Guest editorial: Demand and supply in an on-demand world

Manufacturing News, Source : The Manufacturer US
Zone : Logistics and supply chain
Published : 28 Jun 2007 17:31

Exclusive to The Manufacturer, by Mitch Free, President and CEO of MFG.com
On-Demand Manufacturing (ODM) means different things to different people, depending on what industries they serve and where in the supply (or demand) chain they fall. But one thing’s certain—in the coming years, the chain supply is going to change in a big way. In some cases, it will actually work backwards from what we’re used to today.

I realize that, as manufacturers, we live in the moment. Either something is within tolerance, or it isn’t. It either makes money now, or it doesn’t. But the concept of ODM—to be fully appreciated—must have the attention of our imagination, because too much of what we do in our lives and our businesses will be affected by it.

And we’re the ones that will have to make it work.

To best describe the potential of ODM, let’s look backward and around us to see what it is and where it’s going.

“The customer is always right.” “Give ‘em what they want.” “The invisible hand.” These are statements that only began to suggest that the customer was in control. But they weren’t—not really. While customer preferences indeed made their way into the products, they were often filtered back to the beginning of the design process. It took a relatively “long time” to get the preference ingrained in the product.

Still, there was the thought.

Look around today, and you can see the first rumblings of ODM influence and the beginning of what will disrupt entire markets.

Look at many restaurants—especially those that serve pizza. No matter what you want, your pizza or dish is made to your specs, on the spot. Have it your way. Now that’s ODM.

And what about those Build-A-Bear shops for children that build teddy bears on demand? You pick everything—the clothes, the skin, the heart, the color—and they stuff it and hand it over. It didn’t exist as a product until you walked in the store and your child specified the options they wanted.

Homes and computers are moving in the direction of ODM, but they’re a long way off. The level of detail you can select in those products are still biased toward the manufacturers’ design and distribution models. (For computers, the hardware and software choices are limited to consumers. For homes, the costs for customization are relatively very high when compared to the overall market.)

But maybe the best example today of ODM and its potential to disrupt and influence markets is Starbucks. On demand, fully customized product. Made to the exact specs of the customer, right now. Delivered with consistent quality, whether you’re in Beijing, Brussels or Baltimore. And, do you remember what buying a cup of coffee was like 15 years ago? That’s what ODM will do to markets, and to manufacturers.

So, ODM isn’t new, but why isn’t it more prevalent?

The big problem—like anything else you’ve heard of recently—is change. But this is no ordinary, run-of-the-mill, “oh, I went through the dot-com era, too” kind of change. This is full-blown, disintermediation of biblical proportions. And it goes like this:

OLD FORMULA: BUILT—DELIVERED—SOLD

ODM FORMULA: SOLD—BUILT—DELIVERED

The customer defines what the product is, and it’s provided for them. It’s that simple. And that complicated.

While everything from the design stages all the way through the supply chain will certainly be affected by ODM principles, it will be shifting the rapid, responsive assembly of product closer to the customer that’s the tricky part. In other words, assembly of whole products have to move as close to the customer as possible, to the distribution or sales stage, in order to best respond to the preferences of the customer.

Let’s have some fun, and imagine what influence ODM could have on some established businesses models:

Automobiles—Why are there any ugly cars on the road? I know that beauty is in the eye of the beholder, but really, who designs these things? I understand the loss-leader concept perfectly well, but how disruptive on the auto market would an ODM model be? A customer enters a dealership, where common power trains and chassis are selected. Since the dealer is now an assembly/manufacturing facility, the customer picks body style, color, interior, performance, and customized design features for delivery in days, not weeks. And, of course, custom design services are available for a fee. And the distributor becomes a more valuable node in the supply chain. Think Scion, on the spot. The assembly stage is turned on its ear, and there are fewer ugly cars.

Appliances—This one’s maybe even more ODM-obvious than cars. Want a steel refrigerator with the freezer on the right, a stronger compressor, and customized storage in the door because you just had twins? No problem. You can have that in two hours. Would you like a latte while you wait? What flavor?

Medicine—There may be no better or serious example of what ODM holds for the future than how it will change healthcare. As the human genome mapping is complete and we learn more about ourselves, as DNA exposes our individual strengths and weaknesses, medicine will become even more of an information industry. As such, drugs will be designed for us on the spot, taking into account our peculiar genetic makeup, potential short- and long-term side affects, and what drug or combination of drugs would be best for you, with less trial and error and greater effectiveness.

3-D Printing—It will be amazing to watch this technology mature, because of its impact on nearly every manufacturing business you can imagine. The ability for anyone—consumers, military personnel in the field, aircraft mechanics, orthopedic surgeons, the Pep Boys Auto Parts Store, your child’s teacher, custom and standard parts manufacturers—to “print” an object to spec from what may or may not be a CAD drawing (paid for, of course) has the potential to disrupt an unimaginable number of markets, and accelerate buying cycles beyond recognition. Just think about it. ODM, on steroids.

We will likely see the infrastructure and technologies for these ODM scenarios developed to the point of widespread adoption within the next 10 years. And as that happens, the consumer markets will drift closer and closer to custom, ODM markets.

Customers designing products before the product are built or assembled. They’ll demand it, and then we’ll supply it. Outrageous? Naive? It feels more like tomorrow—than in the distant future.

Mitch Free is president and CEO of MFG.com, the largest online marketplace serving the global manufacturing community. Prior to founding MFG.com, Mitch was founder and CEO of 3DATUM, a provider of technology solutions for the manufacturing and engineering communities. Mitch has held a variety of senior management positions with Northwest Airlines where he managed aircraft engineering, technical procurement and aircraft acquisition projects.

Comments on this story

no comments yet...

click here to add a comment

You must be registered & logged in to add comments
Please register

already have an account and just want to login?

email address
password
remember me