7 December 2017
Disruptive technology: 3D printing
Economist at ING Belgium
Spotify, Netflix, Airbnb, Cambio, Uber… A whole host of companies are using disruptive technology. What is striking is that all these companies are providing a service. We might conclude, then, that disruptive technology is only having an impact in the services sector. That would not be entirely true, however. 3D printing, for example, is experiencing huge growth. Over the past five years, investments in technology have risen three times as quickly as those in traditional capital goods. At present, 3D-printed goods still account for only a small share of the total goods produced globally, but that could quickly change.
What is 3D printing?
3D printing is a technique that allows you to manufacture a product in its entirety. The end product is 'printed' layer by layer. Unlike traditional production, there is no need to manufacture individual components and then assemble them into a complete product.
3D printing offers all kinds of benefits that can help companies increase their revenues. This new technology makes it much easier to manufacture custom products, for example. Consumers may be willing to pay more for personalised products, enabling companies to generate extra income. 3D printing also makes the production process more flexible. Just make a minor change in the computer program and printing can begin. It is an innovation that could also reduce lead times, as production can take place closer to the end user. These factors give companies that use this technology a competitive advantage.
What's more, using 3D printing has the potential to generate significant cost savings. Companies currently need to employ large numbers of staff to take care of assembly and transport, but 3D printing will mean fewer workers are needed. However, it could also allow costs to be cut in many other areas too. Raw material costs will be lower, as it will be easier to optimise usage. For example, round metal objects will no longer need to be cut out of square pieces, meaning that less metal goes to waste. The costs of keeping products in stock can also be reduced. As 3D printing delivers smaller economies of scale than traditional production methods, there is less of an incentive to manufacture and store large quantities of products.
The cost savings outlined above are good news for companies in the manufacturing industry, as they can manufacture their goods more cheaply. Unfortunately, however, the development of this technology is not positive for everyone. As 3D printing reduces the need for transport and storage, this sector may be affected more than others. It is also a relatively important sector for the Belgian economy, accounting for 5.5% of GDP.