This document discusses disruptive innovation through 3D printing. It begins by defining disruptive innovation as something that displaces an existing market by producing something new and more efficient. Recent advances in 3D printing technology including improved speeds, materials, and falling prices are enabling greater disruption. While traditional manufacturing remains more efficient for large production runs, 3D printing provides an alternative for low-to-medium volumes and customized products. The implications include tighter integration of design and production, more localized manufacturing, and infinitely customizable goods. However, the downsides include risks to intellectual property from easy file sharing and potential losses from infringement.

1. Disruptive Innovation &
3D Printing
Part II

2. Agenda
1. What is a disruptive innovation?
2. 3D Printing Disruption
3. Traditional Manufacturing vs. 3D Printing
4. Consumer manufacturers?
5. Implications
6. Specific disruptions
7. Downsides
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3. What is a Disruptor?
Disruptors are innovators…
…but not all innovators are
disruptors
According to Clayton
Christensen (HBS):
•“Disruption displaces an
existing market, business
model, industry, or
technology and produces
something new and more efficient
and worthwhile. It is at once
destructive and creative.”
– Internet, smartphones, UBER | 3

4. 3DP Disruption- Why Now?
• Advances include improvement
in:
– the performance of additive
manufacturing machinery,
• Speed, quality
– an expanding range of possible materials,
• Increased range of materials =
more sophisticated end products.
• Incorporating sensors,
microprocessors, electrical
circuits
– and falling prices for both printers
and materials.
• The average industrial printer now
sells for about $75,000, and some
machines cost more than $1 million.
• These costs are widely expected to
decline rapidly in coming years as
production volumes grow.
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5. Direction of 3DP Technology
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Gartner predicts that 3D
printers with the
capabilities and
performance that is
required by organizations
will be available for less
than $1,000 by 2016.
Source: PriceWaterhouseCoopers. (2014). 3D printing and the new shape of industrial
manufacturing.

6. How are SMEs and large companies adopting 3DP?
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Source: PriceWaterhouseCoopers. (2014). 3D printing and the new shape of industrial
manufacturing.

7. Traditional Manufacturing vs. 3D Printing
• For large production runs, traditional
manufacturing processes cost less per unit than 3DP.
• High up-front tooling costs make traditional
manufacturing more expensive for small
production runs.
• Time to produce a 3-D printed product is much
shorter than the time to make tooling, though actual production time
for each unit is longer than in traditional manufacturing.
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8. Goodbye to Economies of Scale?
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As economies of scale come into play, traditional
manufacturing can be more beneficial for
producing larger quantities of products.
3DP can provide an efficient alternative for low-to-
medium-sized production runs.
3DP marginal costs do not change with volume
Expected reductions in material costs +
improvements in 3DP tech will increase the
production quantities at which 3DP might
compete with traditional manufacturing methods.

9. Bottom Line (for now…)
•Although traditional manufacturing will likely still hold place in the
competitive landscape in the years to come,
the next 10 to 20 years will see a rapid
increase in the innovations made possible by 3D
printing
•Companies based on economies of scale will
continue to support commodity and high volume
production.
•3DP is a viable, competitive option when:
– end-user customization is highly desirable,
– where production is very small volume,
– where the end product requires features that
are not easily manufactured by traditional means| 9

10. Consumer manufacturers?
• Unit sales of consumer 3D
printers remain small, with
about 23,000 printers sold in
2011, but these sales are
growing rapidly, with more
than 300 % in average annual
growth between 2007 and
2011.
• The ability to easily design
and self-manufacture
products could create
significant consumer surplus
and even influence consumer
culture
• Right now, it is unlikely that | 10

11. Implications
• The 3D production
ecosystem will have
major effects in each of
the three major stages
of the design-build-deliver model.
– Design and production will
be tightly coupled through
experimentation.
• It will change the nature
of design and production:
– GE printing a fuel nozzle in
1 piece as opposed to
assembling 20 different
parts (annual cost savings of up to
75%)
– Boeing printing cool air | 11

12. Implications
•Proximity between supplier, manufacturer, and
customer will matter, and localized
production will be not only more feasible but more desirable.
•Goods will be infinitely more customized, because altering
them won't require retooling, only
tweaking the instructions in the software.
•Companies will benefit from savings in materials,
labour and transportation costs
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13. Supply Chain Disruption
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Reducing the supply chain to one
link by eliminating the connections
between development,
prototyping, production, delivery
and warehousing of products.

14. Disrupted Industrial Workers
Will the manufacturing
industry lose jobs to this
labour-saving technology?
•According to PwC, it is too early to
discern how 3DP will impact this
industry
– It may cut into unskilled factory
floor jobs, but will create opportunities
for workers with technical know-
how
• Opportunities for re-shoring and retraining
workers new programs
•45% of manufactures attributed
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15. Some industries are poised to be positively impacted by this disruption:
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Especially manufacturers of:
•Low volume and/or new designs not
economically attractive through
subtractive methods
– Aerospace
•More customized products
– Medical devices, helmets, footwear
•Complex, older generation products with
many parts and obsolete parts that are
still in demand
– heavy manufacturing, energy, agriculture

16. Some industries are poised to be negatively impacted by this disruption:
Especially…
•Transportation and logistics
industries
– More goods being produced locally,
freight volumes may be impacted
– Warehousing
•Patent reliant industries with
weak IP protection
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17. The Downside of 3DP Disruptions
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• Regulatory and policy issues,
most notably intellectual
property rights
• 3D scanners and easily shared
CAD files make IP infringements
possible and very easy
– Similar to sharing music online
• Gartner forecasts $100bn annual
global losses by 2018 due to 3DP
IP infringements
Important: Policy makers face the challenge of evaluating
and addressing these risks without stifling innovation or