1. The traditional electronics manufacturing process works well for large organizations that want to produce hundreds of thousands of products for the lowest price possible.
2. But it is not as friendly to small businesses or newly developed products.
3. The distributed approach to hardware manufacturing improves the process and makes it possible for more innovators to get products to market.
4. Distributed manufacturing, sometimes called distributed production, cloud based producing or localized manufacturing, is a form of decentralized manufacturing practiced by companies using a network of geographically dispersed facilities that are coordinated using information technology. It is
5. the manufacturing landscape of conversion from closed ended and restrictive to transparent and agile. It permits companies to access their supply chain locally with more flexibility, higher quality, faster service and lower costs.
6. Instead of relying on just a single headquarter location or third party overseas manufacturer; organizations that have evolved their business to a distributed manufacturing model are able to be more nimble in how they operate.
7. Distributed manufacturing is quickly reinventing the manufacturing industry from something monolithic and closed to something transparent and nimble. It allows builders to choose from a variety of machines, materials, and quantities, all located nearby, with unparalleled flexibility, quality, and speed.
8. By relying on a network of producers in a specific geographic area, rather than a single overseas manufacturer, distributed manufacturing can deliver superior results in three key ways: speed, quality, and cost-effectiveness.
CENTRALIZED MANUFACTURING
1. A single factory can dramatically reduce per unit production costs by using the same equipment to produce different products, allowing the company to achieve economies of scale. Research from the nonprofit organization APQC shows that centralized organizations have manufacturing costs that are about 3 percent lower than decentralized companies.
2. For an organization with $5 billion in annual revenue, this is a difference of $150 million. APQC’s research also shows that raw material inventory turn rates and production schedule efficiency is higher in companies with centralized manufacturing.
3. Centralized manufacturing can also enable better forecasting, more local jobs, consistent production and more effective use of limited resources. The cost of materials may also be lower for centralized manufacturing sites that are located near the source of those materials.
4. In spite of these advantages, centralized manufacturing tends to be inflexible because of the cost of customization. For example if a product has to change, the entire system must be retooled and this is extremely costly and time consuming. The cost of labor can also be a disadvantage, especially if a company maintains its central plant in a region or country where wages are rising.
DECENTRALIZED MANUFACTURING
1. Companies with decentralized manufacturing enjoy many benefits that often elude companies with centralized plants. These advantages include flexibility, being closer to their customers, better and timelier information, more motivated managers and employees, and the ability to take advantage of low labor costs in different areas.
2. When a company is physically close to its customers, it can be more flexible in meeting increasingly diverse demands. Greater flexibility means greater customization. A company with decentralized manufacturing can manufacture only those products that are in demand in a specific region or country. Flexibility has other rewards as well. For example, communicating locally is more efficient than having to go through multiple channels at a single corporate office. Decisions can be made more quickly.
3. Decentralized manufacturing not only improves the efficiency of decision-making but also empowers employees, letting them improve problem areas immediately without approval from a centralized organization. According to a study by Harvard University, decentralized manufacturing actually increases motivation and creativity by giving lower tier managers more responsibilities. When a manager is given a sense of ownership over an operation, efficiency increases among employees in both production and support positions.
4. Often a company decentralizes in response to increased demand or expanding markets. For example, American Nutrition, a major pet food company, started with a single plant in Ogden, Utah, but as the pet food market expanded, the company also expanded to four manufacturing plants in Phoenix, Ariz.; Woodland, Wash.; and Hazleton Township, Penn.
5. Decentralized manufacturing has disadvantages as well. Multiple sites require a larger investment of capital to set up, the per-unit costs are higher than mass-produced products made in a central plant, and maintaining organization-wide consistency in products and processes is a challenge. For companies that manufacture highly specialized products and distribute them locally, decentralized manufacturing may not be the best solution.
LESS HARDWARE RELIANCE FROM DISTRIBUTED MANUFACTURING
1. Distributed manufacturing allows organizations in cities and small towns that have been affected by globalization and outsourced manufacturing to produce parts with less capital and overhead than ever before, helping hardware innovation continue to grow at exponential rates.
2. When these groups are connected and have the resources they need to be successful, we can lower the barrier to entry into hardware development and positively affect local economies. This is how we begin to democratize hardware.
SMALL BUSINESSES BENEFIT FROM DISTRIBUTED MANUFACTURING
1. Small and growing businesses with few products on the market don’t always have the demand required to get reasonable prices from traditional manufacturing outfits that are designed to churn out high-volume production orders.
2. They also generally look to avoid large inventories and view just-in-time delivery as essential. Distributed manufacturing supports the needs of these businesses by making small orders and prototyping affordable.
3. The gold standard distributed manufacturing solutions also offer inventory and fulfillment services and have developed APIs to integrate the customer’s e-commerce or ERP system.
4. When an end user orders a product, it is shipped from a nearby facility without any additional effort on the part of the business. This reduces costs, and frees employees to focus on more strategic business needs, gets products to customers more quickly, and results in an excellent customer experience. For small businesses, distributed manufacturing can lead to faster growth.
ENGINEERS BENEFIT FROM DISTRIBUTED MANUFACTURING
1. Even for large organizations working a new product idea, traditional manufacturing can be a roadblock.
2. Those operations aren’t equipped to handle your small order or prototype, even if you’re working for a huge corporation.
3. Distributed manufacturing helps address that problem. Because they leverage cloud-based technology to digitize much of the process, these manufacturers are able to accept prototyping orders, help with iteration and produce small batches.
OTHER BENEFITS OF DISTRIBUTED MANUFACTURING
1. Reduced Costs - You may have noticed that many of the capabilities of distributed manufacturing lead to reduced costs. This is a key driver for small businesses and others trying to bring products to market on a tight budget. You do get lower costs at higher volume, but it is absolutely possible to pay reasonable prices for prototypes and small orders.
2. Faster Time to Market - By smoothing the whole manufacturing process with user-friendly online tools, instant quoting, and rapid prototyping, your distributed manufacturing partner helps you get your products into the hands of customers faster. You’ll get a quote in seconds by simply uploading your design documents and Bill of Materials. You don’t have to worry about sourcing because your manufacturing partner takes care of it for you, and you even get steep discounts from parts suppliers. Because turnaround times are so quick and prototype orders are welcome, you can iterate as often as you like without running into big delays. All of this means that your product gets into the hands of your buyers more quickly.
3. Focus - Businesses outsource non-core functions all of the time. Why? Because they want to keep their focus tightly on how they add customer value and let someone else get really good at everything else. You probably don’t want to become an expert in parts sourcing, inventory management, or order fulfillment, so why not partner with a distributed manufacturing partner that already has?
Source:
https://industrytoday.com/centralized-vs-decentralized-manufacturing/
https://blog.brennaninc.com/how-distributed-manufacturing-is-evolving-business
