It can’t be denied that the world of manufacturing is changing. If we’re going to be honest with ourselves, it is always changing, albeit oftentimes quite slowly. Major shifts in the industry are currently based less in design or production practices, and more in changing business models.
Traditional Manufacturing
I hesitate to call traditional manufacturing “old-school.” Mostly because, while it is the older means of production, it is still being used as a standard business model.
Traditional manufacturing starts with a need to make something. Often that something is a component or part of a larger system, while other times that something is the assembly of many widely sourced components (that are manufactured elsewhere) into a sellable product. No matter what type of something is being produced, traditional manufacturing has long relied on one of two demand needs: either there is a need for a large quantity of the said something, or the something is hard to make and is therefore expensive.
Over many decades, manufacturing has not been a cheap endeavor. In the past, major capital investment in machine tools, staff and facilities have made the point of entry into the world of making stuff a challenge. That’s why manufacturers often relied on those two different demands.
If you need to make a lot of something, a manufacturer can justify purchasing a machine tool and hiring staff because they can keep their machine running. If you need to make something that is challenging to produce, the manufacturer can justify charging higher prices to develop specialty tooling and hiring experts.
On-Demand Manufacturing
While on-demand manufacturing isn’t entirely new, it is certainly becoming more prevalent in the industry. Traditional manufacturing has a tried-and-true record, but on-demand manufacturing is beginning to meet the needs of certain businesses.
On-demand manufacturing is a leaner, often more agile, business model. While traditional or contract manufacturing usually relies on capital investment in machines and setups—and then on large production runs to offset those investments—on-demand manufacturing performs smaller runs and often first-run parts.
Simon Arthur, the founder and president of Big Blue Saw, a business that does a combination of on-demand and more traditional contract manufacturing, said, “Our goal, and the reason I started Big Blue Saw, was to make it as easy as possible for people to turn their ideas into real things in the real world. When I started out, I noticed that there really weren’t a lot of great options to quickly and easily order small runs of parts or to go from the design phase to something real and made out of metal.”
Upsides and Downsides of On-Demand Manufacturing
Since traditional manufacturing has been the mainstay for so long, its upsides and downsides are fairly well-known. Traditional manufacturing is often not considered fast, but it is certainly reliable and steady. Entry for new businesses is often challenging, but traditional manufacturing is largely solid for existing organizations.
But What Are the Ups and Downs of On-Demand Manufacturing?
As an on-demand business, Arthur says that he envies the steady income of just having a few types of jobs. Without the steady business from a couple of major clients, one of the challenges that he finds as an on-demand manufacturer is being able to reach those potential future clients. “Because we service so many industries, it’s tough to know which space to focus on and put more resources into.”
While the uncertainty of future work is a disadvantage, because the on-demand model is designed to always look for new business, the manufacturers in this space operate in a much more streamlined fashion.
“[Traditional manufacturers] have a situation where they have like three big clients and they’ve been working with them for the last 20 years, and if they want something new, they go to the same vendors,” Arthur said. “Those businesses seem solid, but they don’t really have any engine for growth. They don’t really have an active function for getting new customers except for maybe word of mouth. That’s a different world than what we’re in. We’re very focused on getting the word out about Big Blue Saw. That’s why we have the ability to get an instant quote on our site, because if people get there, we want to make things easy for them.”
Diversity is a major perk to Big Blue Saw’s business model. Arthur explained that the company works in a variety of vastly different industries, rather than relegating its work to just a couple prime areas of interest. “We don’t have any one industry that makes up the majority of our customer base, so if one industry has a downturn, we can pick that up with another industry. Another great advantage is that we’re not stuck on having one big client as our key client. While that’s nice sometimes, we aren’t riding the fate of another business.”
Big Blue Saw uses a combination of water jet and laser cutting tools, as well as a network of partners to finish its products. Those machine tools are well-suited to being flexible, which provides Arthur’s company with a solid foothold with just on-demand work.
Customers of on-demand manufacturers also benefit from the agility and flexibility of these businesses. “One of the biggest advantages to our customers is the quick turnaround time. I’ve talked to a number of these traditional contract manufacturers, because we’ve tried to sub some work out to them, and I ask what the lead time is … and they say, a month or even two months. That’s completely infeasible for a huge chunk of the market. My customers need something fast … sometimes it’s tomorrow, but usually, at the very least, it’s within a week,” Arthur said.
He credits the speed and flexibility of his company’s technology—both a speedy online quoting system and agile machine tools—to helping the business succeed. “A lot of times, engineers might have the concept of a final piece in their head, but they may have designed it in such a way that it’s going to be very expensive to make in a one-off. That goes to the flexibility of water jet and laser cutting, because it’s easy to conceptualize how the part is made and what kinds of parts you can make.”
For Arthur and many other on-demand manufacturers, it doesn’t make sense to have a business that isn’t focused on growing a customer base. That being said, he admits that there is definitely room for both models in the industry. In fact, there is room for both within his business.
“Doing on-demand manufacturing really gives us the opportunity to get an ‘in’ to doing the larger type orders that are more common in the larger manufacturing space,” Arthur explained. “Somebody might be doing a pilot run where they need 10 or 100 pieces, and then after working with them and they’re happy with what they got, we have an opportunity to do much larger orders over a span of time.”
The business of both traditional and on-demand manufacturing entails risks and advantages for both the companies and their customers. Much like the machine tools that manufacturers choose to fill out their shops, it’s about picking the right tool for the right job.
Arthur said, “If somebody knew which of these business models worked best, I’m sure they’d take over all of manufacturing.”
Finding the right way to leverage both seems to be a winning model for Big Blue Saw and its customers. As on-demand manufacturing becomes more prevalent and approachable, time will tell if this hybrid approach is the key to getting the best of both worlds.