In small-batch manufacturing location, flexibility is crucial
Custom-made products offer smaller producers an opportunity.
The first image the term “small batch manufacturing” brings to mind may be of a hopeful entrepreneur looking to turn a Kickstarter or Etsy dream into reality. However, Maker’s Row, which connects American manufacturers and product-based businesses, reports that established companies like Under Armour and Ralph Lauren also partner with small batch manufacturers.
The rise in adoption rates of just-in-time manufacturing processes places increasing pressure on large and small manufacturers to shorten delivery times from weeks to days—or even overnight. Working with small batch manufacturers can help large-scale producers improve their business agility and compete with smaller, more nimble companies.
A Deloitte Insights report summarizes the manufacturing sector landscape perfectly: “The changing economics of production and distribution, along with shifts in consumer demand and the emergence of “smart” products, are pushing manufacturers to explore radically new ways of creating and capturing value.”
Custom-made products for smaller niche markets are available and accessible with just the click of a mouse or tap on a screen. That raises consumers’ expectations for getting exactly what they want, when they want it. The good news: this creates new business opportunities for manufacturers that can deliver the goods.
The Deloitte report also states that “the boundary separating product makers from product sellers is increasingly permeable. Manufacturers are feeling the pressure—and gaining the ability—to increase both speed to market and customer engagement. And numerous factors are leading manufacturers to build to order rather than building to stock. In this environment, intermediaries that create value by holding inventory are becoming less and less necessary.”
World Emblem produces custom-designed embroidered emblems for apparel manufacturers, and the days of us producing and holding inventory are long gone. Our operation has evolved into a just-in-time method as a majority of customers hold us to tight delivery timeframes.
This year’s NBA All-Star game is a good example. If the players thought the emblems on their All-Star uniforms felt a little warm, that’s because they were figuratively hot off the presses. We received the order on Feb. 9—a week before All Star Weekend began on Feb. 16.
Small batch manufacturers that have access to cutting-edge technologies like 3-D printing can respond to this individualism and operate at a much smaller scale while still producing products that meet the consumer demands. Consider how Invisalign can produce custom dental braces for individual patients’ mouths, or Normal Earphones’ business of creating custom 3D-printed earphones.
It’s still about location
This presents large-scale producers with two choices: develop small batch manufacturing capabilities in-house or outsource. The decision most likely will come down to cost; the former requires significant capital and labor investments that the latter does not.
If your company has decided to evaluate potential small batch manufacturing partners, consider that even in our high-tech age of broadband Internet, cloud computing, and the Internet of Things (IoT), the basic rule of real estate still applies. Whether you’re buying a new house or finding a suitable small batch manufacturing partner, the three most important considerations are location, location, location.
That’s a lesson World Emblem learned when we opened our first factory nearly 30 years ago in Atlanta. Our largest customer was based in Atlanta, and if we were to leverage the just-in-time method, we needed to literally be their next-door neighbor. We followed that model as we grew and opened new factories in Ontario, Calif., Decatur, Ill., Taylor, Mich., and in Mississauga, Ontario in Canada. You don’t have to drive more than a mile from our Canadian plant before you arrive at one of our two biggest customers’ buildings.
If it is not possible to find a small batch manufacturer in your vicinity, location still remains a key consideration. You need your partner to deliver in days, if not overnight. Atlanta offers a large airport and major UPS and FedEx facilities, which all combine to provide one of the largest Zone 1 shipping radiuses in the country.
Location also plays a key role in determining labor costs. We find that within the Atlanta city limits, the labor pool comprises both skilled and unskilled workers. But drive to outlying areas and the labor pool leans much more heavily to skilled technology (and more expensive) workers. The same holds true in California, where labor skews to skilled technology workers in coastal cities like San Francisco and San Diego, and to a more varied labor pool inland.
Location is a top consideration when partnering with a small batch manufacturer, but it’s not the only one. You also should look for a strong technology background that assures its operations will scale with your back office and eliminate most technical challenges. You both need to speak the same tech language, and one key to this fluency is insisting on using standards, such as with web-based services that are easy to use via any device (e.g., PC, smartphone, tablet), or electronic data transmissions interchange (EDI) transmissions for orders and invoices advanced shipping notices (ASNs).
The role of technology
Other key considerations include:
- Strong financials: You don’t want to work with a company that will go broke in a month.
- Strong leadership team: You’re taking the time to develop a close relationship with your supplier. You don’t want that work to be for naught and see your supply chain cut if there’s a management shakeup or company sale in the near future.
- Diversification: You want to be an important client, but not the only client. Call it the Amazon or Walmart Factor. As a small batch manufacture, World Emblem needs to diversify our business across markets and products. This gives our clients the security of knowing that an industry or client shake up will not interfere with their supply of goods.
You may find a small batch manufacturing partner who has developed its own software system for inventory tracking, rather than using off-the-shelf solutions. For example, World Emblem has built a unique solution for accepting orders, pulling designs, and tracking order in real-time. Although this customized technology enables quicker production and delivery, it may create compatibility issues with your MES or ERP solutions that could make systems integration difficult. Consider implementing middleware to bridge that systems’ communication gap and improve operational efficiency for both you and your partners.
Randy Carr is CEO of World Emblem.