{"id":35128,"date":"2018-11-13T19:12:03","date_gmt":"2018-11-14T00:12:03","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/adding-value-in-nikes-production-line\/"},"modified":"2018-11-13T19:12:03","modified_gmt":"2018-11-14T00:12:03","slug":"adding-value-in-nikes-production-line","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/adding-value-in-nikes-production-line\/","title":{"rendered":"Adding Value In Nike\u2019s Production Line"},"content":{"rendered":"

The Additive Manufacturing (3D Printing) industry has been quite a roller-coaster over the last several years. Despite some evangelists touting the potential to disrupt the entire supply chain and \u201c\u2026 slash the time needed to order tools, jigs, and fixtures,\u201d[1] 3D printing companies still only seem to have found very niche areas for application, namely prototyping and some aviation products. Some of the latest interest seems to point to the shoe industry, with Nike publishing articles on Flyprint[2], Adidas working with Carbon 3D on midsoles[1], and New Balance tapping into Formlabs for a partnership[3]. But why is this seemingly commoditized market looking to 3D printing? To understand how Additive Manufacturing (AM) can find mainstream adoption in shoe manufacturing we first need to dig into the unit-cost metrics.<\/p>\n

 <\/p>\n

Unit-Cost<\/strong><\/p>\n

When a company such as Nike designs a mechanical component there are a few options on how they can get it manufactured. A simplified list might include:<\/p>\n

Subtractive Manufacturing \u2013 Starting from a block of material, machine away the exterior until the desired design is left. This still a fairly manual process, typically requiring multiple operations to release and rotate the material in order to get every plane. This can only be done with hard plastics, metals, and some hard foams. This process is often done for low-quantity orders that have very tight specifications or material properties.<\/p>\n

Injection or Compression Molding \u2013 In this process, one starts by machining a metal mold (usually either aluminum or steel) into the negative of the desired shape of the product. Then molten plastic or a fast-curing material is injected into the mold, allowed to cool\/cure, and the mold is opened to eject the component. The material set for this process is extremely broad. There is a high setup cost, with production molds typically running between $15k – $25k. Once these tools are up and running, it\u2019s very quick to get parts produced \u2013 often well under a minute.<\/p>\n

Additive Manufacturing \u2013 This involves building a part one layer at a time, and stacking those layers to form a completed part. Depending on the process, the layers can be from 50um to ~1mm. This process typically takes significantly longer than injection molding and often even subtractive methods. The time depends on a lot of factors, but namely the volume of the part being produced. The same part produced using injection molding in under a minute could take several minutes to an hour using common 3D printing techniques.<\/p>\n

\"\"<\/a><\/p>\n

When manufacturing a product using molding, the tooling cost is fixed, and thus at a per-unit cost will just be divided by the number of units products. At quantities above 100k, the relative cost of a mold becomes vanishingly small.<\/p>\n

 <\/p>\n

How This Applies to Nike<\/strong><\/p>\n

Nike sells $21.1B in shoes per year [4]. Assuming an average price of $100 then they are producing in excess of 200M pairs of shoes annually (380 shoes per minute). At first glance, this would fall well into high-volume production territory where AM cannot compete with molding, however, the unique aspect about the shoe industry is just how many product offerings they supply. RunRepeat.com<\/a>[5] shows a total of 929 different products for Nike. Each of these shoes is offered in a range of sizes, from 5 to 15. Assuming they offer ten different sizes for a typical product, we end up with about 10,000 different SKUs (stockkeeping unit). This means the average design sells around 20,000 units and a unique mold is required for each product\/size. If we spread the $20,000 mold cost across each unit produced, it runs about $1 per pair of shoes.<\/p>\n

A single 3D printer able to produce a pair of shoes every 30 minutes with an 80% up-time would create around $1.00 x 2(units\/hr) x 24(hrs\/day) x 365 (days\/yr) x 0.8 = $14,000 of value per year in molding costs alone. This assumes the cost of materials and labor remains the same as molding. Starting to replace low-volume product assembly with 3D printing could dramatically reduce the overall production cost.<\/p>\n

Saving on mold cost is only one potential benefit in this industry. Consider that Nike might be able to better integrate or automate potential AM systems [3], reducing labor costs by up to $3 per pair of shoes (below). Automation and a simpler, cleaner process could also allow for shoes to be manufactured closer to the end point of sale, saving up $3 on import duty and shipping (below). Further, a lower lead-time can result in reduce inventory carrying costs and allow the company to react faster to consumer trends. Tallying this up, it is no wonder why Nike is investing in new additive manufacturing technology, like Flyprint[2].<\/p>\n

https:\/\/www.youtube.com\/watch?v=RFW35vTTGQI<\/a><\/p>\n

\"\"[6]<\/a><\/p>\n

\u00a0<\/u><\/span><\/p>\n

(Word Count: 777)<\/p>\n

[1] A. Brown. Chain reaction: Why additive manufacturing is about to transform the supply chain. Mechanical Engineering 140, no. 10 (October 2018): 30\u201335.<\/p>\n

[2] https:\/\/news.nike.com\/news\/nike-flyprint-3d-printed-textile<\/p>\n

[3]\u00a0https:\/\/formlabs.com\/company\/press\/formlabs-and-new-balance-come-together-3d-print-high-performance\/<\/p>\n

[4] https:\/\/www.statista.com\/chart\/13470\/athletic-footwear-sales\/<\/a><\/p>\n

[5] https:\/\/runrepeat.com\/ranking\/rankings-of-sneakers<\/a><\/p>\n

[6] Motawi, Wade. How Shoes Are Made:\u00a0A behind the scenes look at a real shoe factory<\/em>, CreateSpace Independent Publishing Platform; 3rd edition (November 18, 2015)<\/p>\n","protected":false},"excerpt":{"rendered":"

With Nike pushing Flyprint, Adidas working with Carbon 3D, and New Balance tapping into Formlabs for partnership, why is this seemingly commoditized footwear market looking to 3D printing?<\/p>\n","protected":false},"author":11037,"featured_media":35379,"comment_status":"open","ping_status":"closed","template":"","categories":[4102,3340,159],"class_list":["post-35128","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-3dprinting","category-additive-manufacturing","category-footwear","hck-taxonomy-organization-nike","hck-taxonomy-industry-consumer-products","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2018\/","yoast_head":"\nAdding Value In Nike\u2019s Production Line - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/adding-value-in-nikes-production-line\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Adding Value In Nike\u2019s Production Line - 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