Inventory performance: How 3D Printing will help you manage your long tail stock?
Technical Focus | 21 November 2021
“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.
The figure looks even more extreme if we consider that only 10% of items are the usually ordered top sellers that account for almost 75% of sales. Of course, with a forecast value-added for items in the tail at only one sixth of what it is for top sellers, manufacturers prefer to dedicate their limited after-sales resources to ensuring supply of important top-selling items. However, the problem of long tails remains unsolved.
Evaluate the TCO to better supply with AM
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.
From 2022, 85 percent of spare parts suppliers may incorporate 3D printing into their businesses. By digitalizing those 80% of long tail parts, you will be able to meet the demand very quickly, with no warehousing or extra cost only by 3D printing your parts. You no longer have to keep over-sized inventories for parts that are only purchased by customers 200 or 300 times a year. Instead, you can print them on-demand and locally to supply the parts within the day.
So, who said it was hard to manage long tails?
Spare Parts 3D helps manufacturers and industrial spare parts users increase their spares availability by producing them on-demand using Additive Manufacturing.
From parts selection to parts production and delivery, Spare Parts 3D proposes end-to-end solutions encompassing:
- Analyze and cluster spare parts catalogs. Automatically select suitable technologies, provide costing and estimate potential savings brought by AM – Request a demo of our cataloguenalysis platform
- Build-up digital catalog through reverse engineering, quality tests and qualifications
- Produce on-demand, at locations closest to your need, thanks to our distributed manufacturing network
You want to know more? contact us!