Manufacturing is a centuries-old industry. However, on-demand manufacturing (or manufacturing on-demand model) is quite a recent phenomenon. Even in this short time, on-demand manufacturing is becoming a fastly adopted model in industries and replacing traditional manufacturing processes in many regards.
Due to the growing popularity of on-demand manufacturing, professionals in the manufacturing industry often question the viability of this process. Many people also wish to have a clear understanding of the on-demand manufacturing model along with the advantages and disadvantages it entails.
This article will explore all the intricacies of on-demand manufacturing and explain how the process works. With the information provided here, you will also learn about the hand-by-hand comparison between the on-demand manufacturing model and the traditional manufacturing process.
What is On-Demand Manufacturing?
In an on-demand manufacturing model, products are manufactured when they are required and ordered, usually in small quantities. It is known by different names such as cloud manufacturing, custom manufacturing, or manufacturing on-demand model. It is very different from the traditional manufacturing model, where the manufacturing industry created the products beforehand anticipating consumer demand.
What Led to the Emergence of On Demand Manufacturing Services?
There are many factors that led to the evolution of traditional manufacturing into manufacturing on demand. These factors include:
Modern Manufacturing Equipment
In the early days, manufacturing was done through methods like the assembly line production process, where there was no scope for custom manufacturing or low-volume production batches. However, modern manufacturing equipment such as CNC machining and 3D printing has completely changed the idea of what is possible. They can not only create small-volume production runs but can also include any custom manufacturing requirements.
The advent of e-commerce has completely reshaped the logistics network around the globe and within national borders. There are no limitations to the size of what can be transported, and the transportation speeds have increased manifold. Therefore, customers can get their orders on a strict time schedule whenever needed, eliminating the need for bulk production.
Manufacturers can identify and eliminate bottlenecks and potential problems by utilizing digital manufacturing processes. They can also improve the product quality and incorporate changes that the users require. Therefore, running an on-demand production process ends up increasing the production rate and customer experience at the same time.
The emergence of Industry 4.0 has also pushed the concept of on-demand manufacturing. With options such as cloud-based technology, companies are shifting to a new model where traditionally in-house teams can now collaborate virtually, making it easier to create and implement changes.
How Does On-Demand Manufacturing Work?
In on-demand manufacturing, items enter the production process after the order is placed. Companies send their orders to the manufacturer after the customers place their orders with the company. Generally, the payment for the products is made upfront. Even the quantities in the production process match the quantities required by the customers.
While it seems like the ideal design for small businesses, even large companies like Amazon have adopted this manufacturing business model.
Traditional Manufacturing vs On-Demand Manufacturing
The manufacturing industry often debates over which is the better method between traditional manufacturing and on-demand manufacturing. Here is a side-by-side comparison of these two methods along with the pros and cons of each:
In traditional manufacturing, a high volume of orders is placed with the manufacturer. After the production is complete, the parts go into the inventory for storage. The main purpose behind this method is to reduce the per-unit cost to the minimum.
This occurs since the fixed costs involved in the manufacturing process are spread over a huge volume of products. At the same time, costs of inventory and warehouse stockpiling are added to the process.
Advantages of Traditional Manufacturing
Here are the benefits of the traditional manufacturing process:
- Low unit cost: By utilizing the economies of scale of a large production volume, manufacturers are able to reduce the per unit cost of the products.
- Uniform approach: Generally, the production volume of large quantities ensures a higher uniformity since the exact same methods and processes apply to the products.
Disadvantages of Traditional Manufacturing
While it is the most popular manufacturing process, there are certain disadvantages of traditional manufacturing such as:
- High lead times: The lead times in traditional manufacturing are significantly high, usually ranging from weeks to months. This is because traditional manufacturing requires the buyer to source the companies, get quotes, review the quotes, and place orders. The sourcing and quoting process itself can take weeks since the manufacturers have to review the requirements of the buyers.
- Warehouse Stockpiling: Traditional manufacturing requires infrastructure for the storage of physical inventory levels. This creates the need for space and resources. Product inventory management requires a dedicated team in itself that is skilled in operating the required inventory software.
- High initial cost: In traditional manufacturing, companies are ordering a very high production volume. Therefore, they require a huge initial investment for order fulfillment.
- Obsolete Units: While manufacturers are producing goods in large quantities, there is no guarantee that all of the stock will be consumed. There is always the risk of fading consumer demand or the product becoming obsolete. This can lead to significant losses.
Since on-demand manufacturing is done to meet consumer demand, it eliminates all of the drawbacks of traditional manufacturing methods. Additionally, it brings along several benefits that are unique to this method.
Advantages of On-demand Manufacturing
Here are the benefits of the on-demand manufacturing process:
- Customization: Since the production is happening after the consumer has placed their order, there is a high degree of customization possible. This makes it a custom manufacturing method.
- Time Efficiency: On-demand manufacturing has a better overall turnaround time. This is because of the reduced time in quotations, lead times, and a single point of production.
- Reduced Costs: Manufacturing on demand eliminates the costs involved in inventory and warehousing. The products, once manufactured, are directly handed to the customers.
- Quality Control: Since the production happens in small batches, there is more control over the individual product quality standards. Manufacturers cannot cut corners and products do not turn defective, as usually happens in large production runs.
- Cash Flow: In an on-demand manufacturing model, there is a consistent cash flow due to its supply chain design. This is because the payments for the orders are done upfront. The cash flow helps in placing subsequent orders and managing other expenses of the company. Traditional manufacturing methods require a huge initial investment due to the lack of consistent cash flow.
- Market Testing: Market testing is one of the major benefits that on-demand manufacturers enjoy. They can take feedback from the consumers and incorporate changes in the next batch of production. This makes on-demand manufacturing the desired model for consumer-centered businesses.
- No Minimum Order Requirements: On-demand manufacturing services make it possible to meet the demand for niche products that do not require a huge volume of production. As such, there are no minimum order quantities required for this process since the whole business model along with the equipment is built around fulfilling a small number of orders as they come.
- No Overproduction: All the units produced with on-demand manufacturing are used by the consumers. There is no chance of overproduction, as usually happens with traditional manufacturers since they have to meet estimated long-term sales which can be quite lower than the actual consumer demand. Elimination of overproduction not only reduces losses for the manufacturers but also helps in reducing the environmental impact of production.
- Streamlined Operations: With on-demand manufacturing, brands can outsource the manufacturing processes to third parties. This helps them in freeing up their resources to focus on what they do best- operations, marketing, and sales.
- Sourcing: Traditional manufacturing requires the buyers to source the materials that they need for the product. However, on-demand manufacturers already have a lot of partners at their disposal that can provide all kinds of materials and tools needed.
- DFM Feedback: Design for Manufacturability (DFM) feedback lets the companies know about the flaws that are present in their CAD models. For instance, a metal product should have a minimum wall thickness or it can collapse. This feedback is provided to companies instantly in on-demand manufacturing when they provide their CAD model to 3ERP.
Disadvantages of On-Demand Manufacturing
While there are quite a lot of benefits of on-demand manufacturing, it comes with certain disadvantages as well. Here are some of the cons of the process for manufacturers:
- Supply Chain Dependency: Traditional manufacturers stock large amounts of products in inventory so that there is no disruption of products in case of any problems in the supply chain. However, on-demand manufacturing is heavily dependent on the supply chain for fulfilling their promised orders to the customers. In case of any disruption in the supply chain, the manufacturers cannot fulfill their obligations making them seem untrustworthy.
- High Production Volume: While on-demand manufacturing provides the best option for low production volume needed for instances like new product introduction, it does not perform so well for sustained production when consumer demand increases. Traditional manufacturing turns out to be the better option in this regard to save production costs and for better feasibility.
- Ensuring Quality: There are certain on-demand manufacturing service providers like 3ERP that handle the manufacturing processes themselves and ensure strict quality standards. However, there are also certain service providers that only finalize the details and hand over the production stage to other small-scale third-party manufacturing partners. This can lead to serious flaws in product quality.
- Available Services: While certain on-demand manufacturers offer a wide spectrum of services, for others the service availability is very limited. If your product has an intricate design, there is a possibility that it falls outside the zone of a particular service provider. Therefore, it is important to thoroughly research the services you require and cross-check with the manufacturing partners if they can provide the exact same services.
- Intellectual Property Theft: On-demand manufacturing involves handing over your design models, blueprints, and CAD models to the services provider. Therefore, there is a risk of intellectual property theft when dealing with a malicious provider or employees. Of course, these things do not happen when reputed manufacturing companies such as 3ERP handle the project.
What are the Technologies Used in On-Demand Manufacturing?
There are a wide range of technologies that you can use for an on-demand manufacturing system. Some of these technologies are:
3D printing has become one of the most popular manufacturing technologies for small production runs such as in the prototyping stage. The process offers a very cheap price while compromising accuracy to a certain degree. A major point to note is that 3D-printed products can only be plastic-forming materials.
Stereolithography (SLA) is a subtype of the 3D printing process. It is known by many other names such as resin printing, optical fabrication, and vat photopolymerization. It uses a high-powered laser ray focussed on a photopolymer resin. The movement of the ray is defined by the CAD files. The liquid resin hardens layer by layer and gets turned into the final part.
Fused Deposition Modeling (FDM)
Fused Deposition Modeling (FDM) is also known as Fused Filament Fabrication (FFF). This method is a subtype of 3D printing itself. It uses a wire filament fed through a spool to the printing head, where it is then melted and shaped into the desired part as the head moves with computer movement.
Selective Laser Sintering (SLS)
SLS is a type of additive manufacturing method where a laser sinters a nylon or polyamide-based powder to solidify it into the desired shape. The laser movement is controlled by a computer similar to a 3D printing machine. This technology is exclusively used for manufacturing in low volumes and rapid prototyping.
Direct Metal Laser Sintering (DMLS)
DLMS is very similar to SLS, with the difference being that DLMS uses a metal powder to create the part. This process is usually applied to create rugged high-performance components which cannot be made out of polymers like nylon or polyamide.
CNC machining has been around for quite some time. The progress of on-demand manufacturing has tapped into the advantages of CNC machining very well. It works well for almost all materials and provides unparalleled precision. There are many different types of CNC machines, each with its own purpose and design specifications.
Injection molding is another popular manufacturing technique used for both small-scale and large-scale production. This process injects a plastic-based resin into a mold to create the desired part shape. It is also a cheap production method while having low precision.
Sheet Metal Forming
Sheet metal forming involves turning a flat metal sheet into the required part. The part shape is obtained by the deformation of the metal sheets through different types of processes. While it sounds like a simple process, it is quite an expensive one. However, some new Incremental Sheet Forming Technologies can help in reducing the cost while maintaining high quality.
What are the Use Cases of On-Demand Manufacturing Services?
There are more and more industries that are adopting the on-demand manufacturing model in their supply chain. Here are some of the use cases of companies that are already using this manufacturing system:
The cost of parts in automobile industries is quite high. Therefore, manufacturers are now switching to an on-demand manufacturing system for their components to free up costs that are otherwise locked in maintaining inventory levels for the parts.
Textile industries generate an astonishing amount of waste since raw materials and finished products go out of fashion every now and then. Therefore, on-demand manufacturing is becoming a go-to model for the fashion industry.
E-commerce has been one of the major sectors that pushed the trends toward on-demand manufacturing. Big brands adopt this model since it allows them to fulfill consumer demand without maintaining a warehouse of every possible item.
The robotics sector is still at an early stage and is completely driven by innovation. Therefore, manufacturers cannot create large quantities of parts as there are constant improvements and better technologies. On-demand manufacturing provides the best way to meet the needs of these innovation-based sectors.
The products in the healthcare industry often require prompt order fulfillment and there are several instances where the traditional manufacturing setup won’t suffice. In these cases, on-demand manufacturing steps in to fill the required product inventory just in time.
The components for the aerospace industry are generally very niche and require manufacturing products in a limited number. On-demand manufacturing gives the best solution in this regard.
On-Demand Manufacturing With 3ERP
3ERP is the leading global provider of on-demand services. It has been the go-to manufacturing partner for numerous businesses based around the world due to the countless benefits it provides over other options.
3ERP provides a wide range of on-demand manufacturing services, such as plastic 3D printing, metal 3D printing, Urethane casting, CNC machining, rapid prototyping, rapid tooling, low-volume injection molding, low-volume extrusion, low-volume metal casting, and more. The platform provides instant quotes for the specific demands that you might have. Additional platform features include DFM feedback that evaluates every possible drawback in the CAD model you provide.
Another advantage of 3ERP is that it is a scalable manufacturing solution. In case the manufacturing requirements for your product increase in the future, 3ERP also provides mass production options.
It is quite clear from the current industry trends that on-demand production is becoming the desired manufacturing process around the globe. More and more industries are shifting towards this model for low-volume production.
The clients of on-demand manufacturing are no longer small businesses. Even medium-sized businesses and large-scale conglomerate such as Amazon works on-demand manufacturing. If you are wondering if on-demand manufacturing will work for your business, it definitely will. Get in touch with a 3ERP executive to discuss your needs and get the answer to any queries that you might have.