The disadvantages of offshore manufacturing started to offset its financial advantages roughly a decade ago. Since then, manufacturers have been recalibrating their production strategies to meet the constantly changing market demands. Several aspects now advocate investments in small, local, and highly automated microfactories, rather than offshoring or building large mass-production plants. This blog describes ten benefits manufacturers can gain with microfactory automation!
Manufacturing Strategies Are Evolving
Manufacturing technologies have evolved significantly over the past two decades. Most of the products are still manufactured in traditional factories that are often offshored to low-cost regions, which has helped manufacturers achieve economies of scale and reduce costs. However, the global offshoring trend started to decline in 2010 and again in 2020 because of increasing labor costs in low-cost countries, various supply-chain challenges, quality problems, and the growing customer preference for indigenous products. The traditional offshored mass production is not suitable for addressing small, rapidly changing market segments. This new landscape drives manufacturers to evolve their offshoring strategies to reshoring production back to the local markets. The global COVID-19 pandemic disrupted the supply chain globally in 2020, accelerating the microfactory trend radically.
The COVID-19 pandemic further triggered a complex cascade of disruptions in global manufacturing, with the semiconductor chip shortage becoming a particularly acute challenge. Initially sparked by pandemic-related factory shutdowns and sudden shifts in consumer electronics demand, the chip shortage reverberated across multiple industries, from automotive to consumer electronics. Manufacturers worldwide faced unprecedented supply chain constraints, with some companies experiencing production delays of months or even halting entire product lines due to a lack of critical semiconductor components. The financial aftermath compounded these challenges, as rising inflation, increased raw material costs, and ongoing geopolitical tensions further complicated manufacturing landscapes.
In response to these global supply chain vulnerabilities, manufacturers are increasingly turning to reshoring as a strategic solution to mitigate future risks. By bringing production back to domestic or nearby countries, companies can significantly reduce transportation costs, shorten supply chains, and gain greater control over manufacturing processes and quality. Reshoring offers multiple advantages, including increased supply chain resilience, faster response times to market changes, and reduced dependency on international logistics networks that proved fragile during the pandemic. Additionally, this approach can create local jobs, stimulate domestic economic growth, and provide greater transparency in production methods.
Countries like the United States have introduced incentives such as the CHIPS Act to encourage domestic manufacturing, while nations in Europe and Asia are similarly investing in local production capabilities. The benefits extend beyond immediate economic considerations, as reshoring can also support more sustainable manufacturing practices by reducing long-distance transportation emissions and allowing for more stringent environmental and labor standards. Moreover, technological advancements like automation and advanced manufacturing techniques have made domestic production increasingly cost-competitive, further supporting the economic rationale for bringing manufacturing closer to home.
The transition from Traditional Factories to Microfactories
Considering the highly segmented and rapidly changing consumer dynamics, along with the challenges of offshored mass production, manufacturers are now evolving their strategies toward operating a network of small, local, or distributed manufacturing units. This strategy shift finally opened the avenue for microfactories, which are optimal for highly automated, small- and medium-scale manufacturing close to the markets, allowing manufacturers cost-efficiently and flexibly to produce small and medium-sized batches of customized products suitable for local taste.
Benefits of Microfactories
Many forerunners and tech-savvy enterprises are seeing clear benefits in investing in the microfactory concept. Here is a rundown of the primary benefits you can gain with a microfactory.
1. Increased Innovation – Microfactories are flexible, and highly automated units that increase innovation. They allow you to ramp up new configurations quickly to test new ideas on a small scale without affecting overall costs.
2. Minimized Investment and Ramp-up Time – A modular microfactory enables you to customize and implement the assembly line configuration and capacity according to your needs. The microfactory delivery time can be up to 30% faster than in a customized automation system. Furthermore, on-site deployment time can be up to 90% faster – in fact, a microfactory can be installed even in one day.
3. Higher Product Quality – Low product quality is one of the biggest offshoring challenges. With a microfactory, on the other hand, you can increase product quality, reducing costs, customer reclamations, and waste while increasing profitability.
4. Supply-chain Optimization – By optimizing supply chains with small, local, or distributed microfactories, you can reduce the delivery time compared to offshore production. Local manufacturing saves costs through reduced working capital and higher resiliency against global disruptions. It decreases logistics costs, inventory, waste, and lead times, and increases forecasting accuracy.
5. Customized Mass-production – The ongoing trend of product customization and personalization requires agile, small-scale manufacturing facilities, such as microfactories. You can easily modify a modular microfactory platform, such as the ANT Plant to produce a high product mix, run short batches cost-efficiently, and scale capacity when needed. You can address narrow market segments and serve multiple seasons in a year with several regional variations and small volumes.
6. Cost Savings – Small microfactories require only limited floor space and operational staff compared to traditional factories, also reducing the consumption of energy and raw materials, and bringing radical cost savings.
7. IPR Protection – Offshoring and outsourcing production always impose a risk of jeopardizing your immaterial property rights (IPR) and expertise. With a microfactory, you can maintain complete control of your manufacturing process and protect IPR throughout.
8. Faster Delivery Time – avoids missing out on sales during high demand or alternatively producing excessive goods in stock.
9. Higher Sales Margin – With a local microfactory, you can benefit from the price-premium of locally made products (Made in the USA, Made in Europe) and grow your sales margin. Domestic products can also open direct access to the public procurement markets
10. Lower Risks – Investing in automation comes with risks, especially in the case of large traditional manufacturing plants. A microfactory, however, minimizes the investment risks. A modular microfactory platform is pre-verified, and the modules and interfaces are tested end-to-end. It can be deployed locally, near other operations. JOT Automation provides you with a full partnership, including in-depth automation technology know-how and 24/7 support.
Take the Next Step in Manufacturing Innovation
Ready to revolutionize your production process? Our fully modular ANT Plant microfactory platform offers:
- Rapid deployment
- Minimal initial investment
- Unparalleled flexibility
- Scalability for future growth
Don't let outdated manufacturing processes hold you back. Contact JOT Automation today to discover how our innovative technology and field-proven expertise can transform your production line. Contact us today!