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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2024 Grand Challenge: Business Resilience
Market-Based Solutions to Vital Economic Issues
Mar 13, 2023

Personal Fabrication as an Operational Strategy: Value of Delegating Production to Customer


There is a growing interest in the industry around 3D printing. A related phenomenon is personal fabrication (PF) in which a firm sells products’ design and lets the customers personalize and manufacture the product using 3D printing services. In this paper, we characterize the market and operational conditions that make PF an attractive operational strategy. We propose a demand market model that captures customer heterogeneity in taste (horizontal) and quality (vertical) dimensions while allowing the market to be skewed with high versus low valuation customers. We quantify three key benefits of PF strategy: (i) the PF strategy enables personalization and improves product fit, (ii) the PF strategy can help the firm through postponement of product configuration, and (iii) the PF strategy enables easier design adjustments and allows design for manufacturability initiatives. Intellectual property and liability risks are significant barriers to the adoption of PF strategy. Furthermore, 3D printing may not be feasible for some parts of the product. In these cases, the firm may pursue the partial PF strategy: delegating only a proportion of the product for customer production. We also identify when partial PF becomes an attractive strategy.

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