Rethinking Portfolio Strategy in the Age of 3-D Printing

3-D printing or - as it is perhaps more aptly called – additive manufacturing (AM) is maturing as a fundamental production method and shaper of corporate real estate (CRE) strategies. As it becomes more likely that AM adoption will continue to expand, conventional manufacturing paradigms are being shattered, foundational processes are changing, and property and facilities management assumptions are following suit.  

Additive manufacturing opens previously unforeseen possibilities for manufacturers, making it feasible to operate a network of small, nimble and specialized ‘micro-factories’ to produce products closer to the point-of-need. The production-on-demand promise of AM means warehousing square-footage requirements will fall significantly or be eliminated altogether for manufacturers. Likewise, virtual inventories and production-on-demand reduce the need for spare parts’ stocks, thus greatly decreasing the need for dedicated distribution warehouses.

Certainly, location strategies developed by CRE decision-makers will still need to evaluate production, warehousing, and distribution sites based on how suitable they are to serving essential customers and based on which locations offer the necessary staff and infrastructure. However, in the new AM paradigm more sophistication and analysis is required in order to optimize increasingly dispersed and complex real estate portfolios. Space requirements and location strategies need to be scrutinized to take full advantage of AM. 

In the manufacturing sector, additive manufacturing’s challenge to long-established CRE axioms is causing decision-makers to closely reexamine their portfolio management philosophies. For instance:

  • In what would be considered a counter-intuitive decision in conventional manufacturing CRE models, it will likely be more economically feasible – in the AM model - to move manufacturing back to high-wage countries, where proximity-to-customer considerations outweigh the cost of labor.  
  • Factories specializing in small series/spare parts production employing AM could be constructed locally and independently from factories in which conventional manufacturing is primarily practiced.
  • Disparate manufacturing processes could be bundled within a single facility. As AM reduces the need for different assembly operations the manufacturing process can be bundled within single facilities as e-plants or microfactories.
  • A network of ‘Print-Shops’ can be created by the manufacturer and/or 3D-Printing service providers to enable rapid provisioning of spare parts and customized products.          
  • Space requirements for purchasing, waste disposal, and distribution warehousing will likely decrease – but not be eliminated - in an AM environment. Materials for printing, as well as final parts, will still need to be stored until they can be delivered to customers.

Of course, the magnitude of CRE change depends on the degree to which a manufacturing organization utilizes 3-D printing technologies. AM is certainly not suitable for mass-production operations. However, manufacturing organizations that do see the value - fast, precise, and low-cost production, short product development processes, and virtual inventories replacing physical inventories stored in warehouses – must be prepared to transform CRE thinking at its foundation, discarding long-held assumptions and paradigms that, while valid for conventional manufacturing, serve only to limit the possibilities at the core of Additive Manufacturing.

Bernard Hoefsmit
Executive Managing Director

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