Traditional manufacturing involves investing capital in a large factory to achieve high rates of output for economy of scale, reducing the per-unit cost of a product. Mass production requires an extensive distribution network, including wholesalers and retailers, to make products available to customers. Traditional manufactured products are standardized. Changes to the product design can add significantly to the cost of production and retail price. Before products are distributed to the market for sale, warehouse space is needed to store them, which includes the inherent cost of carrying inventory.
Compared to the traditional model, microfactory manufacturing sets up multiple small, high-tech units to manufacture customized products only after receiving confirmed orders – also known as “pull” – from customers.
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Following are 4 benefits of microfactories:
- The microfactory business model is based on agility gained through digital technologies. Automation, augmented reality software, computerized laser cutting, digital printing, online workflows, and other innovations are making it possible for manufacturers to change the way they create products. Thus, microfactories are small, highly automated factories capable of rapid innovation. Using data and artificial learning, they can even evolve to anticipate customer demand.
- The typical microfactory is flexible, minimizing the cost of making changes to product design. Microfactories are ideal for small-batch production of different designs and specifications. The ability to provide personalization creates pull from the market and consumer demand for a product. A 2020 New York Times article reported that more and more consumers are seeking products that are personalized or customized, including clothing, jewelry, pharmaceuticals, and footwear. Forbes reported in 2020 that 20% of consumers are willing to pay more and wait longer for something that is personalized or exclusive. ThomasNet.com reports there are garment microfactories that produce each item as customized by the user using an online app.
- Since a microfactory can achieve product turnaround quickly, a low volume of customized products can be made on demand, with a high return on investment. The economic risks of stockpiling raw materials are reduced with microfactories, as are the risks of shifting consumer interest and demand that complicate mass production. There is no need for a costly distribution network since products are manufactured after they’re sold. Customized products can be created and sold without carrying an inventory.
- The microfactory enables lean manufacturing with reduced waste. It has a significantly smaller footprint, needing less factory space. It doesn’t require a large labor force and can economize on energy. Bosch Rexroth, for instance, explains its line of lean production modules can produce only what the customer needs “just in time and according to the zero-defect principle.” Based on technology advances, microfactories can be located in the same country or geographic location as customers, reducing the need for and cost of transportation. Other sustainable uses can include recycling and extracting usable resources from electronic waste – compact disks, cell phone batteries and computer hard drives.
Industry watchers anticipate an increasing number of companies will embrace microfactory technology in the coming years. As they enable production for individuals and small businesses, this could have a significant impact on the manufacturing landscape of the future.