Retailers must Rebound. The retail industry has seen a lot of disruption, particularly with the rise of e-commerce. The “Amazon Effect” is frequently credited with having normalized a “frictionless shopping process with near-immediate results” . Customer expectations for the speed and quality of service are amplified; demand for personalized products and shopping experiences is growing, too. As the chart below demonstrates, traditional retailers must evolve their business strategy in order to remain competitive.
Is 3-D Printing the Solution? The appeal of 3-D printing – or additively fabricating a physical object from a 3-D digital model – is primarily two-fold in the retail space. First, it promises to enable the “mass customization” of products. 3-D printing can be used to fulfill low-volume orders in a cost-effective manner, facilitating a shift from “economies of scale” to “economies of one” . Second, 3-D printing technology can streamline the supply chain. Products can be made-to-order as demand is actualized, allowing retailers to hold (and ultimately discount) less inventory. 3-D printing does not require the costly custom molds used in traditional manufacturing. Plus, 3-D printing facilities can be setup close to the customer, improving delivery speed and reducing shipping costs .
In reality, though, 3-D printing has remained largely unproven in the retail space because of basic limitations. Layer-by-layer printing is a relatively slow means of manufacturing and is only compatible with a narrow range of materials. Further, if the printing process is not constant and automated, cost efficiencies can be lost .
Adidas Finds a Way. Sportswear retailer Adidas has made a significant strategic commitment to 3-D printing, with ambition to be “the world’s biggest producer of 3D printed products” . Adidas’ Futurecraft 4D sneaker, 100,000 units of which will be released this year, features an ornate, lattice-structured midsole constructed via 3-D printing . The key to Adidas’ claim that it can use 3-D printing in a profitable and scalable way? A partnership with the Silicon Valley startup called Carbon.
Carbon, with a current estimated valuation of $1.7B, purports to have developed a technology with “night and day” advantages over traditional 3-D printing . Carbon uses a photochemical process that effectively extracts the desired structure (per digital specifications) as a single piece from a pool of UV-curable liquid resin. This style of 3-D printing produces more structural integrity than the standard layer-by-layer approach, and can be executed at 100 times the speed . Importantly, because Carbon’s mission is to support large-scale manufacturing, the hardware units within its 3-D printing system have been designed such that the production of 3-D objects can be highly automated .
Figures 2 and 3:
Presently, Adidas is busy marketing its innovative sneaker line and reorganizing its supply chain to capture the value of 3-D printing. Because the demand for printed midsoles is expected to come from Western countries first, the manufacturing of these sneakers will not happen in Asia per usual. Instead, Adidas opened a new local facility, called the “Speedfactory,” in Ansbach, Germany and equipped it with Carbon’s printing machines. Adidas has plans to open another facility in Atlanta soon .
In the medium term, Adidas expects to scale up production of its Futurecraft 4D sneaker to millions of units per year . This is where Adidas can begin to fulfill its ultimate vision, and take advantage of the capacity for product customization. Going forward, the idea is to use 3-D printing for personalized midsoles with varying levels of density and elasticity to match each customer’s preference for support and performance. And while customers today are accustomed to paying a premium and waiting several weeks for customized sneakers, Adidas envisions a future where printed midsoles are affordable and delivered in under a week .
Potential Pitfalls for Adidas. It should be cautioned that many unknowns remain, including the cost of this project as it grows. Adidas would be well advised to monitor the cost drivers of production. For example, as Adidas pursues additional customization of its midsoles, the pre-printing costs could rise (e.g. skilled labor to design and review digital 3-D specifications). Or, Carbon might go public and change the pricing model for leasing and servicing its 3-D printing machines. Adidas could also find that the yield of the Carbon 3-D printers drops as they are pushed to a higher utilization.
What do you think? There is a lot of hype for the Adidas Futurecraft 4D sneaker – it represents a compelling retail use case for 3-D printing. Still, skeptics will argue that 3-D printed sneakers are chiefly being used by Adidas for brand marketing, suggesting that the real value is in “the kind of halo that the chess-playing computer Deep Blue brought IBM” .
Is the Futurecraft 4D sneaker a glimpse into the future of manufacturing? Will 3-D printing be an enduring technological innovation in the retail space? Or is the value, here, in the novelty and marketing potential?
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- Brown, Alan. “Chain Reaction: Why Additive Manufacturing is about to Transform the Supply Chain,” Mechanical Engineering 140, no. 10 (October 2018): 30-35.
- Sodhi, ManMohan S., and Christopher S. Tang. “Supply Chains Built for Speed and Customization.” MIT Sloan Management Review, June 06, 2017, sloanreview.mit.edu/article/supply-chains-built-for-speed-and-customization, accessed November 2018.
- Bourzac, Katherine. “Carbon Prints Amazing Materials.” MIT Technology Review, June 27, 2017, https://www.technologyreview.com/s/607964/carbon-prints-amazing-materials, accessed November 2018.
- Cheng, Andria. “How Adidas Plans to Bring 3D Printing to the Masses.” Forbes, May 22, 2018, https://www.forbes.com/sites/andriacheng/2018/05/22/with-adidas-3d-printing-may-finally-see-its-mass-retail-potential/#29f4813e4a60, accessed November 2018.
- Caliendo, Heather. “3D Printing, Silicon Valley Style.” Plastics Technology, October 31, 2018, https://www.ptonline.com/articles/3d-printing-silicon-valley-style, accessed November 2018.
- Carbon, https://www.carbon3d.com, accessed November 2018.
- Sodhi and Tang, “Supply Chains Built for Speed and Customization.”
- Cheng, “How Adidas Plans to Bring 3D Printing to the Masses.”
- Sodhi and Tang, “Supply Chains Built for Speed and Customization.”
- Sodhi, ManMohan. “3-D Printed Sports Shoes are More About Your Wallet Than Your Feet,” Rockaway (November 2017).
Figure 1 Source: Zealley, John, et al. “Marketers Need to Stop Focusing on Loyalty and Start Thinking About Relevance.” Harvard Business Review, April 23, 2018, hbr.org/2018/03/marketers-need-to-stop-focusing-on-loyalty-and-start-thinking-about-relevance, accessed November 2018.
Figures 2 and 3 Source: https://www.carbon3d.com