Top 5 Benefits of On-Demand Manufacturing16 May 2023
Image Credit: zmorph3d via Unsplash
In today’s increasingly digitized and consumer-driven world, traditional manufacturing methods are giving way to more efficient, innovative, and customer-oriented practices. One such revolutionary trend is on-demand manufacturing. As opposed to traditional batch manufacturing processes, where parts are produced en-masse and then condemned to storage, on-demand manufacturing focuses on producing goods exactly when they’re needed and in the precise quantities required. This shift is being facilitated by a new wave of workflow optimization software, enabling companies to streamline their production processes.
With responsiveness and agility built into the model, SMEs are finding they are more resilient to global supply-chain fluctuation, at the same time as being more sustainable. The impact of applying on-demand manufacturing principles has meant that smaller businesses now have a greater ability than ever to compete with bigger enterprises.
The desire from manufacturers to get smarter and digitize is palpable: Fictiv’s 2021 State of Manufacturing report showed that 91% of companies had increased or planned to increase their investment in digital technology in the past year. And in the same report, among those who use on-demand platforms, 100% of respondents reported benefits, with improved quality, transparency, and lead times being key advantages to their businesses.
Read on as we explore the top five benefits of on-demand manufacturing.
1. Reduced Inventory Costs
Traditional manufacturing often requires businesses to maintain substantial inventory levels, creating significant carrying costs.
On-demand manufacturing, however, virtually eliminates the need for warehousing. Instead of storing finished parts in a warehouse and incurring the various costs of this traditional method, manufacturers can keep a catalog of digital files that can be customized according to the customer’s needs, and ordered on an on-demand basis.
AMFG’s MES, for instance, boasts a Digital Inventory feature that helps manage and track digital parts, reducing the necessity for physical storage. This not only saves on storage costs but also mitigates the risks of obsolescence and excess inventory.
A reduction in the need for bulk inventory storage is also spurred on (and futureproofed) by the wider market move away from offshoring and toward onshoring. Illustrating this trend is a survey by McKinsey, which found that 60% of apparel-procurement businesses expect that >20% of materials will be from nearshore by 2025.
Now that components and raw materials no longer need to be shipped and stored in bulk, manufacturing can even happen in remote locations that may be of benefit to military applications where spare parts must be rapidly produced on the field. Check out our article on spare part production in the armed forces here.
2. Increased Flexibility
In the current market environment, where prices of raw materials display unprecedented volatility, and demand for products fluctuates rapidly, it is more necessary than ever for businesses to ensure they are Agile and flexible to the forces of supply and demand.
This question can be existential for businesses, who must make sure that they are not driven out of business due to not meeting supply needs amidst the global supply change crisis, and in turn failing to meet the demands of customers. In Fictiv’s 2021 State of Manufacturing report, 68% of businesses stated that improving supply chain resilience was their number one business priority.
Traditional manufacturing models are inadequate in responding to such fluctuating markets. Their necessarily complex logistics operations mean that they must insure their inventories against unforeseen spikes and drops, while sales networks must measure and manage demand. Transportation systems must be monitored, reviewed and maintained, all resulting in increased worker hours and increased manufacturing costs.
On-demand manufacturing, however, allows businesses to respond to changes in demand quickly and efficiently. If a product suddenly becomes popular, production can be scaled up. Conversely, if demand drops, production can be scaled back without the burden of surplus inventory.
Though traditional manufacturing models are able to cut costs through economics of scale, on-demand manufacturing offers provision for both one-off jobs and massive-scale production runs alike.
AMFG’s MES provides real-time production data, enabling businesses to make quick, informed decisions and adapt to market changes swiftly.
3. Enhanced Customization
On-demand manufacturing is the natural response to an environment where customers expect their demand to be met quickly and exactly to specification. In the marketplace of today, personalization is a significant driver of consumer satisfaction.
Traditional manufacturing methodologies largely prohibit a large degree of consumer customization due to the costs incurred in adjusting hardware in a conventional manufacturing plant. Likewise, a low-volume job would be highly cost-ineffective in a sector that favors bulk production to maximize machine utilization.
On-demand manufacturing allows for greater customization of products without the significant time or cost increases seen by traditional methods. Whether it’s a specific design or functional element, this manufacturing model allows for low-volume manufacturing of unique, tailored products. Novel manufacturing technologies, such as 3D printing, lend themselves to high customization, since there is no material advantage to be gained from producing identical parts, as opposed to builds where each part is made to a custom specification.
This personalization is a key reason why industries such as automotive, fashion, and technology are increasingly adopting on-demand manufacturing.
4. Improved Sustainability
In traditional manufacturing, production leaders must predict the demand from their customers and make estimates on stock. This may result in supply surpassing demand, leaving excess stock having to be stored in warehouses that may be susceptible to damage.
Additionally, businesses may hemorrhage cash due to sudden drops in demand. The coronavirus pandemic, for instance, left traditional manufacturers stranded with useless product, as well as the costs associated with storing it.
On-demand manufacturing aligns with lean manufacturing principles, which focus on reducing waste in the production process. By producing only what is needed, when it’s needed, businesses can significantly reduce waste associated with overproduction and excess inventory. There is no such thing as supply outpacing demand in on-demand manufacturing, when the model is predicated on supply being created only where there is demand.
The approach not only cuts costs but also contributes to sustainability efforts—a key concern for modern businesses.
In fact, in Fictiv’s 2021 State of Manufacturing report, 40% of respondents stated that they were prioritizing investments in sustainable manufacturing in order to reduce their carbon footprint, getting ahead of government-mandated sustainability targets.
5. Improved Customer Satisfaction
Above all, on-demand manufacturing is more likely to lead to greater customer satisfaction, since lead times are cut shorter, even for products that require greater customization.
Keeping an open (and responsive) line of communication open is key to gaining and retaining satisfied customers. In fact, 78% of prospective customers opt for the first responder to a quote inquiry.
On-demand manufacturing methods require transformative software solutions to drive smart MRP predictions behind the scenes – but for a business to operate on a truly on-demand basis, there needs to be some method of demand capture.
This is exactly what is provided with an Instant Quote function on a business’s frontend, such as that offered by AMFG’s MES.
With Instant Quotation, customers can upload CAD models of their builds, generate a highly accurate cost, and put orders through to be produced on the spot, giving a prospective customer a pleasant first-touch with manufacturers.
To take it a step further, with comprehensive MES suites like AMFG, production and shipping times can be accurately scheduled and communicated, and direct shipping integration makes the whole process slick and streamlined, from end-to-end. Prospective customers can upload a custom part and be shown when it will arrive at their door in the same instant, making the whole process of ordering a custom part just as seamless as ordering from a warehouse of ready-produced goods.
Don’t Fall Behind: Digitize Your Business’s Production Workflow
In today’s fast-paced and ever-evolving business landscape, staying ahead of the competition is essential. One of the most effective ways to do so is by embracing the power of on-demand manufacturing and digitizing your business’s production workflow.
By leveraging digital technologies and automation, you can revolutionize your manufacturing processes, streamlining operations, and gaining a competitive edge.
Adopting on-demand manufacturing allows you to respond swiftly to changing market demands, reduce production lead times, and optimize resource allocation. With digital tools, you can achieve greater flexibility and customization, producing goods according to specific customer requirements.
By embracing on-demand manufacturing, you can unlock new opportunities, enhance efficiency, and future-proof your business in a rapidly evolving marketplace.
Don’t fall behind: schedule a demo of AMFG’s comprehensive manufacturing workflow software package today.
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