Justifying a 3D Printer Investment for Rapid Prototyping
Do you think your company could benefit from 3D printing technologies? Are your design teams, engineers, and product managers on board but your accounting or finance department and management teams are still on the fence? If you could use a little help convincing the rest of your team to justify a large investment, you’re not alone. The advantages are significant, as 3D printing allows product development teams to easily, rapidly, and cost effectively produce models, prototypes, and patterns. Parts can be produced in hours or days rather than weeks.
For many companies, prototyping is an expense, not an investment, for which there is a limited budget. With this mindset, increasing the volume of prototyping work means only that expenses increase. This translates to a negative impact on the bottom line that becomes hard to rationalize. To justify 3D printing based on printing more prototypes, the value of prototyping must be quantified in real, tangible ways. The following blog will help you define challenges you may face and all the steps you should take to win your case.
Making the Case
When the cost of new equipment exceeds a manager’s authority, funding will come from a budget that upper management controls, meaning the proposal will be one of many competing for limited funds allocated across the company. To demonstrate that 3D printing is the wisest investment among other proposals, you’ll need to build a business case that clearly shows the value to management.
The goal you’ll want to achieve is to validate a purchasing decision by transforming benefits into concrete, tangible results. This can often be done by using a business case or a use case which will contain an executive summary, a situational analysis, and a financial justification.
Strategies for Justifying a 3D Printer
To build a winning justification that circumvents the challenges of monetizing the advantages of 3D printing, those that have succeeded in obtaining approvals offer four strategies. Used alone or in combination, these approaches provide a strong foundation upon which to build the financial case for an investment in a 3D printer.
Build on a Tiered Approach
The simplest and most commonly used method of justify 3D printing is to calculate the savings when it is a substitution (the first tier) for prototyping work that is currently being done with traditional manufacturing techniques or through third-party 3D printing service providers.
The second tier, augmentation is a category based on doing more of the same type of work that was included in the substitution tier. The speed, efficiency, and capability of 3D printing remove the barriers of time, cost, and effort when making prototypes. 3D printing makes it easy and practical to produce more prototypes, which deliver more value.
The third and final tier is extension, where the justification is built upon doing something in the product development process that isn’t a current activity. Extension is likely to deliver the most significant value since it is changing and improving processes.
Target Cost Reduction
Profit improvement is the ultimate goal of any business action, and it is achieved by either increasing sales or decreasing expenses. However, when it comes to a justification, the most powerful approach is to address the cost side of the equation. Expenses are a current fact while improved sales are a forecasted possibility. Current and measurable, a reduction in expense is more tangible and defensible than a projection of increased sales.
Address Current Problems
Instead of trying to create interest in a potential benefit of 3D printing, try targeting the justification towards solving existing problems. The strategy is to leverage what corporate management has already accepted as fact. If not presented as a solution to a current problem, management may view the proposal as just another added expense or be doubtful of the return on its investment.
Leverage Shared Budgets
When the acquisition and operating expenses are split across departments, the decision making can shift from corporate management to managers and directors. The added benefit of this approach is that these decision makers are more likely to appreciate the value of 3D printing. Being close to the day-to-day operations, managers within the product development teams inherently appreciate, understand and crave 3D printing’s less-tangible advantages. Rather than needing proof of the technology’s impact, the manager merely needs to decide if the budget can support the purchase.
This is just the tip of the iceberg for ways to strategize when justifying a 3D printer. This whitepaper will give you even more details on how to build the financial justification including more information on how to calculate the value, calculate the total expense, and how to calculate the return on investment.
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About the Author
Angelle Erickson writes about how companies are using innovative technologies, such as 3D printers and SOLIDWORKS software to increase productivity, improve product development processes, and maximize business potential.