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Logistics Service Providers becoming Digital Service Providers with 3D-printing

3D-printing (3DP) is supposed to be one of the digital technologies to disrupt the manufacturing industry with its known benefits of shortening time-to-market, lowering inventories, and reducing costs for machinery and tooling. Upfront investment in 3DP machines (still at high prices) is currently seen as the major obstacle to a broader adoption of the 3DP technology. The ongoing trend towards higher customization and manufacturing of individualized products will increase demand for small series or even lot-size 1 production which is exactly the target market for 3DP. The following Forbes article gives a good overview of the general state of 3DP market:


But 3DP will have severe implications for transportation companies as well as products are printed locally at the point of usage and only when needed based on the 3D design transferred over the internet. 3DP could lead to more single-item parcels being shipped over shorter distances instead of thousands of finished goods in containers travelling over vast distances. Therefore the largest impact of the growth of 3D printing is likely to fall on the air cargo, ocean liner and freight trucking businesses with long-ranging transportation networks. The raising demand for specialized shipping, warehousing and packaging of 3DP-input raw materials and 3D-cartridges can hardly offset the decline in deliveries of finished goods. Logistics service providers (LSPs) have responded early to this digital trend even though at first sight it seems contradictory as this technology cannibalizes the main business of providing transportation services (is there a better example of Christensen’s innovators dilemma ?). Check e.g. following press announcements:

Panalpina partnering with 3D printer manufacturer Shapeways

UPS partnering with SAP for an end-to-end on-demand 3DP service

By leveraging their global networks LSPs can offer ‘industrial strength manufacturing as a service’ close at the point of usage/consumption. In the IT world we very well know the paragdigm shift towards ‘as-a service’ or cloud computing, in the context of 3DP it has similar financial implications for the buyer: less capex for e.g. printing machines and usage-based billing/opex (no inventory). This On-Demand model is the next evolutionary step of a manufacturing postponement strategy shifting the pull-push boundary further downstream towards the delivery location. As mentioned earlier while long haul transportation will decrease due to 3DP the efficiency of last-mile delivery will become even more critical, an extreme case is what amazon filed a patent for:

3D printing aboard Amazon trucks that are making home deliveries.

Postal companies like USPS or french La Poste are taking up the 3DP challenge as well and can leverage their ubiquitous first- and last-mile delivery network to offer 3DP service in their mail processing centers to become ‘printing hubs’, parcel carrier will surely benefit from the expected increase of package volumes,

see e.g. USPS update on 3DP here 3

3DP is one more example of LSPs including innovative, digital services in their offerings and trying to differentiate themselves through technology and software services. E-commerce is another hot area where LSPs typically start offering e-fulfillment services in the warehouse and move on to eventually support their customers omni-channel strategy. But today LSPs are going beyond traditional warehousing and transportation by offering complete e-commerce solutions including the management of e-commerce/digital platforms and corresponding IT-services. LSPs providing IT management services is a clear sign that industry boundaries are blurring. On the other hand new competitors leveraging new technology are entering the logistics market, most prominently amazon embedding logistics services in their product offerings (same day delivery etc) but also numerous uber-type startups trying to disrupt the freight & logistics industry. As digital services become an increasingly important element of the LSPs value proposition it might be a good idea to partner with SAP on this digital journey to fully capitalize on the opportunities out there.

If you want to check SAPs view on the digitization in cargo transportation and logistics check out following page:

and the whitepaper here

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