What is On-Demand Manufacturing?
On-demand manufacturing represents a significant shift in how products are made and distributed. More than just an operational model, it is a core strategy for businesses aiming to improve efficiency and minimize waste, impacting industries from apparel to automotive. In apparel, it’s becoming more popular as a tactic that retailers and clothing brands can use to max out their addressable market at the lowest possible risk of production cost.
This approach competes against traditional mass production and even from small batch manufacturing, a concept explored in our latest blog “What is Small Batch Manufacturing?”. While these other models strive for efficiency and profitability, on-demand pushes the boundaries of responsiveness and product evolution.
On-demand production can mean two different things:
- Manufacturing a product only after a customer places an order for it. This shifts the traditional manufacturing process. Some factories support production of even a single unit that is made and shipped when a customer places an order for it.
- Producing micro-batches frequently that are timed ahead of demand so as to reduce shipping times and address sell-outs (having inventory appearing as “sold out”). This can also be used to fill in gaps of sizes that sell out.
This is truly the “made to order” idea, so a finished product isn’t overproduced and is right-sized for needs. For example, for uniform buyers, on demand manufacturing offers incredible efficiency as it can align to hiring cycles. This avoids the costly accumulation of inventory that might never be used.
Beyond the Order
While “made to order” sounds simple, successful on demand manufacturing requires strict planning:
- Long Term Planning: This is a crucial step. It is not about seasonal production runs but making sure that it is a continuous flow. This means planning for consistent demand rather than unpredictable large orders.
- Inventory Management: There is a need to have strategic management of materials. This often means that brands might invest in a minimum amount of their materials (fabrics) that can be stored at the factory for quick reorder. Here, forecasting is about predicting material needs against product sales.
- Collection Planning: For fashion brands, this often means designing styles that correlate to continuous production, beyond a single season. For uniform buyers or private labels, it means committing to specific styles or fabrics that can be consistently replicated as needed. If you plan to keep the same style and swap out the fabric design, and it can be digitally printed so you can use an on-demand model to buy a minimum quantity of the base white or neutral fabric.
When Does On-Demand Make Sense (Pros & Cons)?
On Demand requires a different operational mindset but its benefits for some business models are life changing.
Pros for Factories & Manufacturers:
- Reduced Waste: Producing only what is ordered can drastically cut down on material waste from overproducing.
- Agility and Growth: Factories that adapt to on-demand production become experts in rapid flexible production, attracting clients who prioritize this.
Cons for Factories & Manufacturers:
- Higher Per Unit Cost: Each unit effectively causes new setup costs, making per item price higher than larger runs.
- Difficulty in Logistics: Managing individual or small orders, tracking customizations, tracking fabric use, and coordinating shipping for lots of small packages can be difficult. Not every factory is set up to deliver this profitably.
Pros for Uniform Buyers, Retailers, and more
- Reduced Inventory Risk: The promise of on-demand is to eliminate the hassle of inventory and unsold product problems.
- Always “In Stock”: As long as materials are available, you will never run out of a particular size or color for your product.
- Test & Learn: On demand manufacturing allows you to test first with new designs or different variations of a product without significant financial exposure.
Cons for Garment Buyers:
- Shipping delays: The time to a customer’s doorstep may end up being weeks instead of days because production begins after the order is placed and managing customer expectation is key! This can be overcome by adopting the version of on-demand where micro batches are pre-made to respond more quickly to demand.
- Payment terms: When starting with a new traditional factory, you’ll typically pay half the cost of a production run upfront as a deposit. The other half is due just before your order is shipped, or they might extend credit terms. Factories generally don’t offer credit terms on-demand, particularly to new customers. You may be asked to purchase all of the materials upfront, plus pay a storage fee. You should work out the “math” to understand your full costs and ensure investments are offset by the benefits of the on-demand model.
On-demand manufacturing is more than a trend, it’s a change making businesses more efficient, sustainable, and focused on customers. By producing only what people want, it helps companies be leaner, quicker to respond, and highly innovative.
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