Disruptive Innovation Changing Manufacturing

Since being coinedthe "Third Industrial Revolution" by The Economist in mid-2012, 3D printing has captivated the imaginations of investors and enthusiasts as a technology that offers the potential to fundamentally change the way the world manufactures.

While in total dollar terms the 3D printing industry currently generates a trivial amount of revenue compared to worldwide manufacturing activity, which generates upward of $12.8 trillion annually, it can still be viewed as a disruptive innovation changing manufacturing.

What is 3D printing?On a high level, 3D printing is an additive manufacturing process, meaning it builds objects one layer a time -- the opposite of subtractive manufacturing, or machining, in which a solid block of raw material gets cut or milled down into its final shape.

Compared to machining, 3D printing doesn't require tooling to create objects, which can limit a part's geometric complexity. In other words, 3D printing invites complexity in manufacturing that would otherwise be impossible to produce with subtractive manufacturing techniques.

The other major benefit of 3D printing over subtractive manufacturing is that it doesn't create as much waste material, which can be quite cost-effective for manufacturers when they are working with costly materials such as titanium.

Although it's difficult to estimate the size and scope of the worldwide subtractive manufacturing industry, the CNC machining market, which covers a large subset of subtractive processes, is worth about $90 billion per year.Of that $90 billion, 3D printing could have the greatest disruptive impact in CNC machining applications with high complexity and material cost.

From prototypes to final productsWhen 3D printing was first invented in the 1980s, it offered a cheaper and quicker way for product designers to make prototypes and therefore bring products to market faster. Although this use case still holds true today, the data suggests that the future of 3D printing will be increasingly tied to using the technology to produce parts that end up in final products.

According to Wohlers Associates, a leading 3D printing insights firm, the market for 3D-printed parts that end up in final products expanded by 66% in 2014 to $1.75 billion in revenue, representing about 43% of the 3D printing industry's total revenue for the year. To put this growth rate in perspective, it more than doubled the industry's annual growth rate of 35.2%, suggesting that there's a strong underlying shift in how the technology is being used.

To be clear, 3D printing for final products isn't just being used to produce trivial trinkets or your next smartphone case. General Electric, for instance, has turned to metal 3D printing to manufacture its next-generation fuel nozzle for its upcoming Leap jet engine, which will take to the skies in the coming years.

By leveraging 3D printing, GE was able to consolidate the number of components needed to create a jet engine fuel nozzle from 20 conventionally manufactured parts down to a single 3D-printed component. This reduction resulted in a fuel nozzle that's five times stronger and 25% lighter than its conventionally manufactured counterpart. All told, GE has plans to produce upward of 85,000 3D-printed nozzles to meet the demand of the next-generation engine.

To put this figure in perspective, 85,000 3D-printed fuel nozzles is a huge number for 3D printing, and will likely make history as the largest mission-critical production run of in the history of the technology. However, compared to more conventional means of manufacturing, it's pocket change compared to processes that can produce millions of units with ease.

Putting it into perspectiveAccording to Wohlers Report 2015, the worldwide 3D printing industry generated $4.1 billion of revenue in 2014, and is expected to exceed $21 billion in revenue by 2020. Looking beyond 2020, if 3D printing grew to represent 1% of the entire worldwide manufacturing industry, it would be worth in the neighborhood of $128 billion.

On one hand, it appears that 3D printing's ability to produce complicated parts at a cost-effective price suggests there's tremendous potential for 3D printing to easily disrupt certain areas of more traditional manufacturing.

On the other hand, it could be a very long time until conventional manufacturers view 3D printing as a serious threat, considering 3D printing is slow as molasses. The layer-by-layer nature of the technology inherently struggles with speed, which doesn't make it well suited for large-scale manufacturing applications that demand speed. Although breakthroughs around speed are expected to be made in this future, this limiting factor will likely keep the technology off large-scale manufacturing runs for the time being.

At the end of the day, no one can know with certainty the disruptive threat that 3D printing poses to conventional manufacturing. To me, 3D printing offers the most promise in areas where it could be used to create fundamentally better products than its conventionally manufactured alternative.

The article Disruptive Innovation Changing Manufacturing originally appeared on Fool.com.

Steve Heller has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. 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.