{"id":36173,"date":"2018-11-13T19:53:37","date_gmt":"2018-11-14T00:53:37","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/economies-of-one-the-3d-printing-company-rewriting-economic-law\/"},"modified":"2018-11-13T19:54:24","modified_gmt":"2018-11-14T00:54:24","slug":"economies-of-one-the-3d-printing-company-rewriting-economic-law","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/economies-of-one-the-3d-printing-company-rewriting-economic-law\/","title":{"rendered":"Economies of One \u2013 The 3D Printing Company Rewriting Economic Law"},"content":{"rendered":"

Since Henry Ford introduced the Model T, businesses that produce physical goods have lived (and died) by an eleventh commandment, the economies of scale<\/em>: a proportionate saving in costs gained by a greater level of production. [1] Protolabs of Maple Plain, MN, is rewriting economic law through innovation in additive manufacturing (AM).<\/p>\n

In the early days (~1980-2010), additive manufacturing (AM) attracted plenty of fanfare, as industry insiders called for an \u201cIndustrial Revolution 4.0\u201d. [2] But businesses primarily used this new technology for high fidelity prototyping, as production was still very costly. [1][3] Over the past three years, however, more than $700 million in venture capital funding has poured into 3D printing, resulting in technology that is faster, functional, and affordable. [1]<\/p>\n

For AM companies focused on low-volume and high-complexity, Protolabs is leading the way. Protolabs, is the world\u2019s fastest manufacturer of custom prototypes and on-demand production parts. [2] The company offers production of low-volume 3D printed, CNC-machined, and injection-molded custom parts, serving the automotive, medical device, and consumer electronics market. [4][5] From 2010-2018, Protolabs understood that the sweet spot of 3D printing lay at the intersection of complexity and customization, and the company used this understanding to manage its own product development process. [2][4]<\/p>\n

Today, Protolabs enjoys a competitive advantage in both hardware and software, separating itself from other 3D printing companies by offering automated design feedback, interactive cost estimates, free product-geometry analysis, and speedy turnaround times (less than 24-hours in some instances). [2][4]<\/p>\n

\"\"<\/a>[2]<\/p>\n

Looking forward, Protolabs must respond to three product development megatrends: shorter product life cycles, the proliferation of the internet of things, and a shift to mass customization (personalization). [2][6] How Protolabs responds to these trends will likely drive the company\u2019s performance over the next decade.<\/p>\n

In the short term, Protolabs must meet demand from businesses with shorter product lifecycles. In 2017, Protolabs CEO explained that the product life cycle is in decline: \u201c50% of annual company revenues are derived from new products launched within the preceding three years\u201d. [2] As such, it is critical that Protolabs helps its customers beat their competitors to market by offering the quickest turnaround times on complex prototypes and parts. It is clear that Protolabs management is acutely aware of this need, and in November, 2017, the company announced the acquisition of Rapid Manufacturing, an AM company that specializes in quick-turn around sheet metal fabrication for prototypes and production parts. [7]<\/p>\n

Also in the short term, Protolabs must find a way to play in the internet of things space. In a 2017 newsletter, Protolabs CEO stated: \u201cIoT will have a potential economic impact of up to $6.2 trillion by 2025 and the potential to drive productivity across $36 trillion in operating costs across multiple industries, including manufacturing.\u201d [8] By investing to become a \u2018total solution\u2019 for the supply chain, Protolabs is in prime position to take advantage of the IoT wave by differentiating itself from both traditional manufacturers, who operate in the low-mix high-volume space, and from AM competitors, who primarily focus on a single part of the supply chain. [2][8]<\/p>\n

\"\"<\/a>[2]<\/p>\n

In the medium term, Protolabs must address the product development shift from a mass production model to a mass customization model, as companies globally attempt to serve consumers who value personalized products. A recent Boston Consulting Group report found that from 2018-2023 demand for customizable products will spur approximately $800 billion to move from existing players to the 15% of companies that invest and own this emerging segment. [2]<\/p>\n

In considering steps Protolabs can take to best position itself for the next decade, I would encourage management to speak with UPS\u2019 Vice President of Corporate Strategy. UPS sees additive manufacturing as a supply chain solution. [1] After reviewing its Critical Service Parts logistics business and identifying over one thousand warehouses dedicated to this type of part, UPS has been vocal about the value in being able to quickly produce highly specialized parts on-demand. [1] I would encourage Protolabs to also explore installing production units close to or even in-house for major customers, as AM could face competitive pressure from major logistics companies shortly. [1] Starting a dialogue with the major logistics companies now only seems additive, especially as these interactions could lead to possible M&A opportunities down the road.<\/p>\n

An interesting question that arises when examining Protolabs\u2019 business, (and AM at large), is: can a 3D printing company succeed in the long run without scale? Small job shops can still be profitable in today\u2019s ecosystem, but because AM requires intense R&D and capital investment, the businesses that win may be the businesses that scale faster. Further, as many technology patents are already starting to expire, another interesting question is whether any 3D printing business is truly defensible in the long run? [1]<\/p>\n

 <\/p>\n

(795 words)<\/p>\n

 <\/p>\n

[1] Alan S. Brown, \u201cChain Reaction: Why Additive Manufacturing is about to Transform the Supply Chain,\u201d Mechanical Engineer: The Magazine of ASME (September 2018): 30-35.<\/p>\n

[2] Protolabs, \u201cAnalyst Day Presentation,\u201d https:\/\/protolabs.gcs-web.com\/investorpresentation<\/a>, accessed November 2018.<\/p>\n

[3] Dennis Spaeth, \u201c3D Printing is Changing the Face of Multiple Industries,\u201d ECN: Electronic Component News 61, no. 9 (October 2017): 21-23.<\/p>\n

[4] Protolabs, \u201cWho We Are,\u201d https:\/\/www.protolabs.com\/about-us\/who-we-are<\/a>, accessed November 2018.<\/p>\n

[5] Hollie Slade, \u201cHow Proto Labs Is Building the Factory Of The Future,\u201d Forbes Magazine (October 2014), https:\/\/www.forbes.com\/sites\/hollieslade\/2014\/10\/15\/how-proto-labs-is-building-the-factory-of-the-future<\/a>, accessed November 2018.<\/p>\n

[6] Protolabs, \u201cThe Growing Impact of IoT: How the Internet of Things is Automating the World,\u201d https:\/\/www.protolabs.com\/resources\/blog\/the-growing-impact-of-iot-how-the-internet-of-things-is-automating-the-world\/<\/a>, accessed November 2018.<\/p>\n

[7] \u201cProto Labs Reaches Agreement to Acquire RAPID, Expands Services with Sheet Metal Fabrication,\u201d Business Wire, November 21, 2017, https:\/\/www.businesswire.com\/news\/Proto-Labs-Reaches-Agreement-Acquire-RAPID-Expands<\/a>, accessed November 2018.<\/p>\n

[8] Sarah Goehrke, \u201cProtolabs\u2019 Greg Thompson Discusses 3D Printing In Operations and Production,\u201d 3D Printing Media Network, October 2018, https:\/\/www.3dprintingmedia.network\/protolabs-interview-greg-thompson\/<\/a>, accessed November 2018.<\/p>\n","protected":false},"excerpt":{"rendered":"

For additive manufacturing companies focused on low-volume and high-complexity, Protolabs is leading the way. Protolabs is the world\u2019s fastest manufacturer of custom prototypes and on-demand production parts. Through technological innovation and customer service, the company is attempting to rewrite economic law by succeeding with an operating model dubbed the economies of one. <\/p>\n","protected":false},"author":11807,"featured_media":36246,"comment_status":"open","ping_status":"closed","template":"","categories":[3340,3565],"class_list":["post-36173","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-additive-manufacturing","category-rapid-protoyping","hck-taxonomy-organization-protolabs","hck-taxonomy-industry-manufacturing","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2018\/","yoast_head":"\nEconomies of One \u2013 The 3D Printing Company Rewriting Economic Law - 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\/economies-of-one-the-3d-printing-company-rewriting-economic-law\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Economies of One \u2013 The 3D Printing Company Rewriting Economic Law - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"For additive manufacturing companies focused on low-volume and high-complexity, Protolabs is leading the way. 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