3D Printing: Edge Manufacturing - Executive Overview

Pepperwood Partners© All Rights Reserved March 2013 Page 1

3D PRINTINGEDGE

MANUFACTURINGby Chris Norman

and Patrick Seaman

March 2013

STRATEGIC WHITE PAPERSTRATEGIC

WHITE PAPER

TAKEAWAYS

• Will change what we make and how we make it

• Will Redefine The Supply Chain

• New solution for both new products and parts as well as new option to support legacy infrastructure


Topics in this White Paper

3D Printing / Additive Mfg 3

3D Design becomes real 4

Real Parts & Products 5

Example: Laser Sintering 6

Enter: 3D Printing 7

Industries using 3D Printing 8

Edge Manufacturing 9

Example: Consumer Goods10

3D Printing “Sweet Spot” 11

Industrial 3D Printing

14

Example: Industrial Scenario

15

Solution: Edge Manufacturing

16

Global Market

19

Example: Military Scenario

20

Edge Manufacturing Profile: Kraftwurx

21

Summary & Conclusions

23

About the Authors

25

3D Printing News Stories & Quotes

27

About Pepperwood Partners

31


3D Printing / Additive Mfg

Additive Fabrication / Additive Manufacturing or, as it has become popularly known, 3D Printing, recreates an object layer-by-layer. Using a 3-dimensional digital model (CAD model) as the “blueprint,” successive layers of material are precisely deposited or fused by a computer controlled “printer” into the desired 3 dimensional shape.

3D Printing / Additive Manufacturing

– one layer at a time


3D Designs become Physical Objects

3D Design becomes real

3D Printing is a process of making three dimensional solid objects from a digital model. The technology is used in almost every industry to create parts and products.


Real Parts & Products

(left to right) Aircraft duct for Boeing 777, Turbine Parts, and Turbine Fuel Injector Ring

(left to right) Lightweight aircraft door hinge, Knee implant and 10kt White Gold Jewelry


Wikipedia Commons

Example: Laser Sintering

Laser sintering uses a high power laser(s) to fuse small particles of plastic, metal, ceramic, or glass powders into the desired three-dimensional shape.


Enter: 3D Printing

Today’s 3D Printing technologies make use of a wide variety of materials including plastics, metals, ceramics and even biological materials. Some companies are experimenting with composite materials such as combining plastic and cellulose for a wood-like result. By using multiple print heads, different materials can be fused or deposited at different stages, changing the characteristics of the object.

3D Printed Turbine Engine (© Kraftwurx)


Source: http://wohlersassociates.com/2012report.htm

Source: 2012 Wohler’s Report

Industries using 3D Printing


Edge Manufacturing

On the Internet, servers are located “on the edge” so that they are closest to the end-user, with the least delay of service. Edge Manufacturing does the same, using Digital Manufacturing to reduce costs, delivery times and only make what is needed, when it is needed.

Edge Manufacturing is an evolution of the supply chain model, where Manufacturing-On-Demand bureaus, such as those employing 3D Printing, are called upon to manufacture an item due to their proximity to the destination / customer. The ramifications of Edge Manufacturing are enormous.

It will affect the global economy in ways that corporations and governments cannot yet fully understand.


Example: Consumer Goods

For example:

The design for an item originates in Texas and is showcased on the internet. A customer in Australia browses and buys the product. While the design for the item is in the USA, the item is Edge Manufactured in Australia, so there are no USA sales taxes, international shipping, or import/customs duties.

Suddenly, the US company is competitive in Australia.


3D-Printing “Sweet Spot”

Traditional manufacturing reaches economies of scale with large numbers of items produced. 3D Printing has a mostly uniform production cost.

Cost

Volume ( # of Units)

“Sweet Spot” for 3D Printing

3D Printing

Traditional Manufacturing


Cost

Customizability

3D Printing allows for customizability and complexity to increase independently of cost.

3D Printing eliminates the need for inventory and leverages on-demand manufacturing and mass customization.

Traditional Manufacturing

3D Printing




Co

st

Volume ( # of Units)

Current

Long-Term Future

Near-Term

Traditional Manufacturing 3D Printing

3D Printing

3D Printing

3D Printing manufacturing costs will gradually decline, but (mostly) remain uniform.


Industrial 3D Printing

In the US and Europe, many 3D Printing

bureaus have been operating the

technology for as long as 20 years

On Industrial 3D Printed Parts and Items:


Example: Industrial Scenario

Suppose a refinery or industrial complex has a

broken valve or other critical part. Further

suppose that this part is no longer being

manufactured, and the original manufacturer is no longer in business.

An on-site engineer takes photos, makes some drawings and sends these to an

engineering firm, where another engineer

interprets the drawings and designs a replacement.

Weeks later, a replacement is

constructed via casting, milling or other

traditional method and, often weeks later,

shipped to the location, often going through

Customs (with possible delays), across borders

or from overseas.


Replacement part is designed, anywhere in

the world

An on-site engineer uploads

drawings/photos (or his own 3D Design)

to the Cloud

Network automatically locates closest Edge Manufacturers to

the delivery location and bids for best deal

“Winning” Certified manufacturer

3D Prints the part

Locally 3D Printed part, is immediately delivered to nearby customer without delay

by shipping or customs

Immediately & On-Demand:

Site is operational and

productive again quickly


This example uses the patented Kraftwurx

Edge Manufacturing Network


Ultimate Green: Little to no waste, uses less power

Made local – Not shipped or trucked

from distant manufacturers

On demand – only make what is needed, just in

time



Skilled Labor

What used to require a highly skilled operator with a deep background in many complex methods and techniques to machine, lathe, mill, etc., has been replaced by a computer controlled machine. Once the 3D Design is loaded into the fabricator’s memory, the machine makes the item the same way, every time.

Removing the need for skilled labor to operate the machine, removes much of the barrier to produce that item at affordable price points.



Global Market


Global GDP ( USD

)

~ 70 Trillion USD

Global

Manufacturing

Value Added ( %

of GDP) 16% =

~ 12 Trillion USD

3D Printing

Market

Penetration (%)

~10% = ~ 1.2

Trillion USD



Example: Military Scenario

Imagine that an Army tank breaks down and the nearest replacement part is misfiled at a supply depot, located somewhere in an endless sea of shipping containers. The next closest replacement part is thousands of miles away.

An Edge Manufacturing network could analyze the part, its destination, materials, and other factors required to produce the part and find an appropriate facility and deliver it within days instead of weeks or months.

The army is now deploying helicopter-delivered mobile fabrication labs, called equipped with 3D printers, computer-assisted milling machines, and laser, plasma, and water cutters. Parts can be made of plastic, steel, and aluminum..


Kraftwurx CEO Chris Norman:

“We produce everything as close to the customer as possible, often in the same city or state. This reduces waste and shipping, which also gives Kraftwurx a low carbon footprint.

With our growing network of more than 110+ Smart Grid™ production facilities worldwide, Kraftwurx is establishing the new standard for socially responsible, environmentally friendly Edge Manufacturing.”



Kraftwurx CEO Chris Norman:

“Kraftwurx uses EDGE manufacturing methodology and JIT or Just-In-Time manufacturing. An Edge manufacturing network attempts to place the orders as close to the consumer as possible. It is a distributed manufacturing model.

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110+ Smart Grid™ production facilities worldwide


Products produced on Kraftwurx are produced at more than 110 discrete manufacturing facilities located around the world. Facilities are in Germany, the UK, Canada, the USA, Singapore, Thailand, Russia, Japan, Australia and New Zealand. Kraftwurx has more than 500,000 sf of manufacturing floor split between the more than 110 facilities.”


Kraftwurx’s Digital Factory Provides:

1. Load Balancing-Using AI to make determinations about where and how to send orders to optimize output2. Location analysis & Determination: Finding the best location for output based on many factors typical in manufacturing3. Part Design analysis and quality checks: Ensuring that the model to be produced can be produced, will be suitably strong and durable for its purpose4. Material Optimization: Making sure the best materials are chosen for the design intent5. Design Intent analysis: Ensuring that the part is optimized including FEA analysis(will it break)6. Nesting of parts: In a load-balanced system, ensuring optimum production scheduling7. Global SmartGrid™




★ 3D Printed parts can be made to be as strong, or stronger, than parts made via traditional manufacturing methods

★ Parts can be made in hours or days, compared to weeks or even months with traditional methods, with cost savings up to 10x or more

★ The finished 3D Printed product, such as aviation components, can be up to 60% lighter, compared to traditionally machined part

★ Can be complete one-piece item, without need for welds or fasteners

★ 3D Printing does not require the tooling, setup and experienced and skilled labor that traditional manufacturing methods require

★ Can build new classes of items with complex geometries that are not possible with traditional methods

★ The time to take a digital design from concept to production is dropping, with some estimates it will drop another 50%-80%



3D Printing and Edge Manufacturing will change what we make and

how we make it.

Whether the need is for:★A new and possibly highly customized part or product

★Or, just a relatively small number of them

★Or, you need to support legacy infrastructure with quick replacement of no-longer-being-made parts

★Or, you need a product with complex features or geometries traditional manufacturing cannot make

★Or, you simply cannot wait for the longer traditional manufacturing cycle, and shipping and even customs or similar delays

Edge Manufacturing fundamentally changes the equation.


About the Authors

Chris Norman is CEO of Kraftwurx and Digital Reality, the first and only B2B & B2C mass-customization system for 3D Printing. Mr. Norman is a member of the Direct Digital Manufacturing sub-committee to the Society of Manufacturing Engineers and 16 year member of SME. Mr. Norman earned his MBA in Technology Management from the University of Phoenix and a BS in Manufacturing Engineering from Texas A&M University. Contact Chris at [email protected], and www.linkedin.com/pub/chris-norman/b/7b0/b12.


About the Authors

Patrick Seaman is Chief Technology Advisor to Pepperwood Partners and COO of the social publishing platform company WhichBox Media. Seaman is the former COO of the video eCommerce company Cinsay, and former Director of Technology at Broadcast.com. Patrick serves on the Advisory Board of Kraftwurx Inc, and Qples, Inc. and on the University of Texas at Dallas School of Natural Sciences & Mathematics Advisory Council, and is an IEEE member. Contact Patrick at [email protected], [email protected] and www.linkedin.com/in/patrickseaman/.


Is this “the PC all over again?” Machines that turn digitalobjects (bits) into physical objects are “Pioneering a whole new way of making things – one that could rewrite the rules of manufacturing in much the same way that the PC laid waste to traditional computing”– The Economist

“3D printing is going to be a huge industry because it's much more efficient than traditional manufacturing. The main reason is that the current way to manufacture things is to chip away at a block or sheets of raw material, whereas 3D printing adds raw material as needed. Current manufacturing processes create as much as 90% waste.”– Business Insider

3D Printing News


“Honestly, I think that 3D Printing will grow to

become the biggest, the most important, the most strategic manufacturing

technology ever,” – Terry Wohlers, President

Wohler’s Inc.

“Why I left Wired Magazine –

3D Printing Will Be Bigger Than The

Web.”– Chris Anderson

former Wired Magazine

Editor in Chief

3D Printing News


“This institute will help make sure that the manufacturing jobs of tomorrow take root not in places like China or India, but right here in the United States of America. That’s how we’ll put more people back to work and build an economy that lasts.” – President Barack Obama on the investment into National Additive Manufacturing InnovationInstitute (NAMII)

The Obama Administration

invested $1 billion for the National Network

for Manufacturing Innovation (NNMI) to

accelerate research for 3D Printing and to create a national

network of 15 innovation hubs

3D Printing News


“We may not fully realize it yet, but we are at the dawn of the next Industrial Revolution with 3D Printing. It has the potential to fundamentally disrupt how complex products like jet engines are designed and made in the future” -Michael Idelchik, VP Advanced TechnologiesGE Global Research

General Electric (GE) Aviation

purchased Morris Technologies, one of the largest 3D

Printing companies that manufactures direct parts with

metal

3D Printing News


About Pepperwood Partners

Pepperwood Partners is a boutique investment banking advisory firm headquartered in Dallas, Texas. Pepperwood provides a suite of investment banking advisory services to businesses in the technology, media, telecom, nanotechnology, energy and alternative asset sectors. With a strong focus on institutional relationships in the Russian, European, and CIS regions, Pepperwood works with businesses to achieve capitalization and growth objectives.

Two Lincoln Centre5420 LBJ Freeway, Suite 535Dallas, Texas 75240 USA+1 [email protected]

Learn more at: www.PepperwoodPartners.com