- Instead of sourcing components from single suppliers, manufacturers are starting to look for smaller orders from a range of suppliers to guard against the supply chain disruptions seen during the pandemic.
- Slimane Allab, senior vice president and general manager, EMEA of supply chain tech company LLamasoft said, “Short run manufacturing is effectively bridging the gap between product prototyping and full-scale manufacturing plans.”
- Peter Evans, CEO of UK-based stock management company Orderly agreed that short runs can benefit manufacturers and will only increase in the future.
- Because of their work, Business Insider named Allab and Evans to our annual list of the 10 leaders transforming supply chain in Europe.
- Visit Business Insider’s Transforming Business homepage for more stories.
So many situations, both desirable and undesirable, have been accelerated by COVID-19 and the manufacturing and supply chain industries are no exceptions. The pandemic has increased the need for agility and flexibility and many industries have recognized short-run manufacturing as a way to respond to fast-changing customer expectations in order to get new products to market.
These sectors are likely to see greater supply diversification. Instead of sourcing components from single suppliers, manufacturers are likely to instead look for smaller orders from a range of suppliers in order to guard against the supply chain disruptions seen during the pandemic. This will mean shorter runs and greater efficiency.
“With the rapid emergence of 3D printing, short run manufacturing is becoming increasingly desirable, Slimane Allab, Senior Vice President and General Manager, EMEA of supply chain tech company LLamasoft said. “Short-run manufacturing is effectively bridging the gap between product prototyping and full-scale manufacturing plans.”
Short-run manufacturing enables businesses to shift their level of production to market needs quickly. This means that they are better able to meet demand levels exactly, minimizing the level of inventory and obsolescence, while optimizing logistics and warehousing costs, which can negatively impact a company’s profit margins: “We saw how beneficial this was during the pandemic, with medical equipment, such as plastic glasses, able to be produced quickly to meet a surge in demand,” Allab said.
There is hope, of course, that with positive news on a vaccine, the need to react to disruptions such as lockdowns will hopefully be minimized in 2021. However, Allab said, “COVID-19 has demonstrated that businesses can be forced to react at a moment’s notice and without warning.”
With this in mind, most businesses will want to have contingency plans in place which allow them to react quickly, and short-run manufacturing can help with this. “The development and demand for small-turnaround jobs will continue to accelerate and this will be particularly important for industries such as retail, where lockdowns are causing volatility in demand and a surge in demand for tailored products, but also in the pharmaceutical industry for specific medical devices or other specialized distribution businesses. For this to become a reality, though, more small-turnaround jobs will be required and people to fill them,” Allab said.
Allab said he was seeing a demand for short-run manufacturing before COVID-19 and it has simply been accelerated by the pandemic: “As the value of this approach is increasingly recognized, short-run manufacturing is taking its share from traditional additive manufacturing.”
Peter Evans, CEO of UK-based stock management company Orderly, agreed that short runs can benefit manufacturers. “Low volume techniques typically take less time and money than mass production, especially for prototyping and products not yet proven in the market. It also allows a shorter time to market and helps manufacturers create products closer to a JIT [just in time] strategy, where typical modern forecasting does not work in the current climate.”
Orderly creates supply chain-management software for food and beverage companies. “Our software has seen an increase in transactions but a decrease in average order volume – we hypothesize this is due to vendors such as cafes carrying less perishable stock due to potential local lockdowns,” he said. “Due to the demand signals getting passed through the supply chain this has led to more small-turnaround jobs at manufacturers.”
Adding into this, with increasing customer demand for personalization and individuality in products, Evans believes that utilization of short-run manufacturing is only set to increase.
However, one interesting area that is being considered is intellectual property rights. With the invention of 3D printing, it is easier than ever before to replicate products and produce them on a large scale at speed. This, Allab said, “leaves developers and smaller businesses at even greater risk of being drowned out by large enterprises, who have the resources to perform short run production at scale.”
“If these businesses and developers are to protect their products,” he added, “there will need to be greater regulations put in place to protect their intellectual property rights. This is ultimately a new way of doing business and, as with everything, laws need to be put in place and strengthened to protect those most vulnerable from this development.”