in order for us to learn how companies make decisions on abandoned, how to use that manufacturing, even though the technology is very impressive. But they have to look at the economics and the the the the broader implications of, implementing at the manufacturing so in order to understand this, let's not look at the economics here. What let's start with the traditional manufacturing, right we all understand traditional manufacturing. If you want to kind of say manufacturer, let me go and go buy box again, you don't manufacturer, thousands or millions of these boxes, then whatever the manufacturing, traditional manufacturing, technically using there's going to be a huge set up cost, right? What you see in this picture is, you have volume on the X axis and your total cost of manufacturing these boxes on the Y axis. So you would have a huge setup cost to kind of start making these boxes and whatever the traditional manufacturing technique you've used, whether it is your die casting injection molding or what how you're going to use this, make this box, there's going to be a big setup cost. Then once you include the setup cost, then you can as you increase the volume of the of the production, right and you make more and more boxes, that total cost is not going to be increasing that steeply. In other words, what we call in the, the economics of scale where you make produce more parts, then your total cost doesn't increase that fast. And what does it do, it actually brings down the average cost kind of producing, right, the marginal cost, an average cost actually coming down. So if you look at the average cost per unit of this box that I need to make, the more I make, my cost average cost of making one box actually comes down, right? That's because there is the economies of scale, that's how the traditional manufacturing works and we all understand, we have read this, we've studied this in economics and you started as an operations all the place and additive manufacturing. That's not the case because in additive manufacturing there is not one huge setup cost that you're actually kind of using for manufacturing, thousands and millions of parts, right? Which is kind of, so that fixed setup cost distributed across all these thousands of parts and that's bringing the average cost down but in additive manufacturing as it is shown in blue in this chart, you actually print every box separately. You remember that cannot be explained manufacturing, you're going to use a whatever material you picked and each of these boxes will be printed layer by layer one at a time. So that's why you're not going to see that steep reduction in costs that economies of scale that you see in traditional manufacturing, you're not going to see in additive manufacturing. And that's the reason that I mentioned, additive manufacturing may not be suitable for when you're kind of manufacturing millions of parts, traditional manufacturing still wins from a cost standpoint. However, if you look there are also other economic benefits ability to manufacturing where we need to understand in this chart, there is a very simple, xy chart here on the, on the X axis, somehow imagine it is efficiency, right? It is kind of, you go from left to right on the X axis, it is increasing efficiency and the y axis is about flexibility right? Traditionally, in a traditional manufacturing, you know, the more flexible you want to get the less efficient, for example, flexible in the sense, one way of defining flexibility is, let's go back to the the demands that is placed on manufacturing unit. So for example, the large size of one personalized experience for customers, right? If in an auto, manufacturing context, if all of us want our cars to look unique of different features, then what is going on is the flexibility is going up right, they need to have the variety and flexibility to make, one car for each one of us. But when you go, when you increase the flexibility, efficiency will come down right, the efficiency will actually be reduced that's why you can you see the curve, that is the flexibility increases, you have, the efficiency is going down. So that's a traditional manufacturing in in in additive manufacturing what happens is it actually kind of pushes that curve because of the capabilities that we talked about that is coming with additive manufacturing. First,number one editor manufacturing actually allows you to kind of explore new design options, right? It brings the capability where you can actually kind of new customization, you can actually new shapes you can do and that, may not mean that may not be possible in the traditional manufacturing set right. And an additive manufacturing can actually do that with those changed designs and you know, that variety and also use the same because it's going to be printed one at the time it can still give a little bit more efficiency than the traditional manufacturing. So it actually allows you to kind of look at new design options because of the algorithms and simulations and modelling that you could do with this software. The second it actually, the efficiency Increases through automation and part consolidation right? We saw example in the in the in the in the burner example where we combined 13 parts into one part, right then that is bringing new efficiency. Now, instead of kind of, producing 13 parts and combining it, just putting the one part that actually increases the efficiency further and for the same kind of flexibility. And of course the last we saw the example of rapid prototyping, which three the three D printing technology and manufacturing allows the manufacturer to,, experiment various different variants and also speed up the process of prototyping and also bring in new design of the parts into manufacturing. So that's that process actually again, shift discovered between flexibility and efficiency. In other words, in somebody, what I want to say in the slide is that editor manufacturing actually brings higher level of flexibility and without losing as much efficiency as you would lose in a traditional manufacturing context. So if you understood these, cost trade off and then the kind of the benefits are coming in their little manufacturing, so certainly additive manufacturing brings a lot of these benefits. But however, it is not directly applicable to all manufacturing situations, so there are criteria right? There are kind of, that you need to apply to select when would you use and choose to use additive manufacturing and this credit to our number one, low volume when you have low volume market where there is low volume of parts. Right then what happens is that you are losing the benefits of economies of scale that comes with traditional manufacturing, right that's why I did the manufacturing is a viable option. Examples of motorsports, aerospace industry, you don't make millions of planes, you may make hundreds of planes that we make thousands of planes but you may not you don't make millions as in a car part. Or the second example is tools right in the manufacturing context you make you may make, millions of these boxes but you don't make millions of tools that make these boxesso tools is a classic example. The second criteria is the price, premium performance you need to see that the customer is willing to pay a premium price for the performance of the products. In the as in the case of aerospace, when you reduce the weight of that part by one Kg right there they are benefiting by thousands of dollars, so they would be willing to pay the price premium and that is suitable. That scenario is suitable for additive manufacturing because you can improve the performance of the product even though the cost may actually go up second complex parts and I don't know what, I'm going to repeat that. The Boehner example, very combined 13 parts into one part and the consolidation of parts and bringing your design and and the last one is the personalization, right? I mean the n equal to one large size of one demand coming into manufacturing and for that manufacturers can respond to that only through digitalization. So additive manufacturing allows them to digitize the design of the part and then also make it flexible that they can actually kind of do the minor changes that are required that may be required for every customer, right? In this case, you know, you know, additive manufacturing by definition, by design, it's going to be, a large size of one and that gives the option for, manufacturers to be flexible and make the changes. And classic example, in this case, I would say it health care, I will talk about the applications in healthcare where you need personalization and additive manufacturing. That's why is used in manufacturing of human organs in health care industry.
