A supply chain is the steps involved in getting goods from manufacturers to consumers. It begins with the company’s acquisition of raw materials to the production process to the dissemination of products to consumers. All organizations (esp. CNC machining companies) rely on an effective supply chain system for an efficient production process, better quality products, better customer relationships, and reduced production costs. However, the emergence of the COVID-19 pandemic has disrupted the supply chain of manufacturing organizations. Consequently, this has led to a rise in “on demand manufacturing” as a solution.
The pandemic disruption of the supply chain is because it creates the unavailability of information. This lack of information leads to organizations worrying about their stock (whether it is over-depleting or not moving) and whether they can meet with theirs and their customer’s aims and objectives. However, with on demand manufacturing, it is possible to improve the supply chain. Here, we will discuss the model, how it works, and its effects on your production process.
What is On Demand Manufacturing?
To understand on demand manufacturing, it is necessary to understand the model it is replacing (traditional manufacturing model). The traditional manufacturing model involves the manufacturing of a large number of products based on standard specifications without outright demand for the product. The model is suitable for large businesses and it requires an enormous minimum order quantity (MOQ) and long lead times.
Three things are of importance in the traditional manufacturing model. These are mass production without demand, standard specification, and MOQ. Mass production without demand requires the manufacturing company to have mass storage units and resources. Standard specification means that changes to the original design must follow standard specifications and guidelines to remove errors. It also means that there is no way to change an order. The enormous minimum order quantity makes sure that only large orders are executable. These factors were however removed in on demand manufacturing.
On demand manufacturing is the act of producing what customers need when they need it. The model removed the need for a minimum order quantity, mass production, standard specifications and introduced an online aspect (instant quotation). Therefore, it is easy for smaller companies to function in the face of the uncertainty of information the pandemic brings. The model also allows customers to demand a specific product in real or prototyping while still keeping in touch with the production process.
How Does On Demand Manufacturing Work Together With Digital Marketing?
On-demand manufacturing introduced the instant quoting system by making use of the cloud and digital platform. Therefore it is an important model used by many CNC machining companies that engages in rapid prototyping services.
For example, one of rapid prototyping company RapidDirect’s instant quoting system,the instant quoting system allows customers to easily get quotes for parts they want to make. However, the quoting system majorly depends on the sophistication of the products.
Most quoting systems involve the customer uploading a CAD design, choosing the necessary aesthetics, and receiving the cost in a short time. However, some sophisticated quotes might require a manual quoting procedure, although they are also available in a short time.
On demand manufacturing also gives customers access to Design for Manufacturability (DFM) for every part they upload. Also, at every stage of the manufacturing process, it is possible for customers to stay connected.
How Does On Demand Manufacturing Improve Your Supply Chain?
Many small-scale companies, especially CNC machining companies, are turning towards on demand manufacturing to improve their supply chain. This is based on the features of the model and how it impacts both customers and manufacturers. Below are the mechanisms by which on demand manufacturing improves your supply chain.
It Provides Customers with Instant Quotes that Reduces Lead Time
With an instant quotation, customers can easily upload their CAD designs and check how much the product will cost and the lead time. The lead time for on demand manufacturing is very short, making production very efficient and improving the supply chain.
It Reduces Raw Material Wastage
On demand manufacturing is the act of producing what customers need when they need it. With no mass production without sure demand, there is no need to push the product. Therefore, as a manufacturer, you don’t need to worry about raw materials not being enough or rotting away.
Also, because there are no minimum order quantities and no mass production without sure demand, you don’t need to hold inventory. Therefore, there is no need for working capital, mass storage units, etc. However, this depends on the number of orders the company gets.
✋ Warning
Here is how you can create an exciting demand for your products and services.
On Demand Manufacturing is Best for Prototyping
Prototyping is an important part of product manufacturing as it shows errors in the design of such products for easy correction. The traditional method doesn’t deal well with prototyping as the prototypes are always small. When they do, they charge very high to cater for the cost. However, On demand manufacturing will improve your manufacturing process as it blends perfectly with prototyping. It is more affordable and easy to create. Therefore, there is a better engagement by inventors who are looking to make their ideas and dreams real.
On Demand Manufacturing Reduces Stock Risk and Financial Pressure
On demand manufacturing does not require mass production of goods without demands. As a result, you will know the stocks you are to work with (i.e., no stock risk). A reduction in stock risk will lead to a decrease in financial pressure as finance is properly managed in relation to how many stocks you need to get.
Also, financial pressure reduces as customers pay upfront majorly. Due to this, you don’t need to worry about money being locked in account receivables. No lock of money in account receivables reduces your tendency of further immersing yourself in debts.
It Eliminates Markdown
Markdown is the act of selling products at a low price due to mass production without demands. It is a condition very common to small companies running under the traditional. Due to price reduction, markdown will lead to a loss on the part of your company since customers will be targeting the time you sell at such a price. However, with on demand manufacturing, there is a reduction in markdown since there is no mass production without sure demand.
It Levels Your Playing Field
The traditional model does not allow small companies to thrive in manufacturing due to their extensive domination. Domination of the market is due to the extensive resources they have. However, with on demand manufacturing, there is a leveled ground since it allows small-scale companies to bring some personalized products at favorable prices. It also increases competition which ensures that only the best in innovation, customer satisfaction, customer relations, and low price can rule the market.
Conclusion
COVID-19 has been catastrophic for small-time manufacturing companies, especially by disrupting their supply chain. Therefore, manufacturers are looking to models such as on demand manufacturing in their quest for improving their supply chain. This article showed the effect of COVID-19 on the supply chain, introduced on demand manufacturing, and how you can use it to improve your supply chain.
