Microfactories and the new economies of scale and scope

Abstract

Purpose The purpose of this paper is to explore the microfactory model, the elements that enable it and its implications. The authors argue that microfactories reduce the risks and costs of innovation and that they can move various industries toward more local, adaptive and sustainable business ecosystems. Design/methodology/approach This conceptual paper explores several processes and practices that are relatively new; hence, it uses online secondary sources (e.g. interviews with CEOs, videos, blogs and trade magazine articles) extensively. Findings Given its versatility and high automation levels, the microfactory model can fill the gap between artisanal and mass production processes, boost the rate of innovation, and enable the local on-demand fabrication of customized products. Practical implications Currently, manufacturers generally need to make large investments when launching a new product, despite high uncertainty about customer acceptance, thus risking considerable losses. The microfactory model offers a safer alternative by allowing a firm to develop and fabricate new products and test their acceptance in a local market before mass producing them. Microfactories also enable the local on-demand fabrication of highly customized products. Originality/value This paper contributes to the discussion on the economic advantages and disadvantages of scale and scope, which have been insufficiently explored in the digital domain.

The future of manufacturing: A Delphi-based scenario analysis on Industry 4.0

“…Results (Projections #4; #31) also confirm an intimate relationship between Industry 4.0 and circular economy practices (e.g., Nascimento et al, 2019;Kouhizadeh et al, 2020;Rosa et al, 2020). Vice versa, the widespread expectations for small-scale localized production models (e.g., Srai et al, 2016;Montes and Olleros, 2019) and for the reshoring phenomenon (e.g., Barbieri et al, 2017;Dachs et al, 2019) do not come out so clearly from the results. Even though an increasing regional organization of supply chains is expected (Projection #42), new models seem applicable mainly to volatile high-value product categories leaving the bulk of mass market production relatively unaffected (Projections #6; #8; #26; #35), while new outsourcing opportunities seem less relevant as focal companies internalize high-margin production (Projections #11; #29; #41).…”

Local on-demand fabrication: microfactories and online manufacturing platforms

“…For the authors, these MFs have the potential to make some industries, such as car manufacturing, more ecologically and economically sustainable: they can serve a more diverse demand, they can produce where the customers are and they can shrink the supply chain by producing and selling on site. Montes and Olleros (2019, p. 1) updated this definition and consider MFs as “fabrication units optimized for the small-to-medium-scale manufacture of a variety of products by heavily using digital manufacturing technologies”. MFs thus have the potential to bridge the gap between artisanal production and mass production, enhance on-demand fabrication and lower the risks and costs of innovation (Montes and Olleros, 2019).…”

“…Montes and Olleros (2019, p. 1) updated this definition and consider MFs as “fabrication units optimized for the small-to-medium-scale manufacture of a variety of products by heavily using digital manufacturing technologies”. MFs thus have the potential to bridge the gap between artisanal production and mass production, enhance on-demand fabrication and lower the risks and costs of innovation (Montes and Olleros, 2019).…”

“…For Yusuf et al (1999), agile manufacturing refers to the integration of reconfigurable resources and best practices to efficiently reach higher levels of speed, flexibility, innovation and profitability. Mini-factories are flexible and compact manufacturing systems suited to fabricate personalized items close to customers (Barnia et al , 2017) and MFs refer to fabrication units optimized for the small-to-medium-scale manufacture of a variety of products by heavily using digital manufacturing technologies (Montes and Olleros, 2019).…”

“…Several large companies are already working toward a more local on-demand production enabled by powerful platforms: Adidas, for example, has partnered with Carbon to 3D print on-demand customized shoes in the United States (Dillet, 2018); Boeing is heavily investing in 3D printing (3DP) to manufacture parts internally, shortening its supply chain and accelerating production (Boeing, 2018); Nike is increasingly using online platforms and digitalization to have a more direct and fluid contact with customers, facilitating on-demand production and bringing products to market faster (Kapadia, 2018); and 3D Hubs is leveraging its platform to connect customers needing a part with local fabricators ready to serve them. In this paper, we explore different types of microfactories (MFs) – fabrication units optimized for the small-to-medium-scale manufacture of a variety of products (Montes and Olleros, 2019) – and online manufacturing platforms (OMPs) –virtual hubs that connect firms or people needing to make a part or a prototype with potential suppliers. We classify and contrast several MFs and manufacturing platforms highlighting their diversity, similarities and complementarities by means of a taxonomy and a conceptual framework.…”