There is yet another sign that the hype has subsided and emotional reactions have been superseded by logical decisions. That sign is the return of decision-making based on financial justification. Rather than assuming the value of additive manufacturing (AM), those that want it must prove that it is worth the investment.
Those close to AM recognise, and count on, the value of the technology. Simply put, they know that it is worth it. Countless experiences document the benefits and advantages in product development, manufacturing process development and production. The unique combination of speed, efficiency and automation, all without negative consequences when building complex geometry, is undeniable. However, the undeniable benefit can be difficult to monetise; difficult to prove through hard numbers and measurable results that show a substantial improvement in a company’s financial performance.
The crux of the challenge is twofold. First, it can be hard to determine the value of time. Sure, you can receive prototypes a week earlier, or you can do two product revisions without missing a deadline, but how does that translate to cost reduction or income gains? Faster is better, but speed can have a nebulous connection to the finances. Second, AM’s low-quantity orientation means that the relative impact of cost reduction can be somewhat small when compared to higher-volume processes. Maybe the average cost reduction is $200 each, but if only 1,000 are produced in a year, the savings amounts to “just” $200,000. That is real money, but it is often a poorer return on investment when compared to other capital equipment expenditures.
The two-fold challenge is clearly seen in the oft-used, common approach of justifying AM as an alternative to outsourced work, both for AM and traditional methods. Undoubtedly, there will be a cost reduction and a response-time improvement. Yet, the significance to the company’s overall expenditures may be marginal and easy to dismiss.
To expand the gains, this conventional approach to financial justification often needs to be augmented in a way that monetizes the unique advantages of AM. The difficulty is in making those advantages tangible, measurable and real. This may not be simple, and regrettably, there isn’t one strategy that works for all.
Start by identifying a current, ongoing problem within the product development or manufacturing processes that has a measurable, negative impact on costs
However, there is a tactic that can work for everyone. Start by identifying a current, ongoing problem within the product development or manufacturing processes that has a measurable, negative impact on costs. If AM can be shown to be the best option to resolve this problem, the savings are then a part of AM’s return on investment. For example, if mould rework is a frequent issue that has management’s attention and management has identified an associated cost, the benefit of multiple design iterations, made possible by AM, shifts from a convenient advantage to a practical cost-saving measure. Of course, this assumes that the decision makers accept that more edits lead to fewer mistakes.
On the production floor, the target could be a lack of fixtures. It is very common that a need for a fixture has been identified but not acted upon. Leveraging AM’s speed and efficiency, it could be the tool that makes if practical and convenient to get the fixture deployed. The measurable result is either a decrease in cycle time or scrap rate, and both have an associated cost. The added advantage of this application for justification is that there is a one-to-many relationship. One fixture affects the manufacturing process of every production part. Assume a production run of 250,000 units and a burdened labour rate of $20.00/hour. If that fixture reduces cycle time by 20 seconds, the total savings is over $25,000. This far exceeds the savings upon which most try to justify AM: the cost difference between printing and machining the fixture.
So the key to justification is to capitalize on the problems and challenges that have management’s attention and that have direct correlation to the costs of doing business. In the justification, document that financial impact and show AM as the solution to the problem. Make AM a good investment rather than a discretionary expense.
Justifying AM will be a process. It may not be easy, but it will definitely be worth it.