On demand Manufacturing: When Hardware moves to the Cloud

"It has never been so easy to order first-class manufacturing services online with just a few clicks.
This enables hardware innovations to be made at software innovation speed."

On-demand manufacturing is a flexible and risk-reducing outsourcing strategy to realize mechanical components. It is mainly used in the field of prototypes and small series. There are clearly definable differences and advantages compared to classic in-house production:

1. Instead of buying, maintaining and operating machines, on-demand manufacturing uses existing machines and the know-how of specialized manufacturing companies. This usually allows the investment volume for the realization of products to be significantly reduced.

2. Instead of committing to long-term production scenarios to finance paying off the machines, on-demand manufacturing flexibly utilizes manufacturing capacity according to the company's actual needs, resulting in a significant reduction in business risk.

3. By focusing on external on-demand service providers, the risk of single-source procurement is reduced. In this context, it is essential to construct and design products already in the development phase in such a way that a potential unique selling proposition by manufacturers is prevented. The overriding goal is to achieve interchangeability, flexibility and parallelization in inquiry, procurement and production.

A crucial difference lies in classic on-demand contract manufacturers and modern, digital platforms that offer on-demand manufacturing services. While traditional contract manufacturers generally work as an extended workbench for customers, digital manufacturing platforms offer the brokerage of manufacturing services in a large network of manufacturers. 

Instant quoting has become a core technology for manufacturing platforms, allowing quotes to be generated in seconds based on CAD data. If the customer places an order, the order is automatically sent to a manufacturing partner in the network for implementation. 

Instant quoting thus reduces the ordering time from several weeks to just a few minutes and, thanks to the immediate price generation, allows for a high degree of transparency with regard to the price structure in the market. These developments are beneficial for buyers of CNC parts, 3D printed components and other mechanical components, but detrimental for manufacturers, as high competitive pressure is created.

There are many manufacturing services that are offered on demand and with instant quotes. Here are some examples:

1. 3D Printing: Many 3D printing services offer instant quotes based on your design files. You can upload your design to the website, choose your material and finishing options, and receive an instant quote.

2. CNC Machining: CNC machining services can provide instant quotes for custom parts based on your design files. You can upload your design to the website, choose your material and finishing options, and receive an instant quote.

3. Injection Molding: Injection molding services can provide instant quotes based on your part design and material requirements. You can upload your design to the website, choose your material and finishing options, and receive an instant quote.

4. Sheet Metal Fabrication: Sheet metal fabrication services can provide instant quotes for custom metal parts. You can upload your design to the website, choose your material and finishing options, and receive an instant quote.

5. Laser Cutting: Laser cutting services can provide instant quotes for custom parts based on your design files. You can upload your design to the website, choose your material and finishing options, and receive an instant quote.

Even if prices gain a high transparency now, for many companies the decision for the most suitable ondemand manufacturer is usually not made with the price alone. In manufacturing, people often talk about the golden triangle of manufacturing [1]. This refers to the interdependence of cost, quality and delivery time, whereby a strong advantage in one factor usually leads to trade-offs in at least one other factor.

The greatest strategic competitive advantage for buyers of components usually arises when they use the digital purchasing processes of the platforms and thus do not waste expensive personnel on research, auditing, procurement and logistics. How decisive delivery time and quality requirements are for an industry in addition to costs varies greatly. 

We therefore recommend using our shortlist presented here as a point of reference to compare the providers with each other through real trial orders. It is only through these orders that an overriding understanding of the suitability of the supplier can be gained.

We compared a few suppliers for different manufacturing processes (CNC machining, sheet metal cutting and additive manufacturing). We looked at cost comparisons and did some trial runs to evaluate quality. Our experiences with Xometry, Protolabs and InstaWerk are very different, but impressive.

The Covid pandemic, international trade and armed conflicts have caused many existing supplier relationships to falter. Whether due to sickness-related absences or material shortages, the procurement of parts is becoming increasingly challenging.

A look ahead does not bode well either: rising interest rates will make refinancing more difficult for many companies and thus increase the default risk of the existing supplier structure. But the demographic structure is also making it increasingly difficult to fulfill production orders on time and to the required quality. CNC manufacturers in the USA complain that they currently have enough orders but no staff to process them. No wonder, there are 5 million fewer employees in manufacturing today than 5 years ago [3]. With an average age of 44, there is also little hope for relief.  According to WBUR, there are capacity bottlenecks especially in CNC manufacturing and welding - and that despite higher than average salaries of $29.33 per hour.

So there is little to be said for easing the situation on the supply side, and plenty to be said for eliminating the risk by professionally organizing a preaudited and powerful on-demand network. 

Lists of On-demand Manufacturers and Instant Quote Providers

News on Manufacturing in our Blog

References

[1]: About the principle of Cost, Time and Quality: Wikipedia Article

[2]: Shortage of Labor: WBUR

[3]: Shortage of Labor: CNN