On-demand manufacturing, also called cloud manufacturing, emerged over the past decade and is beginning to revolutionize the supply chain industry. Driven by the explosive growth of e-commerce and shifting consumer preferences, the global cloud manufacturing market is expected to reach about $112 billion by 2024, growing at an astounding 19.8 percent annually, according to MarketWatch.
On-demand manufacturing is a process where goods are produced only when they're needed and in the quantities required. In contrast, traditional manufacturing requires large quantities of products to be made and then stored in facilities until they're ready for shipping. Due to its greater flexibility and ability to produce one-off orders, on-demand manufacturing essentially eliminates the need to hold costly inventory and allows for more opportunities to create unique, specialized products.
A variety of factors have facilitated the growth of on-demand manufacturing, especially the rise of e-commerce. The market was already growing steadily when the COVID-19 pandemic drastically shifted the e-commerce industry’s landscape. In 2020, online sales were projected to hit $709 billion, an 18 percent increase over 2019.
E-commerce has redefined the customer experience, allowing consumers to review and compare a wider range of products than ever before. More and more, consumers expect and desire personalized products. The adaptability of on-demand capabilities can support shifting consumer needs by making it possible for brands to accommodate the rising demand for customized and small-batch goods.
A number of other factors are contributing to the widening adoption of on-demand manufacturing, including decreasing costs of 3D printing, more government initiatives to support the modernization of manufacturing industries, rising consumer demand for artisanal goods in a mass-produced world, and a stronger need for businesses to deploy cloud-based solutions across manufacturing companies.
For companies of all sizes, the case for on-demand manufacturing is strong. The process offers benefits that bolster consumers, businesses and the environment. Here are three primary advantages of on-demand manufacturing for brands:
Reduce the Cost of Storing and Managing Inventory
On-demand production virtually eliminates the need to store materials and the goods made from them. Instead of guessing what consumer demand will be every season and stockpiling inventory, brands can now meet the demand directly because orders are made when requested. On-demand minimizes the need to forecast new product volumes or meet minimum order requirements, and allows companies to skip the costs of warehousing and direct staffing resources to other tasks.
End Overproduction and Reduce Landfill Waste
With traditional manufacturing, brands must estimate consumer demand for each product. That leads to overproduction, especially in the fashion industry, where styles and trends can rapidly shift. When items aren’t purchased, many wind up as landfill waste or are incinerated. Almost 87 percent of textile materials are wasted, representing a lost opportunity of more than $100 billion annually. Because on-demand manufacturing allows companies to produce only what consumers order, it eliminates that unnecessary production and environmentally harmful waste. Simply put, companies using cloud manufacturing can implement a shorter and more efficient supply chain.
With on-demand manufacturing, brands can outsource their supply chain solutions. That allows them to concentrate less on logistics and focus on what they do best — designing, marketing and selling. On-demand also provides an opportunity to easily test new ideas and designs in a cost-effective way, which benefits companies of all sizes. For small brands or startups, the ease and efficiency of on-demand enables them to quickly go to market. For businesses in the apparel and home goods markets, in particular, both of which have blossomed over the past year, on-demand manufacturing is a highly effective approach to scaling their operations.
Retailers have been hard hit by the pandemic, with many needing to re-evaluate their operations to compete in a changing landscape. On-demand can transform the manufacturing industry as brands address the shifting demands of consumers while reducing costs and harmful environmental impacts. While on-demand initially provided growth opportunities for small to medium-sized businesses, more and more enterprise and retail brands are taking advantage of this innovative, cost-effective and sustainable manufacturing process.
Brian Rainey is the CEO of Gooten, a globally distributed production and logistics company transforming how online brands manufacture and fulfill merchandise to their customers.
Related story: How New Tech is Transforming the Retail Supply Chain
Brian is the CEO of Gooten- a globally distributed production and logistics company transforming how online brands manufacture and fulfill merchandise to their customers. As a “big picture” thinker, Brian elevates the organization through pivotal leadership and strategic direction while aiding in the expansion of financing, hiring, and global initiatives.
Before Gooten, Brian gained experience in the accounting and finance industries, previously serving as the Chief Financial Officer of Buzz Points, Inc. At Gooten, Brian maintains an entrepreneurial perspective by which he views every challenge as an opportunity. He solves problems by curating and motivating an inspired, highly skilled cross-functional team to ensure the seamless executions of processes by devising and formulating business strategies and creating short-term goals and long-term objectives. Brian holds a Bachelor of Business Administration in Accounting and Finance from James Madison University in Virginia and an MBA from the Darden School of Business at the University of Virginia.