From the few to the many: swarm economics

With 3D printing, the distributed production economy can alleviate structural imbalances, injustices and diseconomies, if we manage with foresight.

Olaf Groth Mark Esposito Terence Tse
6 November 2014
Miniature human face models made through 3D Printing.

Miniature human face models made through 3D Printing. Wikimedia/S Zillayali. Some rights reserved.We’re seeing a shift in how goods and services are consumed. Driven by the global move towards sustainability, fewer businesses and consumers feel the need to individually purchase, own, and maintain various material assets. From Netjets to AirBnB and Zipcar to Buzzcar, US and European consumers have been flocking toward the “Sharing Economy.”

With the advent of 3D manufacturing—sophisticated printers that add layers-upon-layers of different types of print material to construct anything from rubber ducks to automobiles— the supply side, too, will shift—goods will no longer be designed, made, and distributed from the top down. Over the next 20 years we will see the widespread adoption of 3D manufacturing.

The implications for supply chains and manufacturing are far-reaching—properly realized, 3D manufacturing has the potential to create more parity among economies and to alleviate structural imbalances.

Currently, where global mass manufacturing is located is often determined by the cost of a country's labor force. That can become a zero sum rivalry between winners and losers. The labor winners who are growing their share of manufacturing labor, such as China, have developed economies with low labor costs and the ability to produce on a mass scale. By contrast, manufacturing labor in industrialized countries is often more expensive and gets reduced, which also makes it harder to further evolve manufacturing competitiveness. Then, in winning countries wages rise and mass manufacturers often move on to the next low-cost market.

3D manufacturing has the potential to equalize this tension somewhat. Local 3D printing, or additive manufacturing, reduces some of the other costs in manufacturing value chains, such as logistics and transportation of finished goods, because production can become more localized and immediate. Social networks and SAAS-based data analytics could also help reduce the singular reliance on large corporations to provide co-working infrastructure and trust mechanisms that carry a lot of administrative overhead.

The cost of the printers are also continuing to fall, making one-offs and small runs affordable and allowing more consumers access to obtain control and instant gratification in a decentralized and distributed manufacturing process.[1] And people won’t need to be experts to do this—they will depend on the help of developers, hobbyists, hackers, and other consumers to create designs for new products. These manufacturing communities will hold most of the critical assets for experimentation and production. 

This type of agile and loosely structured cooperative will lead to new ventures, with new behaviors of production and new ways of minimizing transaction cost—a phenomenon we’ve dubbed “Swarm Economics.” Disparate and diverse sets of producer-consumers will come together in forums online, responding to each others’ needs, offering ideas, designs, materials and reciprocal services to each other. They will form in small or large groups on an ad hoc, irregular basis, depending on the needs in question. They will pay, barter, and trade in currency, know-how, assets, and channels. 

At the heart of these groups and Swarm Economics is 3D manufacturing. With 3D manufacturing, entrepreneurs have the opportunity to develop new applications and business models, businesses can manufacture spare parts on an as-needed basis, and companies can harness 3D printing technology as a way to on-shore long lost manufacturing jobs. Managers need to harvest these groups within their own ecosystem. In order to do so, managers must provide value to the swarm. They can do so by creating stability where many questions remain around 3D manufacturing and the Makers’ / DIY movement, from environmental to safety to labor regulations. To answer these questions, company leaders can become stewards of 3D manufacturing by supplementing traditional manufacturing with experimentation and learning from 3D printing—for instance, how to best utilize its capabilities and under which circumstances that are least damaging to workers and the environment.

How to prepare: recommendations for executives

3D manufacturing is undoubtedly the future—the opportunities in cost savings and customizable products are hard to ignore. However, possible risks must also be considered. For instance, current 3D printers have high energy consumption and pose health risks from airborne particle emissions.[2] Better printer design and reduction of dependence on plastics are areas for improvement. To benefit from 3D manufacturing and triumph over traditional manufacturing driven by cheap labor, we recommend a series of dialogues among company leadership to be better prepared to take part in this new economy:

· Exercise more detailed foresight and assess the risks and benefits of shifting enterprise activity to localized 3D manufacturing, including accounting and tax implications. Assess areas where 3D manufacturing might enhance existing manufacturing processes or create new market opportunities.

· Collect data on 3D printers and craft blueprints for health, safety, liability, and labor regulations for a new distributed manufacturing paradigm. Without regulations in place, the advantages of 3D manufacturing may be undercut by institutional fears of associated dangers. The knowledge an enterprise can provide can assuage concerns and accelerate adoption of 3D manufacturing.

· Evaluate human capital needs. Create programs to train software and hardware technicians to operate 3D printers and train employees in the existing supply chain to support 3D manufacturing needs, including sourcing raw materials. Analysis of how local cooperatives can become an asset and what they mean for social cohesion and local socio-economic development will also support the decentralizing of mass manufacturing.

· Develop corporate strategies that take account of the collapse of the value chain. Assess how existing vendors, distributors, and retailers might be affected, and how they might also be able to assist in a 3D manufacturing process. For instance, might retailers themselves be both the point of sale and the point of 3D manufacturing?

With 3D printing, the distributed production economy can alleviate structural imbalances, injustices and diseconomies, if we manage with foresight.

"Swarm Economics" was first published in The European Business Review, Sept/Oct 2014.

[1] Pascal-Emmanuel Gobry, “The Next Trillion Dollar Industry: 3D Printing,” Business Insider

[2] Lindsey Gilpin, “The Dark Side of 3D Printing: 10 Things to Watch,” Tech Republic

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