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What’s the Difference Between Traditional Manufacturing and On-Demand Manufacturing?

If you’re up to speed with the latest supply chain trends, you already know we’ve entered the Age of Demand. In a landscape defined by market fragmentation, flexibility, and consumers’ desire for transparency, getting your brand out into the world means taking a demand-driven approach to manufacturing.

To say that technology – from 3D printing to mobile shopping – is both partly responsible for and up to the challenge would be an understatement. As consumers use their smartphones to seek out more niche products and shorter wait times, on-demand manufacturing (ODM) helps businesses both large and small get their products into customers’ hands faster than ever, while cutting costs and boosting margins.

So what is ODM, and how does it differ from traditional manufacturing? The secret’s in the name: on-demand manufacturing is all about responding quickly and efficiently to fluctuations in demand by producing exactly what you need, only when you need it. Where traditional manufacturing might as well be a blow-torch for a small or short-term enterprise, ODM is a precision tool that helps small and large businesses alike remain agile in today’s dynamic markets.

Manufacturing Isn’t One-Size Fits All

Traditional manufacturing  has worked for so long because it’s powerful and standardized, but as today’s trends move toward increased agility in production, the old model doesn’t always support optimal flexibility.  

There are a few key drawbacks of traditional manufacturing that prevent small and new businesses with short-term needs–like pop-ups or limited brands–as well as larger, more established companies from responding nimbly to customer demands and industry trends:

Long Lead Times

Because of their sheer production power, traditional manufacturers tend to have longer turnaround times between design and delivery than ODM services do. Whether it’s Dad’s brewing kit for Christmas, your 5K group’s custom tees, or the new iPhone, today’s consumers want their goods now. Stock-outs exacerbate the challenge, leading customers to turn to another brand that can get them what they need when they need it.

For large, established companies with fairly predictable seasons, forecasting may not be such a headache, but if you’re selling smaller batches of products with shorter lifespans, you and your customers need fast service. Of course, ODM’s shorter lead times also let enterprises respond quickly to customer demands, ensuring customers will be coming back to the brands they already trust.

Inventory Risk

If you’re forced to anticipate future needs and prevent the dreaded stock-out, you might over-stock, leading to mark-downs and brand dilution if or when you under-sell.

A bloated inventory is a bummer for several other reasons: with your assets frozen in product, you’ve got less cash flow for the rest of your operations, and you risk loss or theft – all of which shrink your margins. Oh yeah – and you have to figure out how and where to store it, too.

Big businesses may be able to  absorb these blows, but even the biggest companies’ margins benefit from reduced inventories, from warehouse costs to payroll. For small and new companies, the overall risk may be too high.

High Upfront Costs

Most manufacturers set hefty minimum order quantities to offset their production costs and turn a profit. This is bad news if you’re just getting started or have short-term needs. These order requirements, or MOQ’s, can have high costs-per-unit that small or pop-up retailers just can’t meet.

MOQs can be just as prohibitive for big businesses, since they can mean over-ordering and over-stocking, trickling down to markdowns and brand dilution in the long run.

Traditional manufacturing doesn't necessarily work for the fast-paced, fragmented markets of today.

How ODM Stands Apart

On-demand manufacturing does just what it says: makes sure you (and your customers) have the quality products you need, exactly when you need them. The benefits are biggest for operations that thrive on flexibility, big and small:

Shorter Turnaround

A combination of good tech and high flexibility can make ODM an all-around faster process. Shorter lead times let you plan better, create more flexibility, sell products with shorter lifespans more efficiently, and get them in your customers’ hands more quickly.

Lean Inventory

With on-demand manufacturing, you order only what you need, when you need it. No need to worry about storing and managing a cumbersome inventory, not to mention the risk of loss or under-selling. With that kind of agility in production, you save costs and achieve more consistent margins.

Low or No MOQ’s

This one’s a no-brainer for small and new businesses, but it can also give big businesses a competitive edge by allowing them to test markets or run limited campaigns with small batches at lower costs. With low to no MOQ’s, you have more access to high-quality product than ever before, without the burden or risk of a high upfront investment. ODM makes an entrepreneur out of anyone with a killer idea.

For businesses of any size with highly dynamic needs, on-demand manufacturing is a win-win for you and your loyal customers. We at The/Studio believe it’s the key to making manufacturing accessible to anyone. That’s why our cloud-based ODM platform strikes the perfect balance between tech and service to bring you all of the above and more.

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