Emerging technologies open a new world of opportunities — and risks — for industrial manufacturers

The new dimensions of 3D printing

While 3D printing, or additive manufacturing, has been around for nearly 30 years, interest has soared over the past five years as recent advancements result in shorter production times, lower costs, and improved quality in printed items. Revenues for the 3D printing market are expected to hit $35.4 billion by 2020, dwarfing the expected $15.9 billion in revenues expected for 2016.

It's undeniable that 3D printing is a game-changing technology for manufacturers, but businesses should recognize that it is also changing the supply chain. For example, 3D printing is blurring the traditional lines with respect to who is responsible for what in a supply chain, says Hedrington. "Who's a designer?" he asks. "Who's a manufacturer? Who's a supplier?" Some parts of a supply chain may see shifting responsibilities, while other parts of the chain may be removed altogether.   

Manufacturers already working in a slimmed down supply chain, such as some tech companies that already design and manufacture their own products, are probably best suited to adapt to changes from 3D printing. Others, though, such as industrial equipment manufacturers, may face challenges when they find themselves taking on new supply chain responsibilities, such as product design. An important factor to consider is the added product and professional liability exposures associated with these responsibilities. 

Industrial manufacturers should also be aware of the increased risks associated with intellectual property infringement and counterfeiting. Companies with proprietary designs that make final products or even components for OEMs (original equipment manufacturers) could find protected designs more easily recreated by other parties. Conceivably, counterfeiters could scan, print, and sell inferior (potentially compromised or sub-standard) versions of products that could expose businesses to various lawsuits — most for products they did not manufacture or designs they did not make, own, or perhaps even have copyright permission to use. Notes Hedrington, "At this point, there is little case law to use as a basis for comparison when these types of litigation disputes surface." 

It's critical for industrial manufacturers to partner with insurers and brokers who can help them stay on top of these new risks so they can properly mitigate them. For example, an agent or insurer could help a company identify changes to its supply chain. Hedrington says, "What we would want a customer to focus on are things that are different or new to them in the process."  Among some of the key questions to ask:

• Is the company assessing the quality of materials they are using in 3D printing throughout the various stages?
• Is it stress-testing designs to ensure the printed products are manufactured as intended? Is it testing the finished products?
• Does it have the proper contracts in place to clarify responsibilities and potential liabilities of all parties?

Industrial manufacturers should also recognize that the insurance coverages they have in place today may not be sufficient. Hedrington points out one example: "Potential defects in the digital design of 3D-printed products may not be not covered by standard general liability policies with typical professional liability exclusions. To protect against defects, a company would need a separate professional liability policy."

Smaller companies in particular must be sure they are working with brokers and insurers that understand their operations and have experience tailoring insurance programs to meet the risks associated with 3D printing. 

The evolution of wearable technology

Wearable technology, also referred to as "wearables," presents interesting opportunities for businesses, and is quickly evolving with new products coming to market in a variety of areas. Wearables come in many forms, such as clothing (e.g., shirts, vests, socks), accessories (e.g., glasses, wristbands), and even stickers that are placed directly on the skin. Commercial uses of wearable technology for workplace safety could help employers to:

• Monitor employee vitals, or other markers of an employee's physical or mental state.
• Signal equipment to turn off if an employee is too close.
• Provide audio and visual instructions as an employee moves throughout a workplace.
• Monitor activity and the quality of employee postures and movements to identify injury risks.

The challenge is that, for all of the potential promise, there is very little research available that clearly demonstrates this technology's ability to effectively predict and prevent injuries. Research that is available is often funded by vendors and not published as peer-reviewed articles in scientific journals.

Industrial manufacturers looking to incorporate wearables as a way to improve safety should try not to get too caught up in the latest and greatest gadgets, but instead should consider what gaps they have in their processes and safety programs. Then, they can identify which wearables might help bridge those gaps. 

Businesses should also be mindful of the unintended consequences of wearables. For example, using this technology could introduce new distractions, over-trust, and other related safety issues. There are also data security and privacy concerns that come with collecting health and other information on employees. As another example, some wearables monitor employee proximity to potential hazards with the intention to enhance the emergency stopping capability of industrial machinery. However, other devices may inadvertently interfere with a machine's safety technology and impede the emergency shutdown signal.  

While commercial use of wearables is in the early stages, some insurers are proactively taking steps to understand this technology so they can provide better guidance to customers. Notes Hedrington, "At Liberty Mutual, our teams are developing wearable-related research studies in areas such as employee acceptance, driving, falls, and materials handling." 

Companies willing to invest in new technologies, such and 3D printing and wearables, may experience advantages in their operations, but they could also expose themselves to new risks. The key is for businesses to find the right insurance partners that can help them navigate the changes and challenges with eyes wide open.

As Hedrington says, "Look for someone who can meet the needs of a changing company; someone who has the experience, expertise, and resources to grow and change with you, because the pace of change is only going to get faster."