This article will take an in-depth look at on-demand
manufacturing.
The article will bring more detail on topics such as:
What is On-Demand Manufacturing?
The Importance of a Demand Environment
Disadvantages of On-Demand Manufacturing
On-Demand Companies
Chapter 1: What is On-Demand Manufacturing?
On-demand manufacturing is a manufacturing concept used to produce goods, products, items, and parts as they are needed in specified quantities and following required time constraints. It is a method of production that has been adopted to avoid manufacturing costs, warehousing costs, and assist customers in meeting tight production schedules.
Using short production runs, on-demand manufacturing is influenced by customer demands and requirements. It is an extension of relationship selling where customers and producers work together to achieve manufacturing goals, with the essential ingredient being manufacturers and producers working together. On-demand manufacturing rests on the rapid improvement of technology that has made it possible to shorten production cycles to produce improved and innovative products at a lower cost.
The emergence of cloud-based platforms and technologies has altered the landscape for the manufacturing industry and offers quick turnaround on quotes and boosts supplier management productivity, and enhances order visibility throughout the supply chain – all managed in a convenient online platform accessible from anywhere. Small orders of simple parts and components can easily be produced in limited quantities.
In theory, suppliers provide their available manufacturing capabilities and pair it with the immediate demand from buyers. This process allows for the maximum efficiency of resources. In many cases, on-demand manufacturing is used as a substitute to promote offshore manufacturing.
On-demand manufacturing has become increasingly popular in recent years due to advances in technology and the ability to quickly produce goods on-demand. However, it seems common that many on-demand companies disguise themselves as local operations, when in reality some use international partnerships and actually outsource the work. This hidden outsourcing can result in several risks that need to be considered.
Short Run Production
To better understand on-demand manufacturing, it is important to understand short run production, which is due to a lack of production scaling, overcapacity, or capabilities. Manufacturing is based on long term relationships with long term production runs. Short run production sometimes is required but it is difficult to find suppliers that want to undertake all the costs associated with short run production issues although it allows manufacturers to charge more for their services and run times. The costs involved as well as preparations make it difficult to find manufacturers who can meet immediate needs. On-demand manufacturing addresses this problem by having the technological and production expertise.
In an on-demand manufacturing system, the most efficient use is to process short run orders using sophisticated software that connects buyer requirements with multiple supplier availability. This efficiency provides great resource allocation to the economy by coupling engineering with pricing software for competitive selection. A price is quoted, and both the buyer and seller agree on it. The on-demand site offering this service also serves as a middleman and executes the contract and charges a fee approximately 5-20% of the order.
Long Run Production-Conventional Manufacturing
Conventional manufacturing is a foundation of the modern economy, involving long manufacturing runs. It involves mass-producing goods in large quantities using specialized machinery and assembly lines. Conventional manufacturing has been around since the first automotive assembly lines, which have undergone significant changes over time, particularly with the advent of new technologies.
A key advantage of conventional manufacturing is its ability to produce goods in large quantities at a low cost. By using specialized machinery and assembly lines, manufacturers are able to produce products quickly and efficiently, thereby reducing production costs. This, in turn, allows manufacturers to offer goods at more competitive prices, making them more accessible to consumers.
Another benefit of conventional manufacturing is the consistency and quality of the products produced. By utilizing automated machinery and standardized processes, conventional manufacturers are able to produce goods that meet strict quality standards. This is particularly important in industries where product consistency is critical, such as the automotive, aerospace, and medical industries.
Conventional manufacturing continues to evolve with the times. Today, manufacturers are incorporating new technologies such as robotics, automation, and artificial intelligence to further streamline and enhance production processes. By doing so, manufacturers are able to increase production output and further reduce costs, while maintaining high levels of quality and consistency.
Zetwerk
With its patented project management tools, technology, and teams, Zetwerk's Production Operating System promotes automation, transparency, and quality throughout the manufacturing process. Regardless of the product, specification, scale, or location, Zetwerk can double production demands overnight. In addition, its partner facilities and global supply network allow for fast scaling up and down of production.
A global industrial network called Zetwerk seeks to maximize effectiveness, quality, and value. Customers can lower the cost of new and used production parts, maximize the number of suppliers, and complete high-quality production more quickly thanks to its manufacturing capabilities. With real-time information consolidated for clients across project levels, Zetwerk gives customers total control over ongoing projects.
Additionally, consumers may easily access data on shipments, tracking, images of each project step, tax compliance, shipping documents, past-due or forthcoming payments, inspection reports, and in-depth analytics and insights into each stage of production. Zetwerk provides a wide variety of production solutions that guarantee the proper match for specifications at reasonable costs and lead times for everything from clothing to aviation engines. Zetwerk maximizes capacity, synchronizes capability, and transforms markets regardless of the demand for capital goods, consumer goods, or precision parts.
Chapter 2: Advantages of On-Demand Manufacturing
On-demand manufacturing is another method used for the production of products and, in some cases, provides various services. It is a method of manufacturing that is designed to produce products as they are required and needed using available resources. The purpose of the process is to eliminate the need for storing items in a warehouse waiting for orders to arrive. With on-demand manufacturing, customers plan their orders in advance such that manufacturers are ready to receive an order and have the appropriate materials on hand. The design of the process is supposed to shorten the time between the placement of orders and the delivery of the final product.
As can be assumed by this description, on-demand manufacturing is not designed for large orders or high volume orders since the resources and materials are not readily available. Additionally, on-demand manufacturing is designed for the production of small parts, components, and mechanisms that are simple to produce quickly. Large equipment such as presses, boilers, and complex machinery require more time and planning than is part of the on-demand process.
Advantages of On-Demand Manufacturing
The need to keep raw materials and the products they are used to make virtually disappears with on-demand manufacturing services. Brands can now directly meet consumer demand because orders are fulfilled when requested, as opposed to speculating on seasonal consumer demand and building inventory. The need to predict new product volumes or satisfy minimum order requirements is reduced to a minimum thanks to on-demand, which also enables businesses to avoid the expense of warehousing and divert staffing resources to other projects.
Brands that use traditional manufacturing must determine the demand for each product. This results in overproduction, particularly in the fashion sector, where fashions and trends can change quickly. Many products go to waste in landfills or are burned when they are not purchased. A loss of more than $100 billion per year can be attributed to the nearly 87 percent of wasted textile materials. On-demand manufacturing eliminates wasteful production since it enables businesses to generate only the products that customers order. In other words, cloud manufacturing businesses can establish a shorter, more effective supply chain.
Brands can outsource their supply chain management needs with demand manufacturing. This enables them to focus more on what they do best—designing, promoting, and selling—and less on logistics. Additionally, manufacturing on-demand allows businesses of all sizes to quickly and affordably test out new concepts and designs. Due to the simplicity and effectiveness of production on-demand, small businesses and startups can enter the market quickly. On-demand manufacturing is a particularly effective strategy for scaling operations for companies in the garment and home goods categories, which have experienced tremendous growth over the past year.
The wants and personal preferences of end users differ greatly from their needs. Manufacturers can supply exactly what a customer wants in terms of numbers and specifications thanks to demand production. Contrarily, a customer's request for a personalized product is almost unattainable under the conventional manufacturing approach. This is because the hardware configuration in traditional production facilities is fixed, and making significant changes would be expensive. Additionally, employing a standard manufacturing setup to produce a small number of goods would be very inefficient financially. On the other hand, with demand manufacturing, a customer may quickly buy and receive even a single prototype, regardless of how complex it is, and have it manufactured.
Due to the high volume of products that are often produced, establishing a traditional manufacturing facility is quite expensive, with some machines costing millions of dollars. On the other hand, systems for manufacturing on-demand can efficiently manage modest volumes that can be produced with far less expensive machinery. Small and medium-sized businesses can now establish small-scale manufacturing facilities.
The regular customer-manufacturer communication, quick turnaround times, adaptability, affordability, and operational transparency that are hallmarks of custom manufacturing have significantly increased the rate of technical innovation. Inventors and innovators can create items and have a single prototype made at an astonishingly quick pace and for a comparatively low price. The product can then be improved using the prototype, resulting in a swift time to market.
The number of fantastic items that hit the market every day has significantly risen because of CAD and on-demand production. Only huge firms could previously afford the costs associated with developing, testing, and manufacturing a new product.
Traditional manufacturers may not be able to give samples because their facilities are designed for large production, and prototypes developed by them can be very expensive. Using an on-demand manufacturer makes prototyping simple and adaptable, allowing businesses to swiftly iterate on concepts before going into production.
Instant quotation engines are used in demand manufacturing to estimate production costs. These fast quotes eliminate the back-and-forth involved in traditional production, which improves the client experience.
Additional Advantages
Small runs are more economical.
Improved communication between customer and supplier.
In instances where there may be problems, the lines of communication are readily available and accessible.
Since most on-demand manufacturing agreements are successful, the producer and customer equally share the success and the benefits.
One of the major benefits of on-demand manufacturing is better control of the process where the customer and manufacturer work as a team to ensure success.
A constant problem in manufacturing is changes in product design in the beginning or middle of production, which affects the cost of the product. Using an on-demand manufacturer makes it possible to halt production and initiate design changes or have prototypes produced in several configurations prior to the initiation of production.
When the on-demand process is being off-shored, products can be perfected, improved, adjusted, and finalized before being sent off shore.
On-demand manufacturing gives a customer a competitive advantage that cannot be found in any other form of production. The complete process from the initiation of an idea to the presentation of a product is controlled, overseen, monitored, and inspected such that the final product is ready for market without flaws or errors.
In many markets, the success of a product is dependent on how quickly it gets to market in order to beat the competition and ensure proper timing. On-demand manufacturing offers the flexibility and dynamics that can quickly get a product to market with the proper timing to meet demand, which is an essential component of on-demand manufacturing.
Chapter 3: Disadvantages of On-Demand Manufacturing
It can easily be misconstrued that on-demand manufacturing is a quick and easy process that provides instantaneous response to customer demands. Unfortunately, this is not the case. There are multiple factors that have to fall into place for on-demand manufacturing to work smoothly and efficiently. In only a small percentage of cases does on-demand manufacturing perform up to expectations due to several limitations.
The decision to use an on-demand producer has to be very carefully considered and analyzed since there are so many factors that can delay the process, produce inferior products, and leave a customer in an unpredictable situation. What is essential, when entering into any on-demand agreement, is that every aspect of the production process be visible and accessible. This is especially true when a supposed on-demand provider sends orders off-shore, which can result in inferior materials and low quality products, a situation that has become all too common with on-demand service providers.
The Role of the Middleman
The Middleman Fee
Waiving Liability
Loss of intellectual property protection
Limitations in material options, fabrication techniques, and quality
Manufacturing Scalability Issues
The Role of the Middleman
The primary role of the on-demand manufacturing site is to be the middleman in the transaction between the buyer and the seller. The role is to transact the relationship between the buyer and the seller for a fee usually set at minimum 5% of the transaction and is executed through the site’s software programs. The buyer and seller do not know each other and the engineering and quality standards are the responsibility of the middleman. The middleman also is responsible to collect all fees and pay all amounts due. However, the middleman indemnifies their operation in terms of any of the failures of the two parties. It's worth noting that not all on-demand manufacturing companies will provide all of these services. Some may focus primarily on connecting buyers with manufacturers, while others may be more involved in handling logistics, quality control, finance, engineering, etc. As with any business transaction, it's important for buyers to do their due diligence and research the specific on-demand company they plan to work with to ensure they understand the company's role in the transaction.
The Middleman Fee
The cost of the middleman fee is a significant disadvantage of on-demand manufacturing. On-demand manufacturing often requires the involvement of a third-party company to facilitate the production of goods. This can include manufacturers, distributors, or other service providers.
These third-party companies charge a fee for their services, which can significantly increase the overall cost of the product. The fee charged by these middlemen varies depending on the service provider, the complexity of the product, and the volume of the order. In some cases, the fee can be as much as 10-20% of the total cost of the product.
One reason for the high cost of the middleman fee is the additional administrative and logistical work involved in on-demand manufacturing. With conventional manufacturing, the buyer typically deals directly with the manufacturer, and there is no need for a third-party company to facilitate the process. However, with on-demand manufacturing, there is often a need for a third-party company to coordinate the production process, manage inventory, and handle logistics, which can add to the overall cost of the product.
Another factor that contributes to the high cost of the middleman fee is the economies of scale. With traditional manufacturing, the manufacturer can produce a large quantity of goods, which allows them to spread their fixed costs over a larger number of units. This results in a lower cost per unit. However, with on-demand manufacturing, the manufacturer produces only the quantity that is needed, which means that the fixed costs are spread over a smaller number of units, resulting in a higher cost per unit.
Moreover, the cost of the middleman fee can be particularly challenging for small businesses or startups. These companies often have limited resources and are looking for cost-effective ways to produce their products. The additional cost of the middleman fee can make on-demand manufacturing less viable for these businesses, especially when compared to conventional manufacturing.
Waiving Liability to the On-Demand Middleman
As the popularity of on-demand manufacturing continues to rise, it is important for businesses and individuals to understand the potential legal implications of utilizing these services. One particular issue to consider is the issue of waiving liability to the on-demand company.
When using an on-demand manufacturing platform, customers may be required to sign a contract (or agree to website or software terms) that includes a waiver of liability for the platform or middleman. This essentially means that the customer is giving up their right to hold the platform or middleman responsible for any issues that may arise during the production process. This may include problems such as delivery delays, defective products, or intellectual property disputes.
While this waiver may seem like a minor legal detail, it can have significant consequences if not carefully reviewed. By signing this waiver, customers are essentially assuming all risks associated with the manufacturing process. This means that if a problem does arise, the customer will be solely responsible for any resulting damages, rather than the platform or middleman.
It is important for customers to carefully review the terms and conditions of any on-demand manufacturing platform before agreeing to use their services. This includes carefully reviewing any liability waivers and understanding the potential legal implications of signing such a document. It may also be advisable to consult with a legal professional to ensure that your interests are fully protected.
In conclusion, it is important to carefully consider the legal implications of utilizing these services. Understanding the risks associated with waiving liability to the on-demand company can help customers make informed decisions and protect themselves in the event of any issues during the production process.
Loss of Control over Production
The loss of communication between buyers, sellers, and their engineers is another significant disadvantage of on-demand manufacturing. With traditional manufacturing, the buyer and the manufacturer have direct communication channels and can work together to ensure that the final product meets the buyer's specifications. However, with on-demand manufacturing, there is often a lack of direct communication, which can lead to misunderstandings and errors in the final product. It is even a bigger issue of the manufacturing being done overseas.
One of the reasons for the loss of communication is the involvement of a third-party company in the on-demand manufacturing process. This can create a communication barrier between the buyer and the manufacturer, as the third-party company becomes the intermediary between them. In some cases, the third-party company may not have the necessary technical expertise to fully understand the buyer's requirements, leading to a lack of clarity in the manufacturing process.
Another factor contributing to the loss of communication is the fast-paced nature of on-demand manufacturing. With on-demand manufacturing, products are produced in real-time to meet immediate demand. This means that there is often a tight deadline, which can result in a rushed production process and reduced opportunities for communication between the buyer, seller, and their engineers.
The lack of direct communication between the buyer, seller, and their engineers can lead to errors in the final product. Without clear communication channels, the manufacturer may not fully understand the buyer's requirements, resulting in a product that does not meet the buyer's expectations. In some cases, this can lead to the need for rework or even product recalls, which can be costly for all parties involved.
Additionally, when communication is lost, it can be challenging to address any issues that arise during the production process. For example, if the manufacturer encounters a problem that requires input from the buyer or their engineer, the lack of direct communication can make it difficult to resolve the issue quickly and efficiently.
Quality Control Issues
One of the biggest risks of outsourced production in on-demand manufacturing is the potential for quality control issues. On-demand manufacturers already have greater risk for quality control problems in comparison to traditional manufacturing, so moving the work to another part of the world introduces additional layers of risk. Companies may be unable to adequately monitor production processes and quality standards in foreign countries, leading to inferior products being produced. This can result in customer dissatisfaction and harm a company's reputation, even if the company is attempting to market itself as a local operation.
Loss of Intellectual Property Protection
Loss of intellectual property is another disadvantage of on-demand manufacturing. Intellectual property refers to the ideas, inventions, or creations that are the result of one's intellect, and it includes patents, trademarks, copyrights, trade secrets, and designs. In the on-demand manufacturing process, it is common for buyers to provide their designs, specifications, and technical information to manufacturers to produce their products. There is a need for businesses to take extensive measures to protect their intellectual property and prevent unauthorized use or reproduction.
The transfer of intellectual property from the buyer to the manufacturer can result in the loss of control over the design and the technical information, which can potentially lead to the theft of intellectual property. In some cases, the manufacturer may produce additional products without the buyer's consent, leading to a loss of intellectual property rights.
Furthermore, in the on-demand manufacturing process, multiple parties are often involved in the production process, such as the manufacturer, the third-party platform provider, and shipping companies. The involvement of multiple parties increases the risk of the loss of intellectual property as more individuals have access to the design and technical information.
Additionally, on-demand manufacturing often involves international partners, which can further increase the risk of the loss of intellectual property. Intellectual property laws and regulations can vary from one country to another, making it difficult to enforce intellectual property rights. This can lead to the unauthorized use of the design and technical information by parties in other countries, resulting in a loss of intellectual property rights.
The loss of intellectual property can have significant consequences for the buyer. It can result in a loss of competitive advantage, reduced profits, and damage to the reputation of the buyer. Furthermore, the loss of intellectual property can also result in legal disputes, which can be costly and time-consuming for all parties involved.
To mitigate the risk of the loss of intellectual property in on-demand manufacturing, it is essential to have a clear agreement between the buyer and the manufacturer that outlines the terms of the intellectual property transfer. The agreement should specify the scope of the transfer and the restrictions on the use of the design and technical information. Additionally, it is advisable to work with manufacturers who have a proven track record of protecting intellectual property rights and to conduct due diligence before entering into any agreements with them.
Limitations in Material Options
One major limitation of on-demand manufacturing is the range of material options that are available. On-demand manufacturers typically work with a limited range of materials, and they may not be able to offer the full range of options that are available with traditional manufacturing methods. This can be particularly problematic for industries that require specialized or exotic materials, such as aerospace, defense, and medical industries.
Another limitation is the fabrication techniques that can be used. While on-demand manufacturing has made significant progress in recent years, it still has some limitations in terms of the fabrication techniques that can be used. For example, some complex geometries or intricate parts may be difficult or impossible to fabricate with on-demand manufacturing methods.
The range of colors and finishes may be more limited compared to other traditional manufacturing methods. While there are many materials available, the range of colors and finishes is generally more limited compared to other traditional manufacturing methods. This can limit the range of aesthetic options available for products, particularly for consumer products.
Additionally, the availability of materials may be limited in certain regions or for certain on-demand manufacturing providers. Some materials may only be available from specific suppliers or manufacturers, which can increase costs and lead times for production.
Finally, the quality of on-demand manufacturing products can be a concern. While on-demand manufacturing can produce high-quality parts, there may be limitations in terms of the tolerances and surface finishes that can be achieved. For example, certain plastics may be unsuitable for high-stress or high-temperature environments. In addition, there may be variations in the quality of the parts produced, depending on the specific on-demand manufacturing process and equipment used.
Manufacturing Scalability Issues
Another potential disadvantage of on-demand manufacturing is scalability, or the ability to produce products at high volumes. While on-demand manufacturing can be highly efficient and cost-effective for low to medium volume production runs, it may not be the best option for businesses that require high-volume production runs.
One reason for this limitation is that the equipment used in on-demand manufacturing is generally optimized for low to medium volume production. For example, 3D printers and other on-demand manufacturing machines may not be able to produce products at the same speed as traditional manufacturing methods. This can result in longer lead times and increased production costs for high-volume production runs.
In addition, on-demand manufacturing may require more frequent maintenance or upgrades compared to traditional manufacturing methods, which can result in additional costs and downtime. This can make it difficult to scale up production quickly to meet changing demand.
Furthermore, some on-demand manufacturing methods may not be suitable for certain types of products, such as those that require high precision or a specific level of surface finish. In these cases, traditional manufacturing methods may be more appropriate and cost-effective.
Dependence on Foreign Suppliers
Outsourced production in on-demand manufacturing can also result in dependence on foreign suppliers, which can lead to several risks. Economic risks, such as currency fluctuations and changes in economic conditions, can have a significant impact on the cost of goods.
Additionally, outsourcing can make companies vulnerable to political instability in the countries where they are outsourcing, which can lead to production disruptions and delivery delays in either country.
Environmental Concerns
Outsourced production in on-demand manufacturing can also have negative environmental impacts, particularly in countries where environmental regulations are lax or non-existent. This can lead to negative impacts on local communities, such as pollution and the depletion of natural resources. Additionally, the increased shipping distances involved in outsourcing can result in a larger carbon footprint, even if the company is attempting to market itself as having a local presence. It may also be advisable to consult with a legal professional to ensure that your interests are fully protected.
In conclusion, it is important to carefully consider the legal implications of utilizing these services. Understanding the risks associated with waiving liability to the on-demand company can help customers make informed decisions and protect themselves in the event of any issues during the production process.
Chapter 4: The Importance of an On-Demand Environment
On-Demand Companies in a Contracting Economy
On-demand manufacturing faces many challenges in a contracting economy. One of the main challenges of a contracting economy is the decrease in demand for goods and services. In the on-demand manufacturing industry, this can lead to a decrease in orders from buyers, which can in turn impact the revenue of the manufacturer. To maintain their revenue, manufacturers may resort to cutting corners, such as using cheaper materials or sacrificing quality, to reduce costs. This can result in dissatisfaction among buyers, leading to strained relationships.
Competing With More Cost-Effective Traditional Manufacturers
Another challenge of a contracting economy is the competition among manufacturers. As demand decreases, manufacturers may compete aggressively for the limited number of orders, which can lead to price undercutting. While this may attract more buyers, it can also result in a race to the bottom in terms of pricing, leading to a decrease in the quality of the final product.
In a contracting economy, on-demand manufacturing sites may also face financial difficulties. As orders decrease, revenue decreases, which can make it difficult to cover fixed costs such as rent, employee salaries, and equipment maintenance. This can lead to layoffs, delayed orders, and even bankruptcy, causing additional stress on buyers who rely on the on-demand manufacturing sites for their business needs.
Material Delays Affecting the Just-in-Time On-Demand Model
Furthermore, a contracting economy can also impact the supply chain of on-demand manufacturing sites. Raw material suppliers may face financial difficulties, leading to delayed or incomplete deliveries, which can in turn impact the production schedule of the manufacturer. This can result in delays in the delivery of the final product, leading to unhappy buyers.
The Increasing Federal Interest Rates
The Federal Reserve's decision to raise interest rates may have significant consequences for the on-demand manufacturing industry. As interest rates increase, businesses may be less likely to invest in new products or technologies, and this could lead to a decline in demand for on-demand manufacturing services. This decline in demand could, in turn, result in a consolidation of on-demand manufacturing sites, as businesses seek to reduce costs and improve efficiencies.
As the market for on-demand manufacturing evolves, it will be important for all parties involved to carefully consider the risks and benefits of these services, particularly in light of the Federal Reserve's actions. While on-demand manufacturing can offer many advantages, it is not without its limitations and risks. For example, some on-demand manufacturing methods may have limitations on the materials that can be used, or may not be suitable for high-volume production runs.
Furthermore, as demand for on-demand manufacturing services declines, it is likely that there will be a consolidation of these services, which could result in higher risk levels for both buyers and sellers in this marketplace. As a result, it will be important for businesses to carefully assess the needs and requirements of their products, and to determine if on-demand manufacturing is the most appropriate approach, or if traditional manufacturing methods may be more appropriate.
In conclusion, the Federal Reserve's decision to raise interest rates may have significant consequences for the on-demand manufacturing industry. As businesses seek to reduce costs and improve efficiencies in the face of declining demand, it will be important for all parties involved to carefully consider the risks and benefits of these services, and to make informed decisions about how best to proceed.
Chapter 5: Offshore vs. On-Demand
Offshore and on-demand manufacturing serve the same purpose, which is to produce products and parts, and include a configuration where the two are combined. On-demand refers to the manufacturing of products as they are needed, instead of having them set on the shelf waiting to be purchased. How or where they are produced is inconsequential, as long as they are produced when required.
The distinction in on-demand manufacturing is in regard to whether the process is onshore on-demand or offshore on-demand with offshore on-demand production taking place offshore, outside the borders of the country where a company does business while onshore on-demand is inside a country’s borders. It can be assumed, which may not always be correct, that onshore on-demand can be more convenient and a quicker method of production since offshore takes time and requires long distance shipping.
Many manufacturers outsource the production of their products to contractors and small producers to lower costs and get faster turnarounds. This has been common for many years. Contractors have developed long standing relationships with larger companies and have proven to provide exceptional quality work. Henry Ford divided up the manufacture of components for his automobiles to small factories located in small towns around Detroit.
Offshore outsourcing began about fifty or sixty years ago as an answer to labor costs, taxation, the cost of raw materials, labor regulations, and ever increasing environmental standards and laws. The initiation of the process includes the creation of subsidiaries that have full management control over the completion of a process and involves trust, communication, coordination, and oversight.
The two forms of offshoring are customer services, such as tech support, and manufacturing. In many cases, an offshore site is a completely separate company answerable to the authorities of the country where it is located. The key factor is the time it takes to place an on-demand order, have it sent offshore, the extra time to make adjustments, completion of the order, and having it shipped back to the originating company.
On-demand manufacturing, known as custom or cloud manufacturing, is a system of manufacturing that produces products when they are needed in the quantities that are required. It is a break from the traditional process of producing high volumes of products, placing them in storage, and shipping them. On-demand lowers the cost of warehousing and on hand inventory, delivers high quality products, and is a method for providing exceptional customer service.
The factors that have enabled on-demand production are related to the development of modern technologies, such as computer numerated control (CNC) manufacturing, 3D printing, and robotics. Essential to the process is the internet, which makes it possible to immediately place an order with the expectation of having it completed in a specified period of time. CAD designs can be easily uploaded with notations regarding materials and other factors regarding the product. The worldwide web makes it possible to have an order sent to Asia, India, Australia, or other offshore locations and have direct contact with the manufacturer.
The breakdown in offshore on-demand is distance and time. While onshore on-demand can be completed and delivered on a short timeline, offshore on-demand can take more time and include shipping expenses as well as fees to directories that take the orders. An additional factor, in regard to onshore and offshore on-demand, is making adjustments to an order. Both onshore and offshore make it possible to contact the manufacturer to change elements of a design. The difference is in regard to the type of communication.
In the modern era, onshore and offshore service providers are accessible by phone, online meetings, and email. It is a blessing of technological advancements. The one problem that technology cannot overcome is time since time in the customer's country may be hours behind the country of production, which makes it difficult to arrange on time meetings. Although there may be time differences with onshore on-demand manufacturing, they are not as great as those found with offshore manufacturing.
For example, an order has been placed with an offshore on-demand service provider that is located in Asia, and the client is in the United States. The client discovers that they need to make an adjustment to their order on Wednesday, which is Thursday in Asia. There is a great possibility that the client's order has been completed while they were sleeping. The factors of time and distance play a major part in the choice of where to place an on-demand order.
It must be clearly understood that the quality of work that is provided, whether it is onshore on-demand or offshore on-demand, is not in question since the quality of a product will be the same in both scenarios since the onshore company that takes orders has vetted its offshore partners to ensure quality. The major factor is time and distance, which cannot be controlled and delays the delivery of an order.
Offshoring vs. On-Shoring
Offshoring
Onshoring
Definitions
Setting up a company outside a company's country's jurisdiction. Outsourcing business processes to a far-off country.
Setting up in a company's own country. Outsourcing business processes to home country agencies.
Services
Engineering Services
Manufacturing
Human Resource Management
Customer Service
Legal Service
Payroll Management
Advantages
Cost Saving
Highly Skilled Workforce
Access to Global Markets
Round-the-clock Availability
Monitor Product and Service Quality
Local Market Knowledge
Ease of Communication
Better Data Security
Disadvantages
Difficult to Monitoring
Communication Issues Due to Time and Cultural Dissimilarities
Data Security
High Overhead Costs
Limited Pool of Candidates
Less Access to Global Markets
Chapter 6: An Example of On-Demand Manufacturing
On-demand manufacturing is an exceptionally expansive process that can be applied to a wide range of applications and production methods. It is this flexibility that has made on-demand manufacturing the go to method for solving assembly issues and improving the performance of the supply chain. On-demand has helped startups compete and resolved production issues for large corporations.
Examples
A world famous energy company, who produces its products and components in its own facilities, focuses on its strengths using the latest laser technologies. When the company finds itself in a situation where it has to produce products that are outside its purview, it relies on on-demand manufacturing to farm out these special needs to avoid making adjustments and changing its focus. The flexibility of on-demand helps the organization save time, money, and resources.
Startup companies lack the resources and expertise to fully meet the needs of its clients and require assistance in certain specialized areas. One such company uses on-demand manufacturing to produce prototypes of new designs and to test materials for their viability. The prototype and test data are used to adjust the design parameters prior to the initiation of production. The use of on-demand manufacturing helps the company reduce costs and allows them to focus on their production goals.
Projects involving the manufacture of a product that has never been introduced and is in its inventive stage requires the production of unusual and unique parts and components. In those situations, innovators do not have access to any form of production method capable of producing components to meet their needs. They rely on on-demand manufacturing to produce single, one off parts. In those cases, the cost of creating such a specialized manufacturing process would be extremely prohibitive and kill a project.
Chapter 7: What is Pay for Performance or P4P?
The Pay for Performance model for modern marketing is a popular trend that is being used as part of internet marketing. It attracts strong leads, helps increase sales, and is a financially responsible method for overseeing the success of marketing dollars. The process of pay for performance marketing developed from the instructional programs of business schools and the goal of businesses to get quantifiable results as a return on their investment.
The common model for marketing is to pay an advertiser with the hope that customers will see the published ads and use the information from the ads to contact the advertiser. This model has been used for over two hundred years as a means to increase business and increase contact with prospective customers. It is a design that is risky and depends on the noticeability of the materials produced by advertising agencies and online websites without regard to the effectiveness of the content.
In the past, companies would squander their advertising dollars on different gimmicks with little guarantee of results and little thought regarding success. In many ways, advertising was a no-results concept that was built on tradition and not on fiscal responsibility. Business colleges and universities have drastically changed the old fashion traditional perspective and replaced it with a concept that is less risky and provides greater benefit.
The rise of technology and the expertise of online companies has led to the introduction of pay for performance marketing, a tool that benefits the client and the advertiser. It is an incentive program that ensures that clients will receive substantial benefits for their investment. Making performance part of a contract lets a client know that the agency with whom they are contracting is confident in its efforts to produce results.
Pay for performance marketing is built on the idea that marketing companies will only get paid if a client sees results. It is a win-win model for both parties. As the cost of the various factors of business continue to rise, companies are constantly seeking methods to improve their performance and profitability. A great deal of effort is placed on a financial plan that includes close scrutiny of return on investment (ROI). Any action, procedure, process, or concept is measured under the constraint as to how it will profit a company, increase its visibility, and grow its business.
As defined by the Performance Marketing Association (PMA), performance marketing refers to digital marketing or online advertising programs where advertisers and agencies are paid in accordance with an action from a client, which can be a click, sale, or lead.. The traceable and measurable metrics allows advertisers to incrementally measure the cost of advertising against the number of successful leads or sales. The criteria for measuring the success of an advertising effort varies with the client and the terms of the agreement with the agency. Using the metric of generating leads, that is defined in the initial agreement, may not be adequate since leads are not indicative of sales. The design of the quantifiable results varies in accordance with the type of business and the partnership between the provider and client.
The rise of P4P promotions and advertising became popular with the rapid spread of the internet, which allows for real time measurement of a marketing campaign’s return on investment. This process has reversed the traditional paradigm of an advertiser paying for creative work prior to the publishing of a program regardless of any return on investment in the campaign. With the P4P model, the responsibility is on the provider to convert their efforts into substantial leads and paying customers. The client only pays the provider after profiting from customer purchases, orders, and contacts.
Stages of Pay for Performance Marketing
Every pay for performance agreement takes a different turn and is arranged in a different manner to meet the needs of the client and the service provider. Although the central agreement is similar, how the factors are determined and the determination of compensation differ according to the metrics that are established in the initial agreement.
One of the primary factors, and one that weighs heavily on providers, is the size of the company for whom the marketing program is provided. Large, complex companies with marketing and advertising departments usually have a plan for every aspect of their promotional process. In many instances, they may have several efforts operating at the same time, and the P4P company may be a small part of the process.
Smaller companies normally have individuals who are handling several aspects of a company’s operations with marketing being one of their responsibilities. Such companies may be depending on the P4P provider to handle the marketing effort and plan the direction and implementation of the campaign. Unlike larger companies, smaller companies will invest more in a P4P effort and depend on its success.
8 Steps for the Implementation of Pay for Performance Marketing
Define Objectives
In modern business, the definition of a company’s goals, purpose, objectives, and beliefs are critical to its direction. This is true in every aspect of a business and applies to its marketing plan. In the case of P4P marketing, there are certain parameters that both parties have to agree to prior to implementing the plan. The first of those factors is the metrics that will be used to determine the success of a digital campaign, which must be clearly defined with measurable results. The criteria can include the amount of website traffic, new leads, increase in sales, or the visibility of the brand. Well defined goals provide for precision targeting of the campaign and an evaluation instrument.
Target Audience
A clear definition of the customer base is a necessity and assists in the development of web content. Part of this aspect of the process is an assessment of the keywords for the product or service being offered and their searchability. This data can be collected via various online services and offers an indication as to the search engines being used and a general picture of online users that are doing the searching.
Pay for Performance Compensation
Pay for performance compensation can take several different forms, which can be clicks, the number of leads, total sales, client inquiries, sales demonstrations or appointments, or a design that is specific to a particular industry. From these factors, a determination is made as to the cost to the client and how the provider will be paid. Compensation is the crux of the P4P model and provides both parties with a clear picture of their success and what works. It is in this aspect of the process that a partnership is formed between the provider and client as they work together to benefit each other's profitability.
Data and Analytics
As any first year marketing and advertising major can tell you, data and analytics are the lifeblood of a successful marketing program. In the computer age, the data that is collected is more specific and can be drilled down to the most minute detail such that a marketing program can be targeted correctly and effectively. The reliance on data is the power that it gives to optimize resources and make informed decisions to increase the ROI.
Hitting the Target
The success of any marketing program is reaching the target audience at the right time, when they are ready to buy. The most powerful message can be lost if it is designed for a group that is unaware of the issue or unwilling to hear the argument. This is a delicate detail that has to be carefully considered when designing a web page and its content. The information for modern clients has to be succinct, accurate, and clearly presented. To meet these requirements, it is important to plan, develop, and implement techniques that are based on the data and the type of audience.
Landing Pages
Every web page designer knows that all the planning and preparation in the world can be easily lost in the landing page, which should provide a seamless, effective, and insightful experience. The function of a landing page is to convert the customer from an observer and researcher into a client and buyer with a strongly compelling call to action. One of the things that is stressed in the selling process is asking for the sale, which may seem obvious but in many cases is overlooked. Copywriters learn that at the end of their content, they have to ask for an action by the reader. This is the goal of a well designed and well constructed landing page.
Finding the Correct Mix
The process of developing a marketing plan goes beyond a single design, one meeting, or a single step. It is progressional involving successes and failures as well as adjustments, corrections, editing, and redesigning. As any copywriter will tell you, editing is a never ending aspect of the writing process and requires multiple steps in order to reach the appropriate mix of words, ideas, concepts, and configuration. Although it may not be at the center of finding the correct mix, the writing of the content can serve as a guide and outline.
Social Media
As any internet marketer can tell you, social media can serve as the biggest push to the success of a marketing plan. It is one of the easiest tools that provides the greatest amount of exposure and is universally used by all age groups. The only drawback to social media use is that it is very general and has to be carefully planned in order to reach the target audience.
The eight steps suggested above are not definitive for the P4P process but can serve as a road map or guide for the implementation of the model. As with any type of business concept, P4P plans have to be carefully examined and minutely conceived to ensure that every detail is understood by the provider and the client, which is another aspect of their partnership. The end result leads to success for both participants and superior service to all customers.
Chapter 8: On-Demand Manufacturing Service Providers
Some of the industry players in on-demand manufacturing include:
3ERP
One of the top firms for rapid prototyping is 3ERP. Specializing in CNC machining, vacuum casting, quick tooling, and sheet metal fabrication, 3ERP ensures that business designs and ideas become a reality in just a few days. Before their product is sent off for mass production, customers will have the chance to examine it in person to ensure that it is both functional and appealing. The knowledgeable staff at 3ERP also assists customers with every stage of product development, from design optimization to helping customers identify the best route for their particular manufacturing requirements. 3ERP prides itself on its expertise in rapid manufacturing, cutting-edge rapid prototyping technology, and an infinite variety of materials.
Fast Radius
Fast Radius is on a quest to improve logistics and production. They have integrated a Cloud Manufacturing Platform with their experienced workforce to make the entire process simpler and smarter. In addition, they are making their own new manufacturing technologies available so clients can make new things possible for the world.
Their factories offer production quality and speed on-demand.
To assist customers in producing better components faster, Fast Radius has an established infrastructure. Customers always have access to the resources, experience, and manufacturing partners they require to successfully complete their tasks, thanks to US production centers, microfactories, and partners worldwide.
Fictiv
Fictiv provides clients with access to a wide variety of capabilities through a single, user-friendly platform to free up more time for design innovation and spend less time on part procurement. They are capable of:
CNC Machining: Tight tolerances and quick turnaround times for finishing as fast as two days.
Injection Molding: Steel tooling for production, delivered in as little as two weeks.
3D Printing: Technologies including FDM, SLS, SLA, PolyJet, and MJF.
Urethane Casting: Quality parts production without the expense of tooling.
Hubs (A Protolabs Company)
Hubs have a huge range of production capabilities and support both one-off prototyping and low-volume production, thanks to the hundreds of manufacturers in their network. They take pride in being the go-to supplier for intricately shaped parts or highly aesthetic components.
Hubs works closely with suppliers who have a track record of producing high-quality products thanks to the efforts of their local and international procurement teams. Order parts are immediately put into production at the most competitive pricing because their global network offers practically infinite capacity.
All components are thoroughly tested twice after production: Once at their manufacturing partners' facilities and once again at the Hubs quality control center in either Chicago or Amsterdam. Parts are passed through customs and dispatched from their facility to their destination within a 24-hour period. All 3D printed components are made locally, and only the manufacturing partner performs inspections. These transport directly to their target.
JawsTec
JawsTec is a firm that offers services for metal fabrication, CNC machining, and additive and subtractive manufacturing. They make quick prototyping accessible to inventors, engineers, and company owners while supplying huge corporations with parts through high-volume manufacturing. With partnerships with organizations like Tesla, Apple, BMW, Ford, Delta, and SpaceX, to mention a few, JawsTec has been able to make components for a variety of sectors.
After submitting their 3D model file, buyers may get real-time pricing from their rapid quotation engines. They take great pleasure in their rapid manufacturing, with most orders having turnaround periods of 4-5 days. We have some of the top industrial machinery in the business, able to create the highest quality components, thanks to their partnerships with HP, EOS, and HAAS.
Kickr Design
One of the Southeastern United States' most rapidly expanding product design, engineering, prototype, and manufacturing firms is Kickr Design. Kickr Design provides free consultations and a free project estimate so clients can discreetly discuss their project with a qualified lead engineer and create the best strategy for getting what they need.
Protolabs
Protolabs' goal is to enable businesses to commercialize novel ideas by providing the world's quickest and most complete digital manufacturing solution. Protolabs takes pride in being one of the fastest sources in the world for rapid prototyping and on-demand production parts. Protolabs can produce commercial-grade plastic, metal, and liquid silicone rubber parts in a matter of days, thanks to their automated quoting and manufacturing processes. A manufacturing partner emerges as a result, helping companies hasten time to market and intelligently control demand fluctuations over the full product life cycle.
Thus, Protolabs leverages the digital market to:
Accelerate time to market
Quotes come within hours and parts within days.
Multiple design iterations are supported by quick manufacturing turnaround times.
Products are introduced to the market and development is hastened more quickly than before.
Create better parts
Each machining and molding quote includes a free automated design for manufacturability (DFM) study that identifies potential problems and offers quick fixes.
Application engineers are ready to talk about design issues and provide assistance.
The company offers a large collection of internet materials, including instructions, advice, and white papers.
Quickparts
They take pleasure in their capacity to satisfy their clients' manufacturing demands, regardless of the size or deadline of the project, as the creators of a comprehensive digital manufacturing platform that offers on-demand additive and traditional manufacturing services.
And their commitment to innovative technology and fresh materials confirms their position as SLA and SLS pioneers. They deliver manufacturing services at the pace clients want and the quality clients demand, backed by their heritage and thorough understanding of the sector.
Rapid Direct
On-demand manufacturing is made simpler and faster via Rapid Direct.
They provide on-demand, high-quality custom parts with expert prototyping and production capabilities. Online fast quotes, automated DFM analysis, and the delivery of high-quality parts all take place within seconds.
Rapid Direct can produce custom parts in huge volumes and on-demand, and it can also produce parts with intricate geometrical patterns and demanding cosmetic specifications.
Choosing companies that not only have strong manufacturing skills but also quickly, effectively, and intelligently build complicated end-use parts is essential for maximizing the benefits of any on-demand manufacturing services. Rapid Direct meets these requirements.
Stratasys
Some of the biggest businesses in the world rely on Stratasys to help them stay one step ahead of their rivals. Global leaders in the automotive and aerospace industries, as well as cutting-edge medical startups and tech behemoths, can all operate more quickly, creatively, and affordably thanks to our tested technology. They offer decades of experience, consultancy, training, industry-leading printers and materials, end-to-end support, and workflow management.
Stratasys doesn't stop at the 3D printer itself because they offer end-to-end support. In addition, they offer a market-leading selection of materials, clever software integrations, and professional advice. Even items on-demand can be printed for clients by their Stratasys Direct team.
Techpacker
Techpacker simplifies the process of creating samples enjoyable, simple, and inexpensive. How? by producing techpacks, a type of standard industrial document that firms utilize to grasp the precise specifications for a design. An online tool that enables budding fashion designers to quickly and accurately order samples from global factories With the aid of their technology, designers can quickly prepare their ideas or mock-ups for manufacture, collaborate with factories, and track progress.
They are not another factory-listing directory service but rather their goal is to provide the most cutting-edge collaboration tools possible, which can be easily used and connected with a variety of platforms. This enables designers to reliably rely on companies all across the world to produce high-quality samples of their innovative concepts.
Total Retail
For executives searching for the most recent information and analysis on the retail sector, Total Retail is the go-to source. Total Retail fulfills its objective to provide retail executives the knowledge they need to accomplish their jobs more successfully through various types of content and community-building activities. The content provided by Total Retail includes that of on-demand manufacturing.
Vogue Business
Launched in January 2019, Vogue Business is an online newspaper for the fashion business. They provide a really global perspective on the fashion sector by examining the influence of cultural trends and world patterns. Vogue Business is the top source of knowledge on how new technologies will influence how goods are produced, promoted, and sold. It does this by drawing on the thoughts of technologists, trend forecasters, futurists, and innovators in other industries.
WayKen
WayKen is a quick manufacturer and prototyping business based in Shenzhen, China. It specializes in rapid prototyping and low-volume production of plastic and metal components, offering a one-stop shop from prototype to production.
WayKen has consistently maintained a strong competitive advantage because of cutting-edge production technologies and a highly qualified staff. Their manufacturing services, which include CNC machining, 3D printing, vacuum casting, fast tooling, and injection molding, are tailored to client unique product design requirements.
Katana
By fusing basic elements, manufacturers produce things that are more than the sum of their parts. And at Katana, they envision a world in which people value software just as highly as the things they create. As facilitated by Katana, businesses are utilizing a combination of D2C and B2B sales channels to bring their manufacturing near to customers instead of outsourcing it to distant manufacturers. These contemporary firms are moving past traditional mass production, thus they want an operating system that accomplishes the same.
Currently, Katana is the only manufacturing ERP chosen to be a Shopify Plus certified partner and has secured $16 million from prestigious international VC investors that, like them, believe the sector deserves more respect. That respect is all about relieving lots of pressure away from manufacturers. They accomplish this with first-rate customer service, simple onboarding, and company software that advances businesses rather than restricts them.
Conclusion
On-demand manufacturing is a manufacturing concept used to produce goods, products, items, and parts as they are needed in a specified time and required quantities. It is a method of production that has been adopted to avoid manufacturing costs, warehousing costs, provide outstanding customer service, and assist customers in meeting tight production schedules.
On-demand manufacturing is used for short-run production needs in various industries.
On-demand manufacturing benefits include cost-efficiency, faster turnaround times, and increased flexibility in product customization.
It can easily be misconstrued that on-demand manufacturing is a quick and easy process that provides instantaneous response to customer demands. Unfortunately, this is not the case.
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