UPS Is Launching a 3D-Printing Service With a Significant Competitive Advantage

By Markets Fool.com

Delivery service giantUnited Parcel Service Inc.announced on May 18 that it's launching an industrial-strength, on-demand 3D-printing service network this summer. The operation will link its global logistics network with 3D printers at more than 60 UPS stores in the U.S. and Fast Radius' on-demand production facility in Louisville, Kentucky.

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Start-up Fast Radius, in which UPS has invested, is located on the UPS Supply Chain Solutions Campus, near UPS' worldwide air hub at the Louisville International Airport. This location should provide UPS' 3D printing service with a significant delivery speed advantage over such services offered by3D SystemsCorporation,Stratasys Ltd., Proto Labs , and others.

This news didn't get as much press as it deserves because it was overshadowed byHP Inc.'shighly anticipated launch of its first 3D printer the day before.

Here's what you should know.

Several of Fast Radius' 3D printers. Image source: Fast Radius.

UPS' 3D printing network

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UPS isn't a newbie to the 3D printing space; its UPS Store was the first nationwide retailer to offer in-store 3D printing services in 2014. The company rolled out this service in collaboration with Stratasys, with Stratasys' uPrint 3D printers the exclusive machines used.

The delivery service titan upped its involvement in 3D printing in May 2015, when it initially partnered with Fast Radius (then named CloudDDM -- DDM stands for "direct digital manufacturing") for the launch of a nearly fully automated 3D printing factory equipped with 100 printers, according to TheWall Street Journal.The rollout of the 3D printing network, however, takes things to a new level, as the network will make the partners' 3D printing services accessible to significantly more potential users.

UPS is also teaming up with German software giantSAPon this initiative. SAP's supply chain solutions will be integrated with UPS' manufacturing solutions and global logistics network to simplify the industrial manufacturing process.

How the process generally works:

  • Customers place their 3D printing orders on Fast Radius' website.
  • Orders will be directed to the optimal manufacturing facility (Fast Radius contracts out capabilities that it doesn't possess) or UPS Store location based on geography, speed, and product quality requirements.
  • Orders can be shipped as early as same day.
  • Any person or company globally can use the network.

The 3D printing network's speed advantage

Setting up operations on the UPS Supply Chain Campus was a key part of Fast Radius' business plan. This location, coupled with UPS' expertise in logistics and Fast Radius' nearly fully automated 3D-printing platform allows the company to generally take orders "up to 6 p.m. Pacific Standard Time, or when most suppliers are having to box up an order for pick-up, and still get them delivered next day," according to its website.

Fast Radius' nearly fully automated factory. The company was formerly named CloudDDM. Image source: Fast Radius.

About Fast Radius

Fast Radius' on-demand rapid prototyping and manufacturing capabilities include both traditional manufacturing techniques and 3D printing. In this way, it's more similar toProto Labs than to 3D Systems or Stratasys. UPS invested in this start-up last year through its venture capital arm.

The company's website shows that it works with both polymers and metals, and possesses all the major 3D printing technologies, including fused deposition modeling (FDM), selective laser sintering (SLS), stereolithography (SLA), PolyJet, and direct metal laser sintering (DMLS).

There's an unknown with respect to its 3D printers. The company's website says that it uses "automated additive manufacturing systems built on proprietary technology." Its website also includes a snippet from Metal Miner's interview with co-founder and Chairman Mitch Free, where Free is quoted as saying, "Our printers are purpose-built and not commercially available." These quotes could suggest that the 3D printers themselves are proprietary, but that doesn't seem seem likely, at least not entirely. For instance, PolyJet is Stratasys' proprietary technology, which means that others cannot manufacture printers using this tech.

I reached out to Fast Radius with several questions about the 3D printers and have not heard back. So, I can only speculate. I'd guess that the company has purchased some to many of its 3D printers from manufacturers, such as Stratasys, and then significantly altered them. Standard commercialized models would need to be altered given that Fast Radius' platform is nearly fully automated.

Fast Radius has global expansion plans, according to co-founder and CEO Rick Smith's statement in UPS' press release. The company's website lists Steelcase, Flex, GoPro, and Georgia-Pacific as customers.

Why UPS is testing the 3D printing waters

UPS' forays into 3D printing are likely as much about defense as offense. Like many companies involved in the manufacturing supply chain, the delivery giant can't yet know exactly how 3D printing will impact its business, as industry dynamics are in the early stages of unfolding. UPS obviously doesn't want to see 3D printing take a big chunk out of its $58-billion-per-year package and freight transportation empire,just as the internet significantly cut into its document delivery business.

Given UPS' 3D printing services network speed advantage, competitors such as 3D Systems, Stratasys, and Proto Labs will need to continue to successfully differentiate their service offerings.

The article UPS Is Launching a 3D-Printing Service With a Significant Competitive Advantage originally appeared on Fool.com.

Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Proto Labs. The Motley Fool recommends 3D Systems, Stratasys, and United Parcel Service. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.