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

There are three major challenges that the 3-D printing industry needs to overcome in order for adoption rates to improve.

Apr 14, 2014 at 1:31PM

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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Blake Bos has no position in any stocks mentioned. Steve Heller owns shares of 3D Systems. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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