Forward Integration Challenges in Logistics Industry
That’s a good term. What’s forward integration? Way back in good ole days, automotive manufacturers had a lot in-house. As the industry matured, platform based production systems evolved. Components were made by vendors. Then Vendors started producing sub-assemblies. As forward integration matured, somewhere in the horizon, brand remains with the OEM. In this value chain, along with other players, logistics service providers moved up the value chain. Instead of just moving goods from point A to point B, logistics players got into VAWD (value added services along with warehousing and distribution, like kitting). Another example of this is direct mailer printing at the point of consumption to avoid logistics costs and improving agility to market demand.
3D printing started as an additive manufacturing technology that accelerates rapid prototyping. This is around for over 2.5 decades. Stereo lithographic systems were the early Avatars of 3D printing technologies and the usage is fairly limited to prototyping and experimental organ printing. Selective laser sintering, FDM (Fused deposit modeling) and Digital Light processing are amongst other and more latest technologies that have evolved in this space. From Cubify Cubex to Makerbot replicators, variety of 3D printing options are available in the market.
So what’s the impact of this evolving industry on logistics? Can 3D printing substantially reduce the need for transportation? Not really, affordability and technological readiness is not there yet. However, deepest impact of this technology on logistics industry lies in how value added services are rendered today. How effectively, a logistics player is able to forward integrate. We are not talking about mass production of garments to compete with China. We are referring to high end designer wear that can be produced in the warehouse of a logistics provider which can be shipped locally. It is about advanced JIT (just in time).
It may not be feasible, practical and cost effective to 3D print items on a massive scale. However, as the technology evolves, leveraging 3D printing for critical supply chain needs in hi-end areas cannot be ruled out. Today logistics players are already engaged in assembly of computing equipment like laptops. Won’t get surprised when a day comes when the needs of forward integration demand manufacturing support from logistics players. 3D printing not just changes the game in manufacturing industry but it does hold potential growth opportunities for logistics players as well. However the logistics industry as we see it today is yet to gear up and capture opportunities in this space. The kind of competencies / skills available in the industry, network infrastructure need to under-go substantial changes.
Let me know your thoughts.