The impact of 3D printing on manufacturer–retailer supply chains

Abstract

In this paper we consider the impact of 3D printing, or additive manufacturing, on a simple supply chain, consisting of a manufacturer and retailer, that serves stochastic customer demand. 3D printing is a relatively new manufacturing technology that is attracting attention from many firms. However, the impact of 3D printing on operations and firm relationships in a supply chain is relatively unexplored in academic research. A unique aspect of 3D printers is that they can be installed at the retailer in a supply chain, a characteristic that we highlight in our paper since it enables the supply chain to be more responsive to demand. Consequently, 3D printers can be adopted by either the manufacturer or, in a more novel situation, the retailer; we analyze the equilibrium of Stackelberg games in both cases. We characterize the economic and competitive conditions where either firm adopts 3D printing, and show that under either scenario, it is possible for both firms to earn more profit than a benchmark system without 3D printing. We identify and quantify the positive benefits associated with 3D printing, for both firms in a simple supply chain, when either firm adopts this new manufacturing technology. In many cases, the scenario where the manufacturer adopts 3D printing and installs 3D printers at the retailer results in the best profit outcomes for the manufacturer. The retailer’s preference, however, depends on problem parameters. Therefore, supply chain managers should carefully consider the possibility of 3D printing products in their supply chain.