The hidden costs of traditional methods which stop a mechanical company from balancing the budget
3D printing or traditional methods? It has become the Hamletic doubt of all entrepreneurs who don’t want to be left behind when it comes to innovative technology, and risk being squashed by the foresight of the competition.
I was one of the first to enter the additive sector, and the information and knowledge that I have today was acquired on the field, often making mistakes.
Before I could tangibly touch the extraordinary advantages of 3D printing, I relied on this technology out of necessity: I had understood that the old machines, which my grandfather had used, and traditional production would not have been enough to increase profit margins and help me prevail over the economic crisis of 2008.
Even if you have not yet realized, just like me in the past, traditional methods are eating up your income. There are hidden costs which you daily fail to see, and which at the end of the year will play havoc with your budget and take away your profit margins.
Today I want to put a spotlight under these costs to bring them out into the open, so that you can also make a better choice for your production.
1) How much is storage costing you?
A component breaks: you do not despair because you have a warehouse full of spare parts.
But how much does it cost you to keep a warehouse?
Henry Ford would say that storage is an ‘out of date’ fashion, for the very reason that he was the first to use it and, in the end, realized that keeping storage is not economically viable.
Ford produced goods in large quantities, therefore he needed to store spare parts and unsold products somewhere: that is how the idea of storage came about.
With time however, Ford realized that storage not only cost more than what he earned but that overproduction led to manufacturing products which in the end remained unsold and were left to rot in the warehouse.
Storage is immobilized capital and requires costs also for maintenance and management.
In the book “The Real cost of Holding Inventory”, storage costs are divided in:
- Operating and Order Costs: invoicing costs, logistics (unloading and storage of goods), accounting and communication;
- Warehouse maintenance costs: the more stocks you own the more you increase insurance costs, storage, obsolescence risk and financial charges on invested capital, etc;
- Costs related to stock breakages: what if one of your mechanical components oxidizes over time? Add to this more hidden costs which will impact on your peace of mind: costs due to loss of loyalty of a dissatisfied customer and damage to your company reputation;
These are only some of the hidden costs which will weigh on your company cash and which, over time, will increase more and more.
At the end of the article I will tell you how you could reduce these costs without uprooting your production.
With a 3D printer you can produce your spare parts at the moment, on demand and in a short time
even only in 24 hours according to the size of the piece, without having to resort to a warehouse.
I am not saying you can get rid of the warehouse but you could drastically reduce the costs.
2) A black hole is eating up your profit margins more and more every year
Your automatic machines still work as they did in the past and have not given you such big problems: your cutter makes a good sound, your lathe still perfectly works objects of any shape, size and material and your planer is like new: why change?
A worrying analysis of Consulting DGM shows how:
operating costs of mechanical machinery have shot up to 9.2 billion dollars in the USA and 50 billion globally
What does that mean? That with the passing of time, manufacturing with traditional methods will cost more and more but they are costs which you don’t see now, but which silently are eating away at your profit margins.
In the end you will be asking yourself more and more often: why did I once produce X, I earned +X and today I still produce X but I earn much less? What has changed? Not only market demand changes but also production costs and unfortunately the costs of traditional methods will always be more expensive.
The mechanical sector is especially at risk.
The research by Excelsior of Unioncamere has reported very serious data concerning manpower: no more experienced staff can be found in the mechanical sector (45% of the workforce is missing on the market).
Universities are increasingly training young people to work in industry 4.0: the real future also for the mechanical sector.
there will be more and more experts of additive systems, robot and automation, rather than experts who know how to use a lathe or cutter
There is a high demand for new training for the very reason that there is an increase in automation, and industrial digitalization and a greater need for precision in the execution of the processes.
This is the unrestrainable wave of the future which is affecting many industrial sectors: instead of being unprepared, and being swept away by the wave, it is better to arm yourself and learn how to ride the change from the start.
Many companies have already done so: according to IDC estimates, 3D printing in Italy is moving like a rocket, at the end of 2019 the market has tripled reaching the value of 7.2 billion compared to 2.5 billion registered in 2015.
I, Ivano Corsini, am contributing to spread 3D printing for only steel for mechanical applications in Italy, ending up on national newspapers (Sole 24 ore, Tom’s Hardware, Hardware Upgrade, Affari Italiani ecc.), National TV (SkyTG24) and international magazine (Industria Automation India), but this is not enough.
What can you do to approach 3D printing and know more about how to exploit this technology to speed up your production, reduce the storage and hidden costs of traditional methods, always on the increase?
To help you I have written a book, a true guide, which will accompany you in the hellish world of 3D printing, showing the traps you will come across on your journey, indicating which technology is more suitable for the production of your mechanical components and how you can speed up your production thanks to this technology.
In your free guide you will also find:
- How to calculate storage costs: you will finally know how much it costs you to manage your stocks and you will unveil all the costs that today are eroding your profit margins;
- Which additive technologies are suitable for the printing of mechanical components and the minimum requirements you must have to produce solid components;
- all the most important information to know about 3D printing which will make you independent and able to evaluate any news you will read in newspapers;
The guide is free and you can ask for it on this link or on the red button below the article. I have only 50 copies available at the moment and you will have to wait months for the reprint.
I advise you to book your free copy before we run out of stocks. I have limited storage as much as possible also in this case
P.S. in the guide you will find a case study which shows how a mechanical component is produced, first using traditional methods and then using additive systems. Which of the two production methods has cost less with a faster production? You can click on the red button to order your free copy and find out.