UPS expands 3-D printing network to 60 U.S. retail sites

UPS Inc. will partner with business software vendor SAP SE to launch a nationwide network of 3-D printers for customers who want to create rapid prototypes or replacement parts for on-demand delivery, the companies said yesterday.

The new form of what the companies called "distributed manufacturing" could allow users to quickly create unique parts and have them delivered to nearby addresses for less cost and time than shipping the items nationwide from a central warehouse, the companies said.

The service will be available at more than 60 locations of the Atlanta-based logistics provider's The UPS Store retail storefronts, and at a 3-D printing factory in Louisville, Ky., run by Fast Radius LLC, a Chamblee, Ga., startup funded in part by UPS' venture capital arm.

Germany-based SAP's role will be to provide front-end software that helps users decide which parts are appropriate for printing, based on business variables such as the costs of digitizing designs, certifying part quality, and shipping and tax fees, said Gil Perez, SAP's senior vice president for digital assets and Internet of Things (IoT) and general manager, connected vehicles and IoT security.

UPS launched a 3-D printing pilot program in 2013 with six locations, and had announced plans in 2014 to add nearly 100 sites. About 60 have opened so far, the company said.

Under the new plan, users can create parts by placing their 3-D printing orders through the Fast Radius website, which sends each job to one of the 3-D printer sites based on the speed, geography, and product quality required.

For example, rush orders could be shipped the same day from a regional UPS Store that creates low-resolution models or prototypes, while an industrial-quality part would have to be printed from more durable materials at the Louisville factory, said Alan Amling, vice president for marketing at UPS Global Logistics and Distribution.

UPS is pitching 3-D printing as a way for users to reduce warehouse inventory by being able to create parts on-site rather than ordering them and have them sit in stock. This is especially true when it comes to parts that, for various reasons, aren't in high demand yet sit on shelves, Amling said. "UPS has more than 900 field stocking locations around the world, but a lot of that inventory doesn't turn over because the platform that uses those parts has been discontinued," he said. "Using 3-D printing, we could take that storage cost off the books, and turn those parts from physical into digital inventory."

Another business application could be reducing maintenance, repair, and operations (MRO) costs, he said. Vendors could fulfill their service contracts by promising next-day delivery of broken parts by using 3-D printers to create replacement parts for a computer server, MRI machine, or other device.

Although a distributed 3-D printing network may offer new cost savings for business customers, the practice could also be a drag on UPS' delivery revenues, one expert warned. For each customer that 3-D prints an item close to its ultimate destination, UPS loses a long-distance shipping fee, Paul Steiner, vice president for strategic analysis at Spend Management Experts, said in an emailed comment.

"There could possibly be a trade down of UPS products since parts will be 3-D printed as close to the customer as possible," Steiner said. "For example, instead of utilizing air services for last-minute parts replenishment, UPS Ground or UPS Freight could be used."

UPS recoups some of that loss by owning the 3-D printing network as well, but the company will have to carefully price the service to maintain its overall profits without making 3-D printing cost-prohibitive to customers, he said.