Make‐or‐buy decisions for industrial additive manufacturing

Abstract

Much of the potential of industrial additive manufacturing (AM) is said to lie in the digital specification of components that can be transmitted seamlessly and unambiguously to partners fostering flexible outsourcing. In industry, we observe nuanced AM supply chain governance structures that result from make-or-buy decisions, with a tendency to implement AM in-house. Thus, there is a discrepancy between what is discussed in the literature and implemented in practice. We apply a multiple-case study approach to investigate why and how AM impacts the make-or-buy decision of manufacturing firms. We identify four decision profiles demonstrating the spectrum of specific governance structures and develop a framework to explain the underlying rationales. We find strong arguments for in-house AM including firms' perceived need to protect their digitally encapsulated intellectual property, reevaluation of their core competencies, commitment to internal learning, and senior management's enthusiasm for AM. By using transaction cost economics and the resource-based view, we contribute to the understanding of how arguments of these general theories are modified by the digital and emerging traits of AM. We reveal contradicting guidance in the theories' argumentation for the case of AM and provide managers a clear perspective on alternative strategies for their AM implementation process.

Adoption of additive manufacturing technology: drivers, barriers and impacts on upstream supply chain design

“…Adopting AM, therefore, does not require specific investments by the supplier. Hence, for all the variables we have considered, we identified a low asset specificity, making this construct non-discriminant in its impact on SC design, confirming what Friedrich et al . (2022) found with the make or buy decision.…”

Supply chain design for industrial additive manufacturing

“…Meyer et al (2021) analyze how AM impacts strategic sourcing decisions. Moreover, Friedrich et al (2022) detail how the specifics of AM, the technologies' digital and emerging traits, affect manufacturing firms in their AM make-or-buy decisions. In addition, Chaudhuri et al (2021) provide domain-specific insights into AM make-or-buy decisions of hospitals, and Hohn and Durach (2021) study AM's effect on SC governance in the apparel industry.…”

“…(2021) analyze how AM impacts strategic sourcing decisions. Moreover, Friedrich et al. (2022) detail how the specifics of AM, the technologies' digital and emerging traits, affect manufacturing firms in their AM make-or-buy decisions.…”

Strategic outsourcing decisions of new entrant and competing incumbent manufacturer in a supply chain with common supplier

“…Ghamat et al [15] consider the setting where a competitive contract manufacturer has a limited capacity and shows that the original brand manufacturer might multisource its component only when competition in the final product market is intense. Recently, there is a stream of research focused on different types of outsourcing services, such as agriculture [49], warranty service [22], inventory systems [16], project outsourcing [20], pricing algorithms [18], industrial additive manufacturing (AM) [14]. However, we pay more attention to the strategic interaction between manufacturer and competitor (the new entrant manufacturer) as well as up-stream supplier in the context of strategic outsourcing, that is, the incumbent manufacturer can produce at a price lower than the wholesale price of the supplier.…”