What is On-Demand Manufacturing?

What is on-demand manufacturing? On-demand production is what it sounds like; a type of production that focuses on making goods available as soon as possible. It is opposed to the traditional mode of production, which focuses mainly on making large amounts of merchandise, storing them, and eventually having these goods on hand when they're ordered. If you think about it, this kind of production process has several obvious benefits.

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For starters, on the supply chain, there is always a demand for goods. There is no such thing as being able to produce more goods than there is a supply for. When the supply chain is established, the only way to make more goods is by making more people work to produce them. The problem with this type of production process is that it often results in an oversupply of goods - and thus a drop in prices. How can this be good for business?


For starters, this method of production allows companies to respond quickly to changes in consumer preferences. Mass production without a sure demand system that results from using on-demand manufacturing techniques tends to force certain goods to take on markets at their best prices, even if other goods could take their place. For instance, consider the popular coffee machine above. This particular machine makes millions of cups of coffee every single day, and it is a highly profitable business. However, it also sells at a very low price, largely because of the minimum order requirement.


On the flip side, demand forecasting tends to favor lower-priced goods. Why is this? Because a company that takes the time to develop a product and guarantee its cost-effectiveness in the market will ultimately drive up its profit margin. On the contrary, an on-demand manufacturer who relies on bottom-line profitability as its guide to development may eventually find itself in financial distress.


Of course, it's not just the minimum order quantity (or MSQ) that is on the minds of those interested in what is on-demand manufacturing. For many companies, the cost-effectiveness of on-demand manufacturing has much to do with developing and maintaining a standard inventory. Simply put, the bulk of the work in any mass production operation - which requires the use of what is on-demand manufacturing - is tasking manufacturers to maintain a consistent, standardized inventory of goods. That helps cut down on waste and boost profits, which are significant concerns for most corporations.

What is On-Demand Manufacturing?
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But what about those of us who are opposed to the use of what is on-demand manufacturing? The argument goes something like this: Since traditional manufacturing involves a level of automation and a highly trained workforce, businesses are forced to engage in a large amount of manual labor to achieve the volume levels that can be brought forth from a mass-production model. That leads to an increase in productivity at the cost of increased costs to the company. The reduction in worker productivity creates a corresponding reduction in the company's profit margin. Eliminating the need for traditional manufacturing methods means that what is on-demand manufacturing becomes more of a viable option.


However, while there may be some merit to what is on-demand manufacturing, that doesn't mean that it can't have its drawbacks. One major drawback is the cost associated with maintaining a standard inventory. In a typical on-demand production process, the production process begins after the supplier's products have been received, sorted, packaged, labeled, assembled, and transported to the point of processing. It means that the entire production process is a one-stop shop. This leads to an increased level of personnel training, employee turnover, and other costs that can add up to substantial annual salaries for individual employees.


What is on-demand manufacturing can lead to an increase in worker turnover, which is definitely a downside for many companies? Also, the increased level of worker training that takes place during the supply chain can take a considerable amount of time and money. These two factors combined can decrease profit for companies that utilize what on-demand manufacturing processes is. These disadvantages, however, must be weighed against the increased efficiency that what is on-demand manufacturing offers.

On-Demand manufacturing
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