If you change the way you look at things, the things you look at change.
To continue growth, in the manufacturing industry and in business in general, traditional models need to be examined and innovation must happen as you look at a different way of doing things. The conversation was VERY timely as I was researching a new approach to manufacturing, distributed manufacturing.
‘Crowd’ is currently something that is very prominent — and revolutionary — in consumer business.
‘Crowd’ is the leveraging of large populations, or resources, to approach tasks and goals.
But how does it work in industry? How could ‘crowd’ apply and work for Henry Ford or William Procter and James Gamble?
Traditionally a manufacturer will employ, or own, dedicated factories to create a convenient supply chain for their clients. The capabilities of a company are limited to their talent pool, largely determined by budget. Thus, up until now, hardware has been reserved for those of great budgets and power.
‘Distributed Manufacturing’ is the future of manufacturing.
Over this decade, Industry will become a connected force of factories, manufacturers, distributors and end consumers. This network combines to achieve ultimate levels of efficiency.
Distributed manufacturing leverages large numbers of ‘partner’ factories and minds to create agile supply chains. It can be explained in two scenarios:
Traditional Manufacturing Model
‘Yesterday Manufacturing Ltd’ embarks on a project to produce wheels. They start by finding and employing Detroit’s top experts on wheels, to work on the project from the Detroit HQ. The designs are developed, to the capabilities of the hired team, and then signed off. Yesterday Manufacturing Ltd spends time finding a factory in the far east. They spend time building a relationship, to guarantee trust and reliability. They employ cheap labourers to produce the wheels, as instructed by their hired engineers in Detroit. The wheels are churned out and shipped on containers to America, rather slowly, where they are distributed and sold. A few thousand containers later the project begins to be profitable.
‘Tomorrow Manufacturing Ltd’ embarks on a project to produce wheels. They start by employing a project manager in the Detroit HQ. They consult a worldwide network of engineers, supplied by a contract firm, to find those most experienced and knowledgeable in wheels. The best people for the job develop the designs remotely, for a consultancy fee. Tomorrow Manufacturing Ltd finds a manufacturer that often makes great wheels, with some free capacity. They are local to the distributor in America so higher labor costs are offset by the time saved in shipping. The wheels are lovingly crafted by wheel fanatics (they exist!) and shipped short distances to distributors or end users. After just a few hundred less than truckload and truckload shipments (or even less) this project is profitable with a higher quality product output.
The distributed manufacturing model dismisses location to find the best talent. The network allows for a specialist factory to fill excess capacity, whilst keeping manufacturing local to the products final destination, reducing emissions and logistics cost all while also keeping quality of product for the end consumer. It’s a very agile model that allows for quick and scalable movement in modern business.
Refining this model, there are 4 key factors: Cost, speed, quality and impact. How much money can I save? How fast can I get to market? Who (not where) is the absolute best person to complete this task? How large of an impact will my actions have economically, environmentally and socially?
1. By manufacturing items closer to their end destination, we reduce logistics cost and environmental impact. This also reduces the time from production to sale.
2. By leveraging the expertise of a larger remote network, you remove limitations like location and the cost of full time employees. There is nobody, in the world, better experienced to work on your project.
3. Without permanent investment in facilities, the manufacturing supply chain is made more agile. In modern business, this is necessary. A company must be able to expand and contract their infrastructure at lightning speeds to stay competitive and survive economic waves.
4. In this model, it is possible to distribute workloads across multiple suppliers. Reducing risk. A failure on your only production line is a disaster. Less so if there is a failure on production line 1 of 10.
5. Manufacturers are also able to support multiple smaller economies by distributing their factories. If aiming to sell in a location, it makes both financial and moral sense to support the local economy.
6. Outsourcing to multiple smaller facilities allows you to make use of existing experts. Many larger production lines will develop in house techniques, but this takes significant time and investment.
7. By opening up your supply chain to a network, you can make use of excess capacity. Most factories around the United States operate at far less than capacity. They opportunity to fill spare space is worth a lot, hence strong discounts.
Over the next few years we will see companies take a step back from scale.
In a newly connected world, small teams will be, and already are, capable of managing large scale production.
Large manufacturers must focus on the speed, efficiency and quality, if they wish to remain competitive against smaller firms.
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