Industry Trends

Traditional manufacturing models vs. on-demand manufacturing

By May 26, 2020
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The rise of on-demand manufacturing

The on-demand economy is officially here. From Amazon’s two-day and next-day delivery services to media streaming platforms and grocery delivery subscriptions, what seemed unthinkable just a few short decades ago has now become the norm.

This new economic model is revolutionizing how consumers access the retail, finance, media, entertainment, and hospitality sectors, and how they engage with services including staffing, transportation, and more. In order to keep pace with the increasing rate of change spurred by the on-demand economy, organizations across sectors are modifying their business models, aiming to increase agility and flexibility. These efforts may involve moving to on-demand production models, rapid delivery, and real-time access to services. These initiatives grant consumers more personalized experiences that are tailored to their specific needs.

One of the most important embodiments of this movement is the rise of on-demand manufacturing. Where traditional models of manufacturing relied on product developers to work with distant manufacturers to order production runs with high minimum quantities and long lead times, on-demand manufacturing allows for greater support and interaction between client and vendor during every phase of the production process. From prototyping to final delivery, cloud-based software makes it possible for manufacturers and developers to communicate and manage projects in real time and with greater control.

How on-demand manufacturing works

The primary benefit of the manufacturing-on-demand model is that it allows goods to be produced when they’re needed — and only in the quantities required.

Traditional manufacturing vs. on-demand manufacturing

Traditional manufacturing models rely on orders with high minimum quantities to be cost effective — as production volume increases, the cost per part decreases. This often also requires a substantial physical footprint to store all the product until it’s ready to ship. This combination has the potential to eat into profit margins — particularly when considering additional costs associated with disposing of excess materials and product if volume predictions are too high, and with maintaining a properly outfitted warehouse.

Alternatively, on-demand manufacturing takes advantage of the flexibility of online services and cloud-based technology to provide manufacturing solutions that are tailored to deliver precisely what the customer needs when they need it. Self-service software enables customers to upload their own design specifications and connect in real time with manufacturers who can guide them through the entire production process. The approach eliminates many of the communication delays associated with the traditional business model, grants greater visibility into project management, and mitigates losses.

This model ultimately offers greater flexibility and ease of production for small batches of parts, which is why on-demand methods can also be a more efficient way to maintain inventory levels. On-demand manufacturing minimizes warehouse stockpiling without limiting the size of production volumes — once finalized, the parts are shipped directly to the customer, eliminating the need to store excess stock for a later date. This creates more opportunities for manufacturers to create niche and specialized parts.

Limitations of the on-demand manufacturing model

While the on-demand model requires less stock and lower upfront investment for production, it offers a smaller margin for error. Maintaining lower product and material inventories makes manufacturers more dependent on supply chains to uphold their obligations, as any error could potentially affect the manufacturer’s production ability.

Supply shocks — like material shortages or sudden spikes in the price of raw goods — pose a greater threat to on-demand manufacturers. Maintaining low inventory can help a manufacturer’s bottom line, but effective implementation of an on-demand model requires greater coordination across the supply chain.

For manufacturers, this often requires investing in IT solutions that automatically notify their suppliers when an order is received. The inherent agility of this synchronized approach allows manufacturers to scale production quickly and cost effectively to meet consumer demand, even when demand increases unexpectedly.

Expanding accessibility via on-demand manufacturing

The shift toward on-demand services has revolutionized the ways in which the manufacturing industry rises to meet the demands of a rapidly changing world. Service-based manufacturing is making part production accessible to small businesses and even individuals, rather than remaining solely the domain of wealthy corporations. As manufacturers continue to develop new methods of making production more convenient and flexible to customer needs, the means by which engineers and designers create and share part designs are likely to continue evolving.

Fast Radius and on-demand manufacturing

At Fast Radius, our designers, engineers, and project managers are committed to working closely with each of our customers during every stage of the production lifecycle to ensure that each part is optimized for quality, ease of manufacturing, and end-use. Contact us today to get started on your order.

To learn more about the benefits of on-demand manufacturing, visit the Fast Radius resource center. There, you’ll find information about which processes work well for on-demand orders, as well as the range of services we offer and viable materials that can be used for each.

Ready to make your parts with Fast Radius?