Inventory performance: How 3D Printing will help you manage your long tail stock?
Technical Focus | 5 March 2018
“How many references do I have in my inventory?”
This is a question asked by a lot of industrial manufacturers are and they ask that for a good reason.
The levels of demand for different parts are usually different; thus, different parts have different production levels and have different production costs. This makes management of spare parts, especially the lon tails, quite challenging.
How do you manage your stock then?
Do you keep inventory levels for every part in case you would need it, or do you produce small batches based on the demand? In other terms, do you prefer losing money due to over-sized warehousing, or buying small batches of parts at higher unit price?
When Pareto rule suggests not to focus on long tails
Long tails are not easy to manage. By definition, there are too many of them. Long tails account for an average of 81% of all items and representing around 20% of total sales volume, depending on the industry. As the innovation process becomes faster and faster, long tails are getting longer and longer each year.
Producing those long tails with 3D printing is the way to efficiently solve this problem efficiently with a competitive cost. Although the production cost per unit may be higher, other elements must be considered. For instance, free digital storage and shortened transportation contribute to a more valuable customer service and make the Total Cost of Ownership (TCO) with additive manufacturing often lower than the one of traditional manufacturing supply chains.
Aside from the possibility to reduce cost, producing long tails with 3D printing also helps manufacturers shorten manufacturing lead time. Once a part is digitalized for AM, the supply chain is extremely simple and fast while sourcing from traditional suppliers might take longer time and involve a more complicated process of materials and quality alignments.