faster,[iv] create a highly differentiated product,[v] execute a faster manufacturing process[vi] and operate with high material productivity.[vii] In essence the success of AT has been its ability to offer a highly customized product to consumers through mass manufacturing techniques. To this end, AT has established a user base of 5.8 million customers with a manufacturing output of more than 320,000 unique aligners per day.[viii]
Whilst not apparent to the average orthodontic patient, AT has significantly disrupted the orthodontic supply chain,[ix] centralizing orthodontics away from dentists and labs and, ‘hundreds of labor-intensive production steps’.[x] To achieve manufacturing cost efficiencies, AT has long operated out of a single factory in Mexico meaning a highly centralized supply chain, longer lead times and expensive transportation costs. In the short term, executives are tackling this problem by localizing production in factories more closely aligned to major demand centers. To this end, AT has recently build a factory in China to meet growing Asia Pacific demand. As the industry matures, maintaining product differentiation through innovation is a key concern.[xi] AT views its research and development as a key business advantage. Speaking to Forbes in late 2017, Vice President of Product Innovation, Srini Kaza highlighted the strong focus of AT on maintaining their innovation pipeline,
“One key area where the field is rapidly progressing is the development of highly innovative materials. Early materials could be brittle but today’s polymers have improved in leaps and bounds. These new emerging material formulations will even surpass the quality we are seeing now, enabling the industry to print more functional and bio compatible parts directly in the printers” [xii]
The company actively holds 420 US patents, 465 active foreign patents and 416 pending global patent applications.[xiii] To maintain their innovation competitiveness AT continues to invest in a yearly research and development spend of about $100 million.[xiv] This investment allows AT to develop new designs, features or highly individualized products[xv] at a low marginal cost.[xvi] One example is the ability to print a unique patient ID directly onto the aligner, better enabling AT technicians to manage the shipment and production of a patient’s set of aligners whilst preserving patient anonymity.[xvii] AT’s ability to continue to improve the patient orthodontic experience over and above emerging competitors, through patient-centric innovation will further cement its dominance in the industry.
In addition to the high risk of design piracy prevalent within the industry,[xviii] many of AT’s early patents are now expiring which is democratizing access to AM technology not only for large competitors such as Danaher and 3M Company but also orthodontists themselves. Given the risk that small dental labs may be able to use localized manufacturing to supply Invisalign themselves, AT should understand whether this could compete at scale with their large centralized manufacturing plants. If this is so, AT may be wise to begin funding decentralized manufacturing at orthodontic clinics over the medium to long term. This would allow them to achieve the same degree of customization but bring down the high transportation costs which would be a source of competitive advantage.
A further risk for AT is the specialized and nascent nature of the AM market which necessitates single source relationships with manufacturers of tools like rapid prototyping machines and advanced materials. This leaves AT highly dependent on a small number of machine suppliers[xix] which is a key supply risk.[xx] As the industry matures over the next 5 to 10 years, AT may wish to consider diversifying their supply away from single suppliers to avoid disruption in AT’s ability to deliver aligners in a timely manner. Of course, the trade-off would be to risk the intellectual property and innovation security that single source suppliers facilitate.
In reflecting on whether AT will be able to sustain the pace of innovation that has defined their success there are three outstanding questions. Firstly, will AT be able to maintain the pace and differentiated innovation that has set them apart in a world where access to additive manufacturing is decentralizing and democratizing? Secondly, will AT be able to create a supply chain that can service the needs of a geographically diverse customer base? Finally, should AT remove their reliance on single source suppliers?
[iv] Deloitte. Disruptive Manufacturing. The Effects of 3D Printing. Deloitte Insights and Issues, 2014
[v] Ford. Additive Manufacturing Technology: Potential Implications for U.S. Manufacturing Competitiveness. Journal of International Commerce and Economics, 332, September 2014
[vi] Turpin. Interview with Align Technology Executives. American Journal of Orthodontics and Dentofacial Orthopedics, 122, no. 2, (August 2002): 19A – 20A
[xv] Wong. Invisalign A to Z. American Journal of Orthodontics and Dentofacial Orthopedics, 121, no. 5, (May 2002): 540-541
[xx] B. Roca et al., Getting past the hype about 3-D printing. MIT Sloan Management Review 58, no. 3 (Spring 2017): 57–62.