3D printing enables capacity ramp down
Nobody likes a downturn. Almost every industry goes through business cycles. And downturns are inevitable. Let us see how 3D printing enables capacity ramp down.
During downturns, product demands go down. If production continues at the same pace, excess inventory will be the result. If production rate slows down it creates idle capacity. Either way, the business has to make tough decisions.
With traditional manufacturing, it is not easy to scale down production capacity. This is due to the high fixed cost structure of traditional manufacturing.
When production slows down, the cost of most other factors of production continues to be high. Fixed costs related to machine depreciation, lighting, labour and other charges stay the same. The business ends up in a loss since it is not able to absorb fixed costs with existing volume of production.
3D printing helps to lessen the impact of downturns. Additive manufacturing has a short production cycle. This means there is less need of materials, assembly and labour.
Since there is less assembly, there is also less machinery. This results in less fixed costs that need amortization.
Where additive manufacturing production is outsourced, there is less risk to mitigate.
Even with in-house capacity, the fixed cost structure is low. Ramp down does not mean servicing of large fixed expenses.
Thus, it makes sense for companies to build up some 3D printing capacity. This could be through outsourcing or in-house capacity. This will help them to weather the vagaries of business cycles.