Manufacturing on Demand (MOD) vs. Traditional Manufacturing

One of the ever-present challenges in traditional manufacturing has been the ability to expediently and accurately forecast and respond to buyer demand. While the technology available today has greatly improved manufacturers’ abilities to anticipate demand and adjust their operations accordingly, there are still times in which companies find themselves with a scarcity or a surplus of products, due to changing market conditions. Beyond forecasting, there’s also increasing pressure for companies to keep reducing their production timetable.

Fortunately, a new approach has emerged to address the need for agility — manufacturing on demand (MOD). Let’s take a closer look at how MOD builds upon the traditional model of production and how enterprises are harnessing it to optimize their processes start to finish.


Challenges Associated with Traditional Manufacturing

It’s fair to say traditional manufacturers face some blind spots — like sudden spikes in demand for which they may not have been able to plan.

Case in point: Online and physical retailers alike are having a very difficult time keeping certain products in stock during the COVID-19 crisis, from disinfectant wipes to paper products and non-perishable foods. Even more concerning is the shortage of vital medical equipment, like ventilators and other critical respiratory devices.

What started out as commonplace items in households and healthcare facilities became coveted resources seemingly overnight. As a result, manufacturers are scrambling to switch tracks quickly in an attempt to meet this surging demand.

Here are just some of the primary challenges associated with traditional manufacturing these days:

  • Supply chains built to support the demands of large businesses rather than small businesses and niche consumer demands.
  • Facilities often located overseas, which can complicate communication and lengthen order fulfillment times.
  • Minimum order requirements (MOQ) and lead times can be prohibitively high and long, respectively.
  • It can take six to 12 months to design, create, test, approve and manufacture products.
  • It’s very easy to overproduce, which saddles companies with costly overstock in warehouses.

Essentially, it’s become apparent that traditional manufacturing models lack the speed and flexibility necessary to keep pace in our increasingly on-demand world. In an industry with already thin margins, over- and under-producing can be the kiss of death for profitability.


Manufacturing on Demand: The Future of the Industry?

As the name implies, MOD aims to produce products as they’re needed, therefore reducing these costly instances of surpluses and shortages. There are a handful of ways to go about it.

One strategy is called Demand-Driven Material Requirements Planning (DDMRP). According to Manufacturing Global, DDMRP builds on the strongest aspects of traditional theory — like the focus on eliminating bottlenecks, improving throughput, reducing stored inventory and minimizing waste — “and it improves them by giving production planners an accurate way of modelling, planning and managing supply chains to protect and promote the flow of relevant information and materials.”

DDMRP entails inserting buffers into manufacturing processes to insulate the supply chain from shocks, as well as more closely aligning demand with production through the usage of advanced manufacturing and sales analytics to understand patterns in buyer behavior and production patterns. The desired results, of course, are shorter lead times and less extraneous production.

Another approach to on-demand manufacturing may actually sound counterintuitive at first: Keeping more machines on hand than are needed at any given time. Having extra machines sitting idle but ready to jump into action at a moment’s notice helps companies keep zero queue time, or as close to it as possible. Some manufacturers are even able to work out ad-hoc arrangements with suppliers in which they only pay for the time these extra machines are in action rather than having to buy them up front and pay 24/7 operating costs.

Manufacturing on demand is the agile response to the limitations of traditional manufacturing, and we’ll likely see even more of a push toward forecasting and production on demand in the coming days.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.