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Retailing with 3D Printing

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  • Li Chen
  • Yao Cui
  • Hau L. Lee

Abstract

Given the promise of three‐dimensional (3D) printing, also known as additive manufacturing, some innovative consumer goods companies have started to experiment with such a technology for on‐demand production. In this study, we consider two adoption cases of 3D printing in a dual‐channel (i.e., online and in‐store) retail setting, and evaluate its impact on a firm’s product offering, pricing, and inventory decisions. Our analysis uncovers the following effects of 3D printing. First, 3D printing at the factory has the substitution effect of technological innovation for online demands, as 3D printing replaces the traditional mode of production. Such technology substitution not only leads to increased product variety offered online, which allows the firm to charge a price premium for online customers, but also induces the firm to offer a smaller product variety and a reduced price in‐store. There is an additional environmental benefit when more customers are steered from the in‐store channel to the online channel. Second, when 3D printing is used in‐store as well, in addition to the substitution effect, the firm also achieves a structural effect due to the fundamental change in the supply chain structure. Since the in‐store demand is served in a build‐to‐order fashion, the firm achieves postponement benefits in inventory management. The environmental benefit is the most significant in this case. Moreover, using 3D printing in‐store will require a new supplier–retailer relationship. We find that cost‐sharing contracts can coordinate the supply chains where 3D printing is used in‐store and the supplier controls the raw material inventory.

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  • Li Chen & Yao Cui & Hau L. Lee, 2021. "Retailing with 3D Printing," Production and Operations Management, Production and Operations Management Society, vol. 30(7), pages 1986-2007, July.
    • Handle: RePEc:bla:popmgt:v:30:y:2021:i:7:p:1986-2007
    DOI: 10.1111/poms.13367
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    1. Jose M. Framinan & Paz Perez-Gonzalez & Victor Fernandez-Viagas, 2023. "An overview on the use of operations research in additive manufacturing," Annals of Operations Research, Springer, vol. 322(1), pages 5-40, March.
    2. Friedrich, Anne & Lange, Anne & Elbert, Ralf, 2022. "How additive manufacturing drives business model change: The perspective of logistics service providers," International Journal of Production Economics, Elsevier, vol. 249(C).
    3. Tsan‐Ming Choi & Subodha Kumar & Xiaohang Yue & Hau‐Ling Chan, 2022. "Disruptive Technologies and Operations Management in the Industry 4.0 Era and Beyond," Production and Operations Management, Production and Operations Management Society, vol. 31(1), pages 9-31, January.
    4. Guo, Shu & Choi, Tsan-Ming & Chung, Sai-Ho, 2022. "Self-design fun: Should 3D printing be employed in mass customization operations?," European Journal of Operational Research, Elsevier, vol. 299(3), pages 883-897.
    5. Sunil Mithas & Zhi‐Long Chen & Terence J.V. Saldanha & Alysson De Oliveira Silveira, 2022. "How will artificial intelligence and Industry 4.0 emerging technologies transform operations management?," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4475-4487, December.
    6. Lingxiu Dong & Duo Shi & Fuqiang Zhang, 2022. "3D Printing and Product Assortment Strategy," Management Science, INFORMS, vol. 68(8), pages 5724-5744, August.
    7. He, Bo & Mirchandani, Prakash & Yang, Guang, 2023. "Offering custom products using a C2M model: Collaborating with an E-commerce platform," International Journal of Production Economics, Elsevier, vol. 262(C).
    8. Nagarajan Sethuraman & Ali K. Parlaktürk & Jayashankar M. Swaminathan, 2023. "Personal fabrication as an operational strategy: Value of delegating production to customer using 3D printing," Production and Operations Management, Production and Operations Management Society, vol. 32(7), pages 2362-2375, July.
    9. Sun, Luoyi & Hua, Guowei & Cheng, T.C.E. & Teunter, Ruud H. & Dong, Jingxin & Wang, Yixiao, 2023. "Purchase or rent? Optimal pricing for 3D printing capacity sharing platforms," European Journal of Operational Research, Elsevier, vol. 307(3), pages 1192-1205.
    10. Nie, Jiajia & Xu, Xiaoxuan & Yue, Xiaohang & Guo, Qiang & Zhou, Yu, 2023. "Less is more: A strategic analysis of 3D printing with limited capacity," International Journal of Production Economics, Elsevier, vol. 258(C).
    11. Haoyu Sun & Huiqi Zheng & Xiaoyang Sun & Wei Li, 2022. "Customized Investment Decisions for New and Remanufactured Products Supply Chain Based on 3D Printing Technology," Sustainability, MDPI, vol. 14(5), pages 1-21, February.
    12. Sun, Cuiying & Zhang, Xiong & Zhou, Yong-Wu & Cao, Bin, 2022. "Pricing, financing and channel structure for capital-constrained dual-channel supply chains with product heterogeneity," International Journal of Production Economics, Elsevier, vol. 253(C).
    13. Liu, Baolong & Wang, Weilong, 2023. "Live commerce retailing with online influencers: Two business models," International Journal of Production Economics, Elsevier, vol. 255(C).

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