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Degree Project in Production Engineering and Management (MG213X)


Academic year: 2021

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Degree Project in Production Engineering and Management



Cost and Lead Time Estimation, Benefits and Challenges





Additive manufacturing (AM) is one of the most widely explored technology in the field of manufacturing in recent years. With a rapid development in its process elements such as process speed, dimensional accuracy, surface finish and repeatability, additive manufacturing continues to expand from being a prototyping technology to substituting the conventional manufacturing processes.

Like many organizations, which are trying to investigate the economic benefits of adopting AM, Scania wants to study the costs of adopting AM to manufacture parts for its special products division. This study involves costs and lead time estimation, benefits and challenges of adopting AM to manufacture the given case study parts from Scania. The most suitable AM technology to manufacture these case studies is chosen by studying various AM technologies available in the market. The chosen AM technology is Electron Beam Melting (EBM). Simulations are done to estimate the build time of manufacturing these parts using EBM platform. It is also used to estimate the production costs using a suitable cost model and parts lead time. The results are compared to those of traditional manufacturing process. Further to this, benefits and challenges of adopting AM in the context of low volume production and supply chain challenges are also studied.




Additive manufacturing (AM) är en av de mest utforskade teknologierna inom tillverkningsområdet de senaste åren. Med sin snabba utveckling i processelementen, såsom processhastighet, dimensionsnoggrannhet, ytfinish, repeterbarhet, tillsatsframställning fortsätter att expandera från att vara en prototypteknik för att ersätta de konventionella tillverkningsprocesserna.

Liksom många organisationer som försöker undersöka de ekonomiska fördelarna med att använda AM, vill Scania studera kostnaderna för att anta AM för att tillverka delar för sin speciella produktavdelning. Denna studie innehåller kostnader och ledtidsestimering, fördelar och utmaningar att övergå till AM för att tillverka delarna som fås från Scania för detta studiefall. Den mest lämpliga AM-tekniken för att tillverka dessa fallstudier är vald genom att studera de olika AM-teknologier som finns tillgängliga på marknaden. Den valda AM-teknikem är Electron Beam Melting (EBM). Simuleringar görs för att uppskatta byggtiden för tillverkningen av dessa delar genom att använda EBM-tekniken. Detta används vidare för att uppskatta produktionskostnaderna med hjälp av en lämplig kostnadsmodell och ledtid i produktionen av delarna. Resultaten jämförs med traditionell tillverkningsprocess. Vidare studeras fördelar och utmaningar för att anta AM i samband med lågvolymproduktion och försörjningskedjans utmaningar.




We are grateful to KTH, specially Amir Rashid for giving us the opportunity to perform our thesis in the topic that interested us the most. We thank Amir for his long discussions on the topic, giving feedbacks and for helping us to get in touch with industry contacts.

We would also like to thank Xiaoyu Zhao for help us with simulating the build processes in the AM machine and for clarifying our doubts on the topic.

Furthermore, we would like to thank Johan Nordkvist and Magnus Mistander of Scania for providing valuable information and supporting us with data and feedback. This thesis would not be possible without their collaboration.

We would also like to extend our gratitude to AIM Sweden for helping us with simulation process. We appreciate their support.





1.1 BACKGROUND ... 7



2.2.2 POWDER BED FUSION ... 13



2.2.5 BINDER JETTING ... 18





3.2 EBM SYSTEM ... 24

3.3 SIMULATION ... 26

3.4 COST MODEL ... 27


3.5.1 Final results ... 27



4.1.1 Design for Additive Manufacturing (DfAM) ... 31

4.1.2 Product and process design ... 32

4.1.3 Material input processing ... 33

4.1.4 Make-to-order components and product manufacturing ... 34

4.1.5 Closing the loop ... 34

4.2 SUPPLY CHAIN ... 35

4.2.1 Monitory Cost Perspective ... 35



4.2.3 Lead Time Benefits ... 41








7 Appendix 1 ... 54





As mass production is being transferred to developing countries, western countries must switch towards low volume production with high added value through innovative, customized and sustainable products. To compete in such competitive environment, manufacturers have started to look for new manufacturing techniques which have higher flexibility and can give low volume production in an economical way. One such technique is additive manufacturing, better known as 3D printing and is being promoted as the start of new industrial revolution (Weller et al., 2015).

AM industry was valued at 3 billion US dollars, and is expected to rise to 13 billion US dollars by 2018, 21 billion US dollars by 2020 (Wohlers, 2014). With such enormous potential, many industries have started to explore and adopt AM technologies. Though having been known for a few decades now, AM techniques have been predominately limited to manufacturing of prototypes. However recent advancements in the technology specifically speed, part quality and performance have made it possible to adopt the technology in conventional manufacturing. Nowadays, it has become feasible to reliably manufacture dense parts in certain AM techniques and with various material, including steel, aluminium and titanium (Murr et al., 2012). Manufacturers in domains such as automobile, dental, biomedical and aerospace have already successfully adopted AM techniques. The flexibility of AM insures that parts can be customized, allows for digital interaction with customers, which in turn helps to reduce costs, supply chain complexity and lead times (Bogers et al., 2016).

With such enormous potential like easy customization and personalization of products and production, AM provides the opportunities and challenges to develop new business models – the logic of creating and capturing value (Pillers et al., 2015; Ponfoort et al., 2014).



conventional manufacturing methods can be economical only in large quantities. However, this in turn increases the storage costs. To avoid this, the company is looking for other flexible manufacturing techniques which can be economical for low volume production. In this thesis, AM is being explored to better understand its capabilities and opportunities.


What are the costs and lead time of manufacturing the case study parts through additive manufacturing and what are the benefits of doing so?

Below sub-questions can be derived from the research question above:

- What are the available types of AM technologies?

- Which of these technologies would be most suitable for the given parts?

- What is the most suitable cost model to evaluate AM?

- What are the advantages and challenges of adapting AM at the company? - What are the effects of AM on the design and supply chain of the parts?

- What is the future of AM in manufacturing industry?




The company purchases its parts from suppliers who manufactures them through conventional processes. Since these are low volume parts, economies of scale cannot be achieved and hence the part cost is high. Lead times are also high due to complex logistics. This thesis considers three parts which is assumed to represent the majority of the parts bought from the supplier. The details about the parts can be found in the table 1 – Details of case studies.

Part No Part 1 Part 2 Part 3

Material Aluminium DF, EN AC-Al Si9Cu3(Fe)EN AC-46000 Aluminium EN AC-46000 DF, EN AC-Al Si9Cu3(Fe) Steel S355MC

Unit Cost 250 euro 117 euro 35 euro

Lead Time 14 weeks 12 weeks 8 weeks

Consumption 50 pcs/year 50 pcs/year 50 pcs/year


Method Casting Sheet metal cutting, bending, welding Sheet metal cutting and bending Build Size 195 mm x 270 mm x 175 mm 173 mm x 244 mm x 150 mm 350 mm x 168 mm x 73 mm

Table 1 Details of case studies



The various AM technologies available in the market are studied through literature review and the most suitable technique is chosen from it. The cost model to calculate the manufacturing cost is chosen from literature review. The suitable AM system is chosen from market study. The build simulation of the case studies is done in the chosen AM system with the help of a research institute in Sweden. Conclusions from the results are made with the help of simulations and calculation results including the literature review.





Additive manufacturing is defined by ASTM (2012) as “joining materials to make objects from 3D model data, usually layer upon layer, as opposed to subtractive manufacturing methodologies”. Also known as 3D printing or rapid prototyping, this technology is gaining immense attention due to its ability to improve part functionality with complex geometrical designs and along with the fact that it is theoretically possible to produce any shape without limitations. (Gokuldoss et al., 2017) Unlike conventional manufacturing where material is removed to make the product, AM involves additional material to create a product.

The history of AM started in the field of rapid prototyping and then tooling. Though these fields continue to be exploited, improvements in AM technologies have led to them being used extensively in direct manufacturing. (Ford et al., 2016). AM technology can produce customized products without tools or molds which helps in cost reduction. Moreover, AM helps to produce complex and integrated functional designs in a single step which can possible lead to reduction of assembly work. (Weller et al., 2015)



There are several variants of AM techniques that exist. These types differ in terms of the raw material used and the technical principles behind the technique of layer deposition, which gradually builds up three-dimensional parts. (Baumers et.al., 2016) Choosing the right additive manufacturing process for a particular design is not always an easy task. Availability of various types of AM techniques and materials means that often several processes can be suitable. However, each of them can offer different dimensional accuracies, surface finishes or post processing requirements. The various types of AM technologies available in the market are:


Vat photopolymerization is the process in which a photopolymer resin is solidified by exposing it to light of a specific wavelength and inducing a chemical reaction. Various AM technologies utilize this concept to make solid parts layer-by-layer. (3dhubs.com, 2017)

As the process uses liquid to form objects, there is no structural support from the material during the build phase, unlike powder based methods, where support is given from the unbound material. In this case, support structures will often need to be added. Resins are cured using a process of photo polymerisation. (Gibson et al., 2010) The light is directed across the surface of the resin with the use of motor controlled mirrors (Grenda, 2009). When the resin comes in contact with the light, it cures or hardens.



Once the CAD data is transferred to the machine, the build platform lowers into the VAT resin by the layer thickness. UV-light is directed across the surface of the resin by use of motor controlled mirrors, which cures the resin layer-by-layer, solidifying it in the process. The platform continues to lower and additional layers are built on top of previous ones. After the completion of the process, the resin is drained and part is removed.

Types: Stereolithography (SLA) - cured with laser, Digital Light Processing (DLP) – cured with projector, Continuous Digital Light Processing (CDLP) – cured with LED and oxygen.

Materials: plastic and polymers.

Though this process has high level of accuracy and good finish, it is relatively expensive and often requires lengthy post processing and post curing for the parts to be strong enough for structural use. Also, vat photopolymerization is relatively quick process with large build areas. (lboro.ac.uk, 2017)




Figure 2 Powder bed fusion process (lboro.ac.uk, 2017)

The process begins with spreading layer of the powder material over the build platform. A thermal source fuses the first cross section of the model over this thin layer of material. A new powder layer is spread across the previously fused layer using a roller. The process continuous until the complete model is made.

The main difference in PBF technologies is due to the variety in energy sources (laser or electron beam) and the powder material used (plastic or metals).

Types: Multi Jet Fusion (MJF) – fused with agent and energy using plastic powder materials, Selective Laser Sintering (SLS) – fused with laser using plastic powder materials, Direct Metal Laser Sintering (DMLS) or Selective Laser Melting (SLM) – fused with laser using metal powder materials, Electron Beam Melting (EBM) – fused with electron beam using metal powder materials.



process itself is relatively slow with high powder usage and a finish which is dependent on the powder grain size. (lboro.ac.uk, 2017)


Material extrusion is the process in which material is heated and drawn through a nozzle, and then deposited over the build platform one layer over another. The quality of the final model depends on various factors, however there is great potential and viability when these factors are controlled efficiently. (Gibson et al., 2010)



Figure 3 Material extrusion process (lboro.ac.uk, 2017)

As material is heated and passes through the nozzle it is deposited over the build platform. Following layers are added on top of previous layers as per model cross section. The layers are fused together by temperature control or by chemical agents. There is also provision for the deposition of support materials to build support structures.

Types: Fused Deposition Modelling (FDM). Materials: Composites and plastic.



Material jetting is the process in which parts are created by depositing photopolymers layer-by-layer on a platform and curing or hardening them by exposing them to light or high temperature. The process is often compared to 2D ink jetting process. This principle allows the printing of different materials simultaneously and this helps to print support structures from different material. The material is deposited on the build platform either by a continuous or Drop on Demand (DOD) approach. The fact that materials are deposited in drops limits the number of suitable materials.

Figure 4 Material jetting process (lboro.ac.uk, 2017)

The print head which deposits the materials is positioned right above the build platform. Using thermal or piezoelectric method, the print head deposits droplets of material onto the surface where required. Once deposited, the droplets solidify and form the first layer. Further layers are built upon the previous layer, which eventually forms the parts. Layers are hardened either by allowing it to cool down or curing it by UV-light. Supports material is removed during the post processing.

Types: Material Jetting (MJ) – cured with UV light, NanoPartical Jetting (NPJ) – cured with heat, Drop on Demand (DOD) – milled to form.



The process generates lower waste since it benefits from high accuracy of droplets deposition. Multiple material parts and colours can be created under a single process. Though the process gives the high accuracy, materials are limited to polymers and waxes. (lboro.ac.uk, 2017)


Binder jetting process uses powder material and liquid binder to build solid parts layer-by-layer. The binder acts as an adhesive between the powder layers. Both powder material and binder are deposited on the build platform using a print head. The print head moves along the build platform depositing alternative layers of powder material and the binder. Once a layer has been printed, the platform lowers and a new layer is printed over the previous one. The process is repeated to generate a solid part. Once a part is cured, it is removed from the powder bed, followed by post processing.

Figure 5 Binder jetting process (lboro.ac.uk, 2017) Types: Binder Jetting (BJ) – joined with binding agent.

Materials: Metals, polymers and ceramics.



processing leads to increase in the overall process time. (lboro.ac.uk, 2017) 2.2.6 DIRECT ENERGY DEPOSITION

Direct energy deposition is the process of building a part by melting material which is in the form of powders or wire as it is deposited. This method is also known as direct metal deposition. This process is mostly used in repair applications or to add additional material to an existing component. (Gibson et al., 2010) Though the process typically uses metals in the form of powder or wire, it can also be used with polymers and ceramic materials.

Figure 6 Direct energy deposition process (lboro.ac.uk, 2017)

Build material either in the form of powder or wire is deposited on the build platform through a nozzle. On deposition, the material is melted using a laser, plasma arc or electron beam. Further layers of material are deposited on the previous ones upon solidifying. The process is similar to material extrusion in principle. However, in this method the nozzle is movable in multiple axes and it is not constrained to any specific axis.

Types: Laser Engineering Net Shape (LENS) – fused with laser, Electron Beam Additive Manufacturing (EBAM) – fused with electron beam.

Materials: metals, polymers and ceramics.



high degree of control over the grain structure. The process often requires a balance between speed and surface quality. However, speed is often sacrificed for a high accuracy and predetermined microstructure in repair applications. (lboro.ac.uk, 2017) 2.2.7 SHEET LAMINATION

Sheet lamination is a process in which sheets or ribbons are bound together. Ultrasonic Additive Manufacturing (UAM) is a sheet lamination process which uses metal sheets or ribbons which are bound together using ultrasonic welding. UAM often requires post processing which involves CNC machining to remove unbound material. Laminated Object Manufacturing (LOM) is similar in principle to UAM but uses paper as material and uses adhesive for bonding.

The method is often used to create aesthetic and visual models which are not suitable for structural purpose.

Figure 7 Sheet lamination process (lboro.ac.uk, 2017)

The first sheet of material is placed on the cutting bed. The following material sheet is fused over the previous one by ultrasonic welding or adhesive. The required cross-sectional shape is cut from the layer by laser or knife. The next layer is placed and the process is repeated until the part is created.


21 Materials: Metals, composites and paper.




From the literature review, it is clear that the following techniques of AM can be used to create metal parts:

1. Material Jetting

i. NanoParticle Jetting (NPJ); 2. Binder Jetting (BJ);

3. Direct Energy Deposition

i. Laser Engineering Net Shape (LENS);

ii. Electron Beam Additive Manufacturing (EBAM); 4. Powder Bed Fusion

i. Direct Metal Laser Sintering (DMLS) or Selective Laser Melting (SLM); ii. Electron Beam Melting (EBM);

On more detailed analysis, though Nano Particle Jetting has been predominantly used to make plastic and wax parts, its application in creation of metal parts has been introduced very recently and there are not much industrial case studies using this technique. This technique need a few years before it is established as reliable AM technique to manufacture metal parts. (additivemanufacturing.com, 2017)

Though the process of Binder Jetting is faster than other AM techniques, the parts created however are not suitable for structural products. Due to the fact that the material powder is bound together by binder material. (lboro.ac.uk, 2017) Moreover, this technique is not suitable for manufacturing of fully dense parts. This is because the density depends on the packaging factor of powder feedstock. (Bailey et al., 2016)



Some of the major advantages of Powder Bed Fusion system are:

1. Possibility to produce almost any shape. This makes it possible to economically manufacture small production quantities which are customized and geometrically customized.

2. High resolution of the final product.

3. Flexibility and geometry allows to integrate multiple functions in a single product, which is normally made out of multiple parts.

4. High re-usability of the unused powder material (insidemetaladditivemanufacturing.com, 2017).

5. Availability of large range of material options (lboro.ac.uk, 2017).

All these advantages make Powder Bed Fusion as one of the most favourable AM technology for highly engineered end-use products (Stucker, 2012; Ruffo et al., 2007). Furthermore, unlike other polymeric PBF systems, EBM and DMLS have the capability to produce parts whose material properties can match or even exceed those manufactured by conventional process (Krishnan et al., 2013; Fachini et al., 2009). Martin Baumer found that specific build costs for EBM system is far lower than that of a DMLS system. For this reason, we choose EBM for the cost estimation.




Figure 8 Electron Beam Melting AM system (arcam.com, 2017)

Heated tungsten filament emits electrons, which is controlled by two magnetic coils called magnetic lenses. The magnetic lenses focus the electron beam to the desired point on the build platform. Fine metal powder is supplied from two hoppers in a thin layer by a rake mechanism. The beam melts the metal powder in a desired pattern as per the design file. A new powder layer is laid on the top of this and the process is repeated. This process takes place under high vacuum. After all layers are completed the build is allowed to cool down. The build is then removed and post processing is done. (Gong et al., 2014)




analysis in this study. This system is specifically designed for cost-efficient metallic parts. Its Ø350 x 380 mm build envelope allows to create large components and optimal stacking of smaller parts. Furthermore, the build chamber is designed for easy-powder handling and fast turn-around times. These qualities help Q20 plus to be one of the most favorable system in the market for industrial applications. (arcam.com, 2017)

Additional information about the system can be found in table 2 - The features of Arcam Q20 plus.

Figure 9 Electron Beam Melting system (arcam.com, 2017)

Table 2 The features of Arcam Q20 plus (arcam.com, 2017)


Arcam AB

System Model

Arcam Q20plus

Beam Type

Electron Beam

Beam Power

3 kW

Build Material

Ti6Al4V Titanium Alloy

Nominal Build Volume

Ø350×380 mm



The CAD designs of the case studies were converted to STL files with necessary support structures. These files were sent to a Swedish research institute to simulate the build process in Arcam Q20 plus available at their facility. The corresponding build times of case studies are presented in Table 3 - The results of simulation.

Figure 10 Simulation of the process

Part Number Total Build Time

Part 1 32 hours

Part 2 33 hours

Part 3 41,5 hours



CBuild = (CIndirect x TBuild) + (m x PriceRaw material) + (EBuild x PriceEnergy)

CIndirect – the total indirect cost rate, measured in SEK/h,

TBuild – the estimate of Total build time,

EBuild – the estimate of energy consumption,

m – the mass of all parts including sacrificial anchor structures, PriceRaw – the price of the metal powder, measured in SEK/kg,

PriceEnergy – the electricity cost, measured in SEK/MJ. (Baumers et al., 2016)


The consolidated cost and Lead time estimations can be found in Appendix 1 and 2 respectively

3.5.1 Final results

Part Number Part 1 Part 2 Part 3

Manufacturing Cost

(SEK) 8139 8383 7438

Lead Time (Days) 2 2 3



Figure 11 Cost comparison

Figure 12 Lead time comparison

Comparing the costs of manufacturing the part through traditional and additive processes, it is evident that using AM to manufacture these parts will prove to be cost inefficient. However, with respect to lead times, the time taken to manufacture these parts through AM is only a fraction of what it could take through traditional processes. Regarding the mechanical properties of the parts made through AM, several literatures show that a static and fatigue properties of steel grades, aluminium alloys and titanium alloys manufactured by AM techniques generally meet or even exceed those cast or wrought counterparts. (Herzog, 2016) Furthermore, it is interesting to note that the cost difference reduces as a design complexity of the part increases. In this case we can conclude that it would not be a cost-effective decision to manufacture these parts

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Part 1 Part 2 Part 3

2424 1150 364 8139 8383 7438


Traditional Manufacturing Process Additive Manufacturing Process

0 20 40 60 80 100

Part 1 Part 2 Part 3




2 2 3


Traditional Manufacturing Process Additive Manufacturing Process









Adoption of AM helps firms to attain value chains which are shorter, smaller, more localised, more collaborative and with significant sustainability benefits. Additive manufacturing being fundamentally less wasteful than traditional subtractive production processes can help to decouple social and economic value creation from the environmental impact on business activities. The major sustainability benefits of adopting AM are,

• Improved resource efficiency: redesigning of manufacturing processes and products for AM can help better resource usage in production and use phases; • Extended product life: through better sustainable approaches to repair,

remanufacture and refurbishment;

• Reconfigured value chains: shorter and simpler supply chains with more localized production and innovative distribution models.

Adoption of AM has a great impact on sustainability in the company. To better understand this, the effects can be discussed across the four stages of product life cycle as in Fig.13 namely product in process design, material input processing, make to order component and product manufacturing and closing the loop. (Ford and Despeiise, 2016)


31 4.1.1 Design for Additive Manufacturing (DfAM)

Similar to Design for Manufacturing (DfM), which holds guidelines to ensure designs which eliminate manufacturing difficulties and minimize costs. DfAM helps designs to take advantages of capabilities of AM technologies. The objective of DfAM can be defined as “Maximize product performance through the synthesis of shapes, hierarchical structures, and material compositions, subject to the capabilities of AM technologies”.

AM provides unique design opportunities and freedoms. It is important to take advantage of this when designing a part that is to be manufactured through an AM technique. In general, parts which can be manufactured economically using traditional manufacturing processes should probably not be produced using AM. Alternatively, it is efficient to consider parts which have complex geometries, low production volumes, special characteristics, opportunity for part consolidation or a combination of these characteristics for AM processes.

The major capabilities of AM are:

• Shape complexity: which is the possibility to build virtually any shape with customized geometry and shape customization.

• Material complexity: which is the possibility to manufacture parts with complex material compositions and property gradients.

• Hierarchical complexity: which is the possibility to manufacture parts with multi-scale features.

• Functional complexity: which is the possibility to manufacture parts with inbuilt functionality”. (Rosen, 2014)


32 Cellular material

Another important advantage provided by AM’s geometric complexity capability is the choice of cellular material. These are materials which contain voids such as honeycombs, foams or lattice structures. Parts manufactured with cellular materials have high strength with relatively low mass. Moreover. They provide better energy absorption characteristics and good thermal and acoustic insulation properties. (Gibson and Ashby, 1997)

It is important to adopt standards for design guide lines for AM to make it easier for organisations to adopt AM technologies and take advantage of its design freedoms. Various international committees such as ASTM and ISO pursue to define such standard. (Rosen, 2014) Consolidation of parts

Consolidation of components into single product can have various benefits such as reduced inventory complexity, removal of assembly steps and might even help to reduce the organisation’s supplier base. Consolidation of parts simplifies supply chain networks and this in turn can help organisations to be more agile and resilient against distructions. (Mohr and Khan, 2015)

Consolidation of parts can also have numerous benefits for downstream activities such as assembly time, repair time, shop floor complexity, part inventory, reduced tooling. These advantages lead to cost savings throughout the life of the product”. (Rosen, 2014)

4.1.2 Product and process design

Due to the freedom of shape and geometry in AM, it is possible to design more complex and better optimized parts which have simpler assemblies with fewer parts. Design freedoms of AM helps to create novel material structures such as porous mesh arrays and open cellular forms. Adoption of these in component design can help improve features such as strength, stiffness, etc. (Guo and Leu, 2013)



et al., 2010). A well-known example where additive manufacturing was used to redesign its part is GE for its LEAP engine. GE managed to redesign and manufacture its fuel nozzle through AM which is five time stronger, has better combustion efficiency and 25% weight reduction. Furthermore, it was able to consolidate its parts from twenty separate components into single component. A major challenge here is to educate designers and engineers of the possible uses and benefits of AM adoption and to support skill development in design for AM. Furthermore, being a new technology further research is required in terms of certifying new parts manufactured through AM. Similar to design improvements AM can also help to design better production processes. Adoption of AM in manufacturing of tooling systems can help to make production processes more energy and resource efficient. (Chen et al., 2015) Finish company Salcomp managed to redesign the vent structure of the molds in its injection molding systems to improve heat dissipation. It helped to reduce the cooling time by over 40 % which in turn let to increase production output.

4.1.3 Material input processing



4.1.4 Make-to-order components and product manufacturing

The economics of AM has a great impact on manufacturing of products. AM makes it economical to adopt make-to-order policy in component and product manufacturing. It also helps to have lower costs in customization of parts. Traditionally, most organisations maintain an inventory of spare parts. This can be costly and future demand is uncertain. Producing spare parts on demand using traditional manufacturing techniques can prove to be expensive. AM can make such on demand production of spare parts to be more cost effective. Siemens Power Generation Services, for example, is shifting towards make-to-order of its spare parts. By using DMLS technology, Siemens PGS has been able to redesign its burners. This has led to a tenfold reduction in its repair time, reduction in waste generated and increased easiness in design upgradation. Adoption of AM can help businesses to manufacture spare parts on demand and closer to the customer location. (Ford and Despeisse, 2016) Furthermore, it can help to reduce or eliminate inventories which in turn help to reduce economic losses and environmental impact due to unsold or obsolete components (Chen et al., 2015).

4.1.5 Closing the loop

AM can be utilized in many ways in the closing the loop stage of product lifecycle. One of the easiest ways being the recycling of unused AM material at the end of the process. For example, it is estimated that 95 to 98% of metal powders can be recycled. (Petrovic et al., 2011)



technique possess a high potential in areas of remanufacturing and repair of high value products. (Ford, Despeisse, 2016)


Additive manufacturing has come a long way from its initial applications in prototyping to play a crucial role in product lines and production approaches. In many cases AM is used less in creating new products than in improving supply chain capabilities or even in a waiting across a whole supply chain. (deloitte.com, 2017)

The effect of adoption of AM on supply chain can be looked from two perspectives: • Monitory cost perspective

• Resource consumption perspective.

The cost perspective explores the effects of AM on supply chain in terms of monitory value while the resource perspective explores the time, labor and national resources used in the manufacturing, usage and disposal of the product.

4.2.1 Monitory Cost Perspective

Costs of production can be classified in two ways:

1. “Well-structured” costs which include labor, material and machine costs.

2. “Ill-structured” costs which are associated with build failure, machine setup and inventory. (Thomas, 2015)



difference between AM and conventional manufacturing processes it is crucial to examine the costs right from raw material extraction to production and sale of the final product. This can be represented as:



CAM – the cost of producing an additive manufactured product,

MI – the cost of material inventory for refining raw materials (R) and for manufacturing (M) for additive manufacturing (AM),

P – cost of the process of material extraction (E), refining raw material (R), and manufacturing (M), incrusts machine costs, and other relevant costs for additive manufacturing (AM),

FGI – the cost of finished goods inventory for material extraction (E), refining raw material (R), and manufacturing (M) for additive manufacturing (AM),

WTAM – the cost of wholesale trade for additive manufacturing (AM),

RTAM – the cost of retail trade for additive manufacturing (AM),

TAM – the transportation cost throughout the supply chain for an additive manufactured

product (AM).

However, it is important to understand that this is a theoretical representation purely for the purpose of understanding the hidden costs involved in manufacturing processes. This is just a cost perspective and unlike the cost model mentioned in the section 3.4 cannot be used to calculate the manufacturing cost.

These costs can be compared to that of traditional manufacturing, which can be presented as:

CTrad = (MIR, Trad + MIM,Trad + MIA,Trad) + (PE,Trad + PR,Trad + PI,Trad + PA, Trad) + (FGIE,Trad +

FGIR,Trad + FGII,Trad + FGIA,Trad) + WTTrad + RTTrad + TTrad

CTrad – the cost of producing a product using traditional processes (Trad),

MI – the cost of material inventory for refining raw materials (R), producing intermediate goods (I), and assemble (A) for traditional manufacturing (Trad),



machine costs, and other relevant costs for traditional manufacturing,

FGI – the cost of finished goods inventory for material extraction (E), refining raw material (R), and producing intermediate goods (I), and assemble (A) for traditional manufacturing (Trad),

WTTrad – the cost of wholesale trade for traditional manufacturing (Trad),

RTTrad – the cost of retail trade for traditional manufacturing (Trad),

TTrad – the transportation cost throughout the supply chain for a product made using

traditional manufacturing (Trad). (Thomas, 2015)

It is also vital to understand that AM might have significant cost saving benefits when examined in an assembled product. This is because traditional manufacturing often involves various intermediate products which are transported and assembled unlike AM which can create an assembly in a single build. Good analogy would be an engine which when traditionally made has parts manufactured and shipped for assembly from different locations with each location having its own manufacturing side, inventory, personal, logistics infrastructure etc. AM has a possibility of producing the entire engine in one build. It can further aid in making an engine with lesser material, more efficient operation and a longer life, due to its flexibility in design when compared to traditional manufacturing. It might not be possible to capture many of these benefits using previously mentioned costs model. It is important to use cradle-to-grave analysis to understand and quantify these benefits. Breaking down the costs involved in supply chain can help better understand effects of AM. Unfortunately, collection and assessment of these costs for the specific part can be difficult and expensive, but these are the costs that AM may impact.

4.2.2 Resource consumption perspective



resource utilization. Thus, the total advantage of AM can be understood by exploring the difference in use of resources (land, labor and time) during the production, utilization and disposal along with the utility of the product compared with that of traditional manufacturing techniques. This can be better explained by equation below. (Thomas, 2015)

TAL = (LAM,P + LAM,U + LAM,D) – (LT,P + LT,U + LT,D)


TAT = (TAM,P + TAM,U + TAM,D) – (TT,P + TT,U + TT,D)

TAU = U(PAM) – U(PT)

TA – the total advantage of additive manufacturing compared to traditional methods for land (L), labor (LB), time (T), and utility of the product (U)

L - the land or natural resources needed using additive manufacturing processes (AM) or traditional methods (T) for production (P), utilization (U), and disposal (D) of the product

LB - the labor hours per hour needed using additive manufacturing processes (AM) or traditional methods (T) for production (P), utilization (U), and disposal (D) of the product T - the time needed using additive manufacturing processes (AM) or traditional methods (T) for production (P), utilization (U), and disposal (D) of the product

U(PAM) - the utility of a product manufactured using additive manufacturing processes,

including the utility gained from increased abilities, enhancements, and useful life. U(PT)- the utility of a product manufactured using traditional processes, including the

utility gained from increased abilities, enhancements, and useful life.



of monitory and resource values. Also, it might be difficult and expensive track and compare these costs through the entire supply chain. It is vital to understand that an exhaustive understanding of these components is necessary while examining the issue (Thomas, 2015).

Figure 14 Material supply chain for motor vehicle steering and suspension component (Thomas, 2015)

Unlike traditional tooled manufacturing processes which is limited to huge centralized manufacturing sites, the adoption of AM can reduce the significance of such economies of scale and help to decentralized the manufacturing to points of consumption. (D’Aveni, 2013)

Adoption of AM can have specific benefits on the supply- side or demand- side of an organization depending on the type of supply chain chosen. Organisation can opt to adopt either centralised or decentralized supply chain when adopting AM. Centralised supply chain has more effects on the upstream or supply- side of the supply chain and decentralized supply chain has more effects on downstream or demand- side of the



supply chain. Centralised supply chain can be favourable when logistic costs are low and decentralised when logistic costs are high. In the centralized supply chain adoption of AM helps organisations to reach higher level of vertical integration while decentralized supply chain helps to achieve close proximity to customers. (Oettmeier and Hofmann, 2016) It is important for organisations to understand the benefits and challenges of adoption centralised or decentralized supply chain. Figures 15, 16 and 17 show the schematic of different types of supply chain.

Figure 15 Supply chain in traditional manufacturing (Oettmeier and Hofmann, 2016)



Figure 17 Decentralised supply chain in additive manufacturing (Oettmeier and Hofmann, 2016)

In the supply chain of the traditional manufacturing, organization procures raw materials and parts from numerous suppliers to produce a product. In this case customizing the products with the respect to changes in customer needs can prove to be time consuming and expensive. This is mainly due to the involvement of various suppliers and tooling costs. In the case of centralized supply chain in AM, the organization procures raw materials or small parts from fewer suppliers. AM’s ability to manufacture parts with inbuilt functionality helps to reduce sub-assembly activities and simplify manufacturing steps. This in turn helps to lower transportation. In decentralized supply chain in AM, production is moved closer to customers. AM helps to improve customization of products with changing customer needs without increased lead times. (Oettmeier and Hofmann, 2016)

4.2.3 Lead Time Benefits



lead time can help to prevent this. Long lead time can result in over or under production and inaccurate inventory levels. This is due to the fact that long lead time magnifies a bullwhip effect. Furthermore, reduction in lead time makes it easier to plan operational activities and helps improve cash flow by reducing the tie up of capital in physical resources. (Magnusson and Simonsson, 2012)


“Economies of scale is the cost advantage that arises with increased output of a product” (investopedia.com, 2017).

Economies of scale forms a central feature when it comes to traditional mass manufacturing approaches. However, AM technologies do not exhibit this feature. This portrays AM as a technology that can operate without having to increase its output in order to decrease its manufacturing costs. (Pine, 1993)

A significant portion of the cost structure of conventional manufacturing processes is made up of tooling expenses, which is amortized over the production runs (Ruffo et al., 2007, Atzeni et al., 2012).

Due to the fact that AM processes do not require tooling cutting implements, moulds or dies, economies of scale do not exist for the process. However, it is expected that future improvements in AM technology might give rise to economies of scale. One such improvement would be an increase of available build volume, which will result in lowering of the average costs as some of the fixed process steps such as warm-up or cool-down can be amortized over the larger build volume. (Baumers et al., 2014) Furthermore, developments in AM processes aim to improve productivity by making the build process more continuous or even have multiple depositions. Thus, it is vital to understand that economies of scale in AM is possible with increased throughput or physical scaling-up. Hence, it is hasty to assume that AM processes have the disadvantages when it comes to high volume production. Moreover, adoption of AM leads to significant reduction of front-end fixed costs related to introductions of new products which in turn helps to promote product innovation.



considering the type of product that it wishes to produce. For parts that are produced in large volumes, companies can take advantage of economies of scale offered by traditional manufacturing processes. But in case of parts that are produced low volumes, highly customized and have complex features, companies can take advantage of economies of one offered by AM techniques. (Petrick and Simpson 2013)


Although, AM has numerous advantages which organisations can benefit from, it is vital to understand these benefits come with associated challenges or risks. Some of the major challenges of adopting AM are:

1. Lack of material variety. 2. Intellectual property issues.

3. Shortfall of skilled designers and engineers in AM. 4. Need for post processing of AM parts.

5. Further developments needed in standards and regulations for AM process and parts.

6. While making supply chains more agile and reducing logistic costs, adoption of AM runs the risk of increased manufacturing costs and the absence of economies of scale.

7. Though supply chain complexity decreases, adoption of AM will require complex testing and quality assurance processes, which in turn leads to complexity in downstream supply chain.

8. In cases of advanced applications, AM processes still need improvements in terms of quality and accuracy.

9. Uncertainty in future technical developments of AM creates a financial risk of investment (Mohr and Khan, 2015).



In general, business model describes the company’s logic of creating and capturing value. On a more detailed level. Business model refers to “a system of interdependent activities within and across organizational boundaries that enable the organization and its partners to create value and capture part of that value”. (Zott and Amit, 2010) Unlike some new technologies which can be implemented with the same existing business models, AM technologies being disruptive need reshaping or reinvention of the current business model to be able to capture its value (Chesbrough, 2010).




The department deals with customized products. This means the production volume is low and the product design is highly variable. Producing these parts through the conventional manufacturing methods have high lead times for low quantities. Due to this, the company is looking for other manufacturing techniques which can help in reducing the lead times.

This study considers AM as one technology to help in reducing the lead times. From the cost and lead time calculations, it can be concluded that AM can greatly reduce the lead time taken to manufacture a part. However, the production costs involved in AM are considered to be higher than those of conventional manufacturing processes. This cost difference can be justified by the huge reduction in the lead times. Scania can take advantage of this lead time reduction by adopting AM.


It is often complicated for companies to choose how to deploy AM across their businesses. Deloitte has come up with four strategic paths that companies can take when adopting AM in their products and/or supply chain. The framework for understanding these paths and their value is shown in figure 18 - Framework for AM paths and value.

Path I: This is for companies which seek to use AM to improve the value delivery for their products within the already existing supply chain. These companies do not pursue profound changes in their supply chain or products.

Path II: This is for companies which seek supply chain transformation through the adoption of AM. Adopting this path helps companies with supply chain evolution by increasing the responsiveness and flexibility, reduction in required inventory, supply chain decentralization to mention a few.

Path III: This is for companies which seek to achieve better performance or innovation in their products. Adopting this path helps in product customization, increased product functionality, better market responsiveness etc.



Figure 18 Framework for AM paths and value (DUPress.com, 2017)

It would be crucial for Scania to take into the consideration the above-mentioned steps before adoption AM. Each of the paths come with its own benefits and limitations. Scania can adopt a path based on its needs. Furthermore, for the purpose of cost calculations Scania should select parts which have the potential to take advantage of AM capabilities. Few such characteristics are parts which need customization, parts with increased functionality through design optimization and parts of low volume. DfAM techniques can be used to make such parts more suitable for AM. It would be beneficial for Scania to include AM skill developments in its organization. This will make it easier for future AM adoption in Scania.




in high total expenditure. To overcome this, it is important that the deposition rate of AM systems should be improved closer to those of conventional manufacturing processes. The costs of AM systems might not be of primary importance, as long as the systems deposition rates are high enough to amortise the machine costs. (Baumers et al., 2016) Furthermore, increasing the dimensions of the available build volume can lead to a lower part costs. This is due to the fact that certain fixed process elements such as warm up and cool down can be amortised over the larger build volume. (Baumers et al., 2014) Thus, future improvements in deposition rate and build volume size will have the greatest effect on reducing part costs. This also shows that economies of scale can be achieved in AM processes by increasing machine throughput.

Although developments in materials can help in the wide spread use of AM, other aspects of AM which are the subject of research on the global scale are,

• Process speed;

• Dimensional accuracy; • Surface finish;

• Repeatability.

Although improvements in these aspects have come a long way from AM being rapid prototyping technology, further improvements can help make AM equally attractive as conventional manufacturing processes. Furthermore, many manufacturers are able to cope with current system limitations to their advantage. (Ruffo et al., 2006)

Adoption of AM can bring a future where: “The factories of the future will be more

varied, and more distributed than those of today […] The production landscape will include capital intensive super factories producing complex products; reconfigurable units integrated with the fluid requirements of their supply chain partners; and local, mobile and domestic production sites for some products. Urban sites will become common as factories reduce their environmental impacts. The factory of the future may be at the bedside, in the home, in the field, in the office and on the battlefield” (BIS,

2013). Furthermore, the supply chain networks become one where “logistics may be






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7 Appendix 1

Appendix 1 – Cost calculation



8 Appendix 2

Appendix 2 – Lead time calculation

Build Time (hrs) Post Processing (hrs)

Quality control (hrs)

Internal Logistics (hrs)

Total Lead Time (Days)

32 1 1 4 2

33 1 1 4 2

41,5 1 1 4 3

Part Number

Total Lead Time (Days)


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