{"id":4011,"date":"2014-12-18T20:29:00","date_gmt":"2014-12-18T20:29:00","guid":{"rendered":"https:\/\/get3dsmart.com\/Stagingsite\/\/\/?p=4011"},"modified":"2017-07-10T20:49:29","modified_gmt":"2017-07-10T20:49:29","slug":"whats-really-delaying-investment-3d-printing","status":"publish","type":"post","link":"https:\/\/get3dsmart.com\/Stagingsite\/2014\/12\/18\/whats-really-delaying-investment-3d-printing\/","title":{"rendered":"What\u2019s Really Delaying Investment in 3D Printing"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Last week, Gartner released the results of a <\/span><a href=\"https:\/\/www.gartner.com\/newsroom\/id\/2940117\"><span style=\"font-weight: 400;\">survey<\/span><\/a><span style=\"font-weight: 400;\"> which revealed that high acquisition and startup costs are delaying investment in 3D printers. The survey included 330 participants whose companies have over 100 employees and are either already using or planning to use 3D printing in their operations. One of the questions asked was about their reasons for pursuing 3D printing. Here were the results:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Prototyping is a pretty small chunk of the pie&#8230;already. At least among this group, there is already clear opportunity and demand for 3D printed products and parts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fabaloo\u2019s <\/span><a href=\"http:\/\/www.fabbaloo.com\/blog\/2014\/12\/11\/gartner-identifies-the-big-barrier-to-3d-printing\"><span style=\"font-weight: 400;\">coverage<\/span><\/a><span style=\"font-weight: 400;\"> of the survey went so far as to define a few of the major cost components involved with starting up. They mentioned investments related to the machines, such as consumables and environmental (HVAC, clean room, etc.) But Fabaloo also touched on another important category of investments that included software, training, and workflow.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Like the machines themselves, maybe those things really aren\u2019t costs at all. They\u2019re investments. Each of them is important because they drive cost out of each transaction. <\/span><\/p>\n<h4><span style=\"font-weight: 400;\">Transaction Costs Are Delaying The Growth of 3D Printing<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Ever wonder why 3D printing service bureaus (and many other types of companies for that matter) have minimum charges? It\u2019s because somebody in accounting figured out that the company didn\u2019t make money under a given threshold. So, if a company\u2019s minimum is $150 and their average gross is 30%, their transaction cost is somewhere around $45. That is what it costs them to process an order.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That\u2019s fine in an environment where you produce relatively few, high revenue and high profit jobs. But, what about an environment where you\u2019re doing many small jobs? If the average order size is $5,000 its pretty easy to absorb $45 in soft cost. If the average order size is $30, you\u2019re out of business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Why would anyone want that?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s equal parts offense and defense. On one hand, you\u2019ll want to tap into that stream of orders because the scale of the opportunity is immense. On the other, you\u2019ll have to if you want to remain competitive &#8211; even with your current product offering. Why? Because necessity is the mother of invention. Companies who drive transaction cost out of their businesses can apply those savings everywhere.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Existing service bureaus may not have a choice.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Pick a service bureau (or any manufacturer for that matter), and ask if their average order value has gone up or down lately. Not only are the machines getting faster and cheaper, but with more competition, prices are falling. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">What\u2019s the natural reaction to that problem?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Get more orders! That\u2019s when the pain of transaction cost is felt. Here\u2019s an example:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One of my associates worked at a (2D) printing company. The pre-press manager there insisted on personally handwriting each order that went into the shop. The company started looking at software to automate order entry, which she resisted. Finally, in a conversation among the entire management team, someone broke it down for her. You see, on average it took her 10 minutes to write each order. That meant she could write somewhere around 50 orders per day. When the VP of Sales said he would instruct the sales team to stop selling when they hit 50 orders, everyone got the point.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can kill it with labor or you can kill it with technology. Labor doesn\u2019t scale.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The direct cost of 3D printing is coming down. Demand is growing. To remain competitive, existing players must attack transaction cost. Assume a future average order value of $30. To operate profitably in that space, the transaction cost would need to be less than $5.<\/span><\/p>\n<h4><span style=\"font-weight: 400;\">How to Drive Out Transaction Cost<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Solutions to business problems are usually solved with people, process or technology. People are often the most expensive and least scalable solution (like our pre-press manager above!) Technology is most effective when a great manual process is already in place. So, start there. Start by identifying and documenting the workflow of an order from receipt to delivery. Look for roadblocks and bottlenecks. Do anything and everything you can to remove those first.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Then, once you\u2019ve driven as much cost as possible from process, identify and deploy technology that takes it to the next level. Want to eliminate order entry costs? Develop an API that allows you to receive order details and specifications online and in real-time. Want to reduce the cost of communicating job status? Expand your API to relay information back upstream. Tech opportunities abound from online quoting and order entry to production scheduling, pre-flight and shipping integration.<\/span><\/p>\n<h4><span style=\"font-weight: 400;\">If You Won\u2019t Maybe Someone Else Will<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">Thinking about starting a business? How about starting a 3D printing service bureau that\u2019s designed to print $30 orders all day, at scale. You\u2019d enjoy little or no selling expense and once the system is optimized, years of annuity income. Just connect to <\/span><a href=\"http:\/\/blog.3dlt.com\/2013\/11\/19\/retails-wellspring-of-3d-printable-content\/\"><span style=\"font-weight: 400;\">the firehose<\/span><\/a><span style=\"font-weight: 400;\"> and start printing.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A firehose? Really. It\u2019s already happening. Retailers like Walmart, Amazon, Rakuten, Staples, and Target are already selling 3D printed products and they could sell a hell of a lot more. Two of the biggest bottlenecks are capacity and cost.<\/span><\/p>\n<h4><span style=\"font-weight: 400;\">My Big Prediction for 2015<\/span><\/h4>\n<p><span style=\"font-weight: 400;\">For 3D printing, 2015 will be the year of workflow. Software companies, equipment suppliers, and service bureau customers will develop, sell, and buy software that makes 3D printing more productive and efficient at scale. Whether they realize it or not, the real problem they\u2019ll be solving is transaction cost.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last week, Gartner released the results of a survey which revealed that high acquisition and startup costs are delaying investment in 3D printers. The survey included 330 participants whose companies have over 100 employees and are either already using or planning to use 3D printing in their operations. One of the questions asked was about<a class=\"article-read-more\" href=\"https:\/\/get3dsmart.com\/Stagingsite\/2014\/12\/18\/whats-really-delaying-investment-3d-printing\/\"><i class=\"flownewsicon fa-angle-double-right\"><\/i><\/a><\/p>\n","protected":false},"author":1,"featured_media":4012,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[61,62,59],"tags":[68,137,69,71],"class_list":["post-4011","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-3dp","category-economics","category-workflow","tag-3d-printing","tag-service-bureau","tag-transaction-cost","tag-workflow"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What\u2019s Really Delaying Investment in 3D Printing | Get3DSmart<\/title>\n<meta name=\"description\" content=\"Transaction costs are delaying investment and growth in 3D printing. 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