Assessing the potential of additive manufacturing for the provision of spare parts

• Author: J. Jakob Heinen,Kai Hoberg
• Date: 01 December 2019
• Published date: 01 December 2019
• DOI: http://doi.org/10.1002/joom.1054

TECHNICAL NOTE

Assessing the potential of additive manufacturing for the

provision of spare parts

J. Jakob Heinen | Kai Hoberg

Kühne Logistics University, Hamburg,

Germany

Correspondence

Kai Hoberg, Kühne Logistics University,

Großer Grasbrook 17, 20457 Hamburg,

Germany.

Email: kai.hoberg@the-klu.org.

Funding information

Open access funding enabled and organized

by Projekt DEAL.

Handling Editors: Jan Holmström,

Matthias Holweg, Benn Lawson, Frits Pil,

and Stephan Wagner

Abstract

Spare parts are a particularly interesting application for switching production

from traditional manufacturing (TM) to additive manufacturing (AM). Research

assessing AM has primarily addressed cost models centering on the production

process or the operations management of separate spare parts. By combining case

study, modeling, and design science elements, we adopt a holistic perspective and

develop a design to examine the systematic leverage of AM in spare parts opera-

tions. Contextually grounded in problems faced by a leading material handling

equipment manufacturer that is challenged by common characteristics of after-sales

operations, we engage with practice to propose a portfolio level analysis examining

the switchover share from TM to AM. Using a data set of 53,457 spare parts over

9 years, we find that up to 8% of stock keeping units (SKUs) and 2% of total units

supplied could be produced using AM, even if unit production costs are four times

those of TM. This result is driven by low demand, high fixed costs, and minimum

order quantities in TM. Finally, we present the evaluation by the case company's

management and highlight five areas of opportunity and challenge.

KEYWORDS

3D printing, additive manufacturing, portfolio level analysis, spare parts management, switchover

share

1|INTRODUCTION

Production andmanagement of spare parts are among the most

promising applications of additive manufacturing (AM, com-

monly called three-dimensional printing[3DP] in an industrial

setting), and these AM applications are progressively being

adopted across different industrial domains (Müller &

Karevska, 2016). Daimler, Volvo Construction Equipment,

and Deutsche Bahn are a few prominent examples of compa-

nies that have alreadyproduced their first spare partsusing AM

technology (Daimler, 2017; Deutsche Bahn, 2018; Volvo,

2018). With the technological advancement of AM, research

has identified the potential that this technology holds for new

supply chain solutions around spare parts operations (Walter,

Holmström, & Yrjölä, 2004). Reducing costly inventories by

systematicallyshifting spare parts to flexible AM production is

viewed as a key advantage in the application of AM for spar e

parts (D'Aveni,2018; Holmström & Gutowski, 2017; Khajavi,

Holmström,& Partanen, 2018).

In reality, firms frequently manage large portfolios of

spare parts that often consist of tens of thousands of individ-

ual stock keeping units (SKUs) (Guvenir & Erel, 1998; van

Wingerden, Basten, Dekker, & Rustenburg, 2014). This

portfolio complexity makes the detailed analysis of each part

Received: 15 May 2017 Revised: 23 July 2019 Accepted: 29 July 2019

DOI: 10.1002/joom.1054

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original

work is properly cited.

© 2019 The Authors. Journal of Operations Management published by Wiley Periodicals, Inc. on behalf of The Association for Supply Chain Management (APICS).

810 J Oper Manag. 2019;65:810–826.wileyonlinelibrary.com/journal/joom

infeasible for obtaining systematic insights into the overall

AM potential. Given the growing strategic importance of

spare parts and after-sales operations in many firms (Cohen,

Agrawal, & Agrawal, 2006; Cohen & Lee, 1990; Dennis &

Kambil, 2003; Kastalli & Van Looy, 2013), practitioners

often would like to attain an initial understanding of how

many spare parts candidates could be potentially shifted to

AM in their specific settings. In fact, a possible lever could

be generated from a comparatively small share of slow-

moving spare parts that are crucial to a firm's after-sales

strategy but that tie up significant financial and operational

resources. Reducing the risk for excessive inventory levels

and obsolescence resulting from, for instance, a lack of

demand or changes in part design and specifications can

offer great potential for reducing inventory costs without

changing existing after-sales strategies (Holmström &

Gutowski, 2017). Here, it would be important to learn how

many total units supplied would switchover from traditional

manufacturing (TM) to AM. Such insights would help man-

agers prioritize their AM efforts, understand future require-

ments for AM capabilities building, and plan their overall

operations strategy for introducing AM (Roca, Vaishnav,

Mendonca, & Morgan, 2017).

The motivation for our research came from a leading

material handling equipment manufacturer that informed us

of the challenges it faced when selecting potential spare

parts for AM. Although the company was aware of the many

opportunities that AM promises for spare parts operations,

the company found it difficult to identify and quantify the

overall potential of AM. Redesign benefits such as weight

reduction and customization do not play a role in the spare

parts portfolio of the company. Hence, the company was less

interested in individual part identification and more inter-

ested in a systematic perspective of AM along the spare parts

supply chain. Leveraging elements of design science

research, we address the challenge of the case company by

exploring and evaluating an initial solution (Holmström,

Ketokivi, & Hameri, 2009; van Aken, Chandrasekaran, &

Halman, 2016). The overarching objective is to evaluate

how the company can benefit from a one-for-one replenish-

ment solution for spare parts by a switchover from TM to

AM. Furthermore, we leverage design science to interact

with practice and gain knowledge on the operational factors

associated with the proposed switchover from TM to AM.

Other assessments currently presented in the literature

focus on the feasibility of using AM for certain part groups

based on various characteristics such as size, material, esti-

mated processing time, performance improvements, and eco-

nomic aspects (Conner et al., 2014; Klahn, Bastian, &

Meboldt, 2015; Lindemann, Reiher, Jahnke, & Koch, 2015;

Westerweel, Basten, & van Houtum, 2018). However, the

challenges of supporting strategic decisions based on a large

number of parts are generally ignored. By contrast, we

examine the share of SKUs and parts that would be econom-

ical to switchover from TM to AM, as AM cost premium

changes. Conceptually, the switchover share of the portfolio

is closely related to the switchover quantity for individual

parts proposed by Khajavi, Deng, Holmström, Puukko, and

Partanen (2018). Whereas the switchover quantity specifies

the demand level when a part is economical to switchover,

the switchover share specifies the share of SKUs that are

economical to shift to AM as production- and inventory-

related costs change. Grounded in established concepts and

models of inventory management, we aim to assess the

leverage that AM exerts on manufacturing an entire spare

parts portfolio. Using a large empirical data set, we find that

high real-world order quantities that go along with very low-

demand rates result in high inventory levels for

TM. Switching manufacturing to AM enables a significant

supply chain cost reduction for these parts. For the case

company, we also find evidence for cost-efficiency leverage.

While 8% of SKUs would be produced using AM, only 2%

of total units supplied would be manufactured using AM

technology, if AM unit production costs had a 300% cost

premium (i.e., four times the cost) compared to that for

TM. However, this switchover can reduce overall system

costs by 6.4%.

The remainder of this article is structured as follows. In

Section 2, we provide the research context, including an

introduction of the case company and an outline of our

research process. In Section 3, we use empirical data to ana-

lyze the potential leverage of AM in the spare parts supply

chain of the case company. In Section 4, we evaluate our

results, and in Section 5, we discuss our contribution.

2|RESEARCH CONTEXT

The research was carried out in close cooperation with a

leading material handling equipment manufacturer interested

in assessing the AM potential for after-sales operations. By

engaging with practice, we identify challenges and require-

ments of the case company's spare parts operations and

explore a possible solution for the adoption of AM. In addi-

tion to focus group discussions and expert interviews, we

collect data and documents provided by the case company to

obtain a complete picture of the after-sales business. Table 1

provides an overview of the field problem highlighting some

statements from our discussion.

After-sales services offer the company significant value

creation potential. Compared to its peers, the company's

clearly stated objective is to achieve leading customer ser-

vice in the after-sales business. Distributing more than

330,000 spare parts per month, it achieves a delivery readi-

ness of greater than 95% and delivery punctuality of 99.9%

HEINEN AND HOBERG 811