McKinsey & Co.: 3 Major Challenges for 3-D Printing Companies to Overcome

At the Inside 3-D Printing Conference recently held in New York City, Daniel Cohen of McKinsey & Company addressed the audience about what it's going to take to drive further adoption of 3-D printing in industrial manufacturing settings. After considering a range of important variables, Cohen identified three major challenges that the 3-D printing industry needs to overcome in order for adoption rates to improve. For 3D Systems (NYSE: DDD  ) and Stratasys (NASDAQ: SSYS  ) , overcoming these challenges will provide an increased supply of first-time industrial 3-D printing customers.

  • Organizational readiness: There's a high barrier of entry for a manufacturing company to get its operations and team in order. A lot of technical expertise around 3-D printing needs to be gained before a manufacturing operation can implement 3-D printing into its process.
  • Software automation: The majority of the design of 3-D printed objects is done by hand today. As you can imagine, this is not a very efficient approach for a manufacturer with millions of parts in its inventory. Until a streamlined and robust solution to automate this process becomes readily available, this major bottleneck will continue to play out.
  • Labor force experience: Mainstream awareness of 3-D printing is very new, and consequently, there's very little formal education around the subject. The total expertise pool needed to get an entire economy on board with 3-D printing simply isn't available today.

Plugging the hole
Because there's a general lack of competency outside the 3-D printing industry, prospective customers have been turning to 3D Systems and Stratasys for help adopting 3-D printing as part of their operations. These consulting gigs are great leads for 3D Systems and Stratasys because they're "warm" opportunities to establish relationships and introduce potential customers to their respective offerings.

As the 3-D printing industry matures and these three challenges are overcome, 3D Systems and Stratasys will be working with a much larger addressable market than what's at stake today. In dollar terms, the 3-D printing industry is projected to be worth $10.8 billion in 2021, a 390% increase from the $2.2 billion it was worth in 2012. Of course, this kind of growth is predicated on the assumption that these challenges will be overcome in a timely manner. There's no telling how long it will take the 3-D printing industry to mature, and seven years from now may not be long enough for the industry to grow by what would be nearly fourfold in a nine-year period.

In the following video, 3-D printing analyst Steve Heller and Motley Fool industrials bureau chief Blake Bos discuss the challenges associated with 3-D printing adoption rates. 3D Systems and Stratasys investors should watch how organizations, software, and the labor force all improve to support a burgeoning 3-D printing industry.

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  • Report this Comment On April 17, 2014, at 5:22 PM, j2dayton wrote:

    Hmm...

    The requirement for an educated labor force may play into the hands of the early 3d printing consumer adopters. A lot has been said about the limited market for home enthusiasts but when people realize this could lead to paying jobs, it may kick start the consumer market in a big way. Imagine if you are out of work, you could train yourself for a new job by getting a home 3d printer.

    And the software issue is spot on. Even if those 4 million parts exist in CAD programs, the designs will all have to be adapted to how the dimensions actually change with an additive process (mainly shrinkage when plastic cools).

  • Report this Comment On April 17, 2014, at 5:31 PM, RnRchoc wrote:

    Yes, but there are other media for 3D printing besides ABS. The UV Cured resin is no shrink. The shrinkage problem exists with just about every manufacturing method. Bending metals need to have bounce back in the equation, Los Wax casting is another field where shrinkage has been considered for centuries. so this is, I think a no brainer for experienced personnel.

  • Report this Comment On April 17, 2014, at 6:26 PM, j2dayton wrote:

    Have done a fair amount of designing and 3d printing and having talked to a plastics professional who has done a lot of 3d printing, it is by no means a slam dunk. He applies his knowledge to how materials change dimensions in the three steps from model, to mold, to injection molded part and he still has to have several trials to get it right. And he's skilled at it. So I wouldn't say this is a no-brainer for skilled personnel in that it will take time to convert each part. And it's not a simple process of just adding some percentage to each dimension as the model's geometry affects how it shrinks. And while the UV resin has almost non-existent shrinkage, it still has different characteristics than whatever manufacturing process it's replacing be it molding, cnc milling, etc. That's why expertise is wrapped up in software (so called expert systems) will be important to converting the millions of parts out there to be 3d printed.

    Of course one could say that there is no benefit to converting existing parts but I would assert that there is benefit for a certain segment, especially the low volume parts.

  • Report this Comment On April 17, 2014, at 10:15 PM, narj wrote:

    25 or so years ago 3D came to the design industry, allowing designs to be sent to CNC milling equipment. It took a few trials but in short order designs for electrical enclosures were executed with minimal intervention. This is not new just different.

  • Report this Comment On April 18, 2014, at 8:33 AM, smacunalum wrote:

    For prototyping and limited quantity parts, the three areas of improvement are without a doubt in the way of the higher rates of adoption.

    But when it comes to high quantity production, that is quantities of multiple-thousands of parts, I believe that there is a production capacity issue.

    However, if the machines can print with materials that are used for molds, then mold making would seem like a natural application of the 3D printers.

    As you can see, I am not totally up to speed on the machines; but I can see long term for them and I am invested long term.

  • Report this Comment On April 19, 2014, at 4:25 AM, capitan60 wrote:

    Is there a 4th challenge to recognize and solve?

    Possibly, and it could rank among the top 5.

    Production volumes vary among industries and even among applications within each industry.

    There is nearly universal awareness of low volume in prototyping and competitive advantages of 3D Printing. And, less universally but widely appreciated awareness about ultra high volume piece part production being economically as well as per part production cycle time being un-competitive for 3D Printing. The middle range between these is likely unknown and certainly not appreciated or understood. Yet THAT is where a lot of the opportunity spectrum may lie for 3D Printing. The low hanging fruit beyond Prototyping, such as high value one to a few piece parts like Dental Implants and Custom Specialty Parts is being harvested or soon will be by the Early Adopters of functional 3D Production Printing. Yet the bulk of the industry does not even mention this, why?

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