cation where autonomous vehicles may be appropriate, avoiding an indiscriminate or one-size-fits-all approach.

Changing how we manufacture. Three-dimensional (3-D)
printing involves the creation of objects using a machine
that typically melts and distributes layers of a growing vari-
ety of materials, including plastics, metal, glass, and ceram-
ics, in a pattern described in a digital file that contains the
specifications of the item to be created. 5 Actual examples
include toys, spare parts for the International Space Station,
food, and even human organs! Implications for the supply
chain include:
This technology can facilitate customization and the use
of more innovative and functional designs. It also offers the
potential to combine process steps required in traditional
manufacturing, with the added advantage of requiring no
specialized tooling. It will change what we source, as we
will be buying feedstock for 3-D printers rather than com-
ponents. Because 3-D printing enables the manufacturing
of customized products on demand, in lots as small as one,
many organizations could create a decentralized network
of small, fully flexible production centers that would allow
them to manufacture small lots of highly customized prod-
ucts close to the point of demand. Such a model would
reduce complexity, eliminate the need for large lot sizes and
high inventory levels, and take time and cost out of trans-
portation. 7 Spreading out manufacturing locations so that
production occurs closer to the end customer would also
reduce lead times and improve responsiveness. In fact, 3-D
printing could even help shift manufacturing away from
low-cost regions and closer to the customer base.

Looking more broadly, 3-D printing will usher in new competitors with new ways of delivering products and services to customers. It disrupts the value-creation process by changing how we produce—we will come back around to crafting individual products, but now by data-driven machines rather than by human hands.

With all its obvious benefits, 3-D printing also carries
some risks, most prominently that of a new age of “digital
piracy” that could erode traditional, value-added supply
chains. In this new era, designs can be digitally scanned and
shared or sold over the Internet. This may challenge com-
panies’ ability to control their proprietary designs. It may
also result in loss of revenue from “knock-off” products
sold on the gray market for a fraction of the original prod-
uct’s price, or from customers printing their own additional
or replacement products.

A CONTINGENCY-BASED APPROACH

The typical human response to change is to either ignore or avoid it. Supply chain managers cannot afford to go that route and must instead think strategically about disruptive technologies. We recommend a contingency-based approach. That is, determine the characteristics of your organization and the industry in which you compete, and then select a strategy and related tactics that align with your organization and its competitive context. This can allow you to invite disruptive technology into your supply chain in a way that allows you to manage it.

Contingency-based approaches to strategy, such as the one described by Hofer, 8 have been around for decades. The idea is that managers should not adhere to one rigid strategy, but rather adopt an appropriate strategy depending on the situation. Managers should consider how their competitive environment is changing and create alternative strategies for the most probable scenarios. For example, they may want to conduct sensitivity analyses to understand the impact of changes in currency-exchange rates or raw-material prices on their decisions, and then identify possible strategic alternatives.

With that in mind, we offer a framework for conversations about and actions in response to disruptive technologies. For the sake of simplicity, the framework includes four questions supply chain managers can explore to better plan for and adapt to disruptive technologies. Much of this work may have already been done in your organization as part of strategic planning exercises, supplier certifications, or external audits, so you may be able to complete this analysis quickly. Figure 1 summarizes the following information in graphical form, with each answer in the listed options corresponding to a green, yellow, or red circle.

Question 1. How much havoc could disruptive technol-
ogies cause within your business model? To what extent
might a disruptive technology transform your:
The greater the potential to disrupt your business model,
the higher the priority and attention you should give to this
issue.