On-demand Manufacturing — an international Perspective on Digitalized Players and the Role of Instant-Quoting
Think for a moment about the fabricator in your industrial park who has been making CNC parts or cutting laser sheets for you for years. I’m sure it’s been a great relationship over the years. Unfortunately, this type of company will soon cease to exist. There is a revolution in manufacturing on the horizon that will overtake contract manufacturers and job shops. We call this the wave of online manufacturers — and it is an international phenomenon. Already, many countries have launched similar offerings and are gradually displacing the old players. Let’s take a closer look at the international landscape together in this article.
The hardest part of this article was finding the right terminology. Distributed manufacturing, manufacturing on demand, smart manufacturing, manufacturing-as-a-service (MaaS), online manufacturer, cloud manufacturer, the AWS of manufacturing. There is virtually an infinite number of descriptions that online manufacturers find for a simple effect: The industrial manufacturing landscape is digitizing, and with it new players are entering the market to displace the old top dogs with software-enabled business models.
We are all (at least everyone under 50) used to shopping online. The online shopping world is always available, prices are transparent, and most of the time it’s just more convenient to make three clicks instead of driving across town for a pair of shoes. Corona has further strengthened this trend worldwide. In B2B purchasing and especially for buying manufacturing services, the world still looks somewhat different. Long-standing supplier relationships, trust and a long-term approach seem to determine the choice of suppliers.
However, this all applies more to series parts. Because there, possible defects or unreliability lead to intense problem chains for the buyer. The costs of which significantly exceed the procurement costs of the individual parts. Prototypes and small series, on the other hand, have a different set of requirements: They must be quickly, cheaply and conveniently procured by development departments, because every day of delay in market entry costs enormous amounts of money. This is where online manufacturers come into their own.
I have been watching the world of on-demand manufacturers closely for years and regularly report about trends, the players and the implications for the industry on my blog (unfortunately all in German). In the English-language literature, the world seems to me to be somewhat limited to American companies, so today I want to offer a more international view.
USA: The home country of the digitized customer relationship
Without a doubt, Americans have been the main instigators of this trend. Years ago, Plethora began selling its own manufacturing capacities in California to online-savvy customers in Silicon Valley via an online portal. Instant quoting was used to determine a price directly on the basis of the CAD model. Other companies, such as Fictiv and Xometry, quickly joined the fray.
The latter in particular has raised massive amounts of venture capital in recent years and is internationalizing its business. Ficitv still operates exclusively in the USA, but already maintains international production facilities (including in China). Certainly, Ficitv will also strive for internationalization, because otherwise the company will hardly be able to compete against the economies of scale of its internationalized rival.
The Netherlands: Pioneers of online manufacturing in Europe?
Until now, Protolabs has been the largest supplier of prototype parts in the United States. The company began processing its quotations orders via an online mask years ago. However, the quotes were still calculated and entered manually for online review by customers. Nevertheless, Protolabs heard the signs of the times in time. In 2021, it acquired Europe’s largest online manufacturer 3D-Hubs for $280 million, even though 3D-Hubs had only made about 20 million euros in sales (and probably no profit) by then. This purchase price alone shows how promising the business of online manufacturers was estimated to be by Protolabs. If you can’t beat them, buy them. It worked out well, I would say.
In fact, despite its small size, there are several other strong 3D printing and on-demand manufacturing companies in the Netherlands. 247 Tailorsteel is considered a pioneer in digital sourcing in Europe, and has also become the largest supplier of laser sheet metal. Who says you cannot earn money with industrial manufacturing online?
Germany: Europe’s industrial power house goes digital
In Germany, the mechanical engineering sector generates 280 billion euros. Germany is truly the industrial power house of Europe. The number of manufacturing companies is correspondingly large. Although there are only about 80 million inhabitants in Germany, there are 8,000 German CNC manufacturers of various specializations.
The spectrum of suppliers is very diverse. Very large industrial companies are primarily export-oriented and handle a large part of series production. In addition, however, there is an almost unmanageable number of owner-operated small companies that perform classic contract work.
Accordingly, it is no wonder that the Germans are responding to the American attack on their core industry by developing their own on-demand manufacturing solutions. Language hurdles and cultural peculiarities still serve as a protective wall while doing so.
InstaWerk, for example, has firmly established itself in the minds of customers as a supplier of CNC parts. Turned and milled parts are calculated directly via an online mask. InstaWerk’s international manufacturing network is smaller than its U.S. competitors, but InstaWerk claims to generate more relevant order sizes for its fabricators by bundling orders, ensuring higher quality and data security. Compared to competitors’ open marketplaces, the concept is less quickly scalable, but certainly fits well with the German spirit, which is always concerned with predictability and security.
But there is also a lot going on in sheet metal manufacturing. Interesting examples here include Blexon and Cutworks. Two classic manufacturers that are looking to move into the online world. Both suppliers have developed online solutions that make it easy and convenient to order laser parts. So it’s not at all the case that startups are looking at the world of online ordering. Traditional manufacturing companies are also investing considerable sums in some cases to be ready for the future, and in some cases are cooperating with each other to offer a wider range.
Japan: tradition and modernity?
The list of countries can be continued virtually endlessly. China, India, Italy and France are also developing solutions for cloud manufacturing. Anyone looking for specific references here is welcome to contact me. I’m always happy to have a digital coffee on this topic. Also if you want to have your countries supplier listed here, just comment it below please 😊.
I still find one country example worth noting. Even in Japan — a country that culturally cultivates long-term thinking, intense partnerships, and trust like no other country in its business life — a shift to online manufacturing is taking place.
A reader (thanks Hiroshi!) brought NC-Network to my attention. Already back in 1997, the company began with a vision of building a “virtual factory” that would make global manufacturing capabilities available. In 2020, the company was acquired by DI-NIKKO Engineering for 180 million Yen. The virtual factory is arguably more of a supplier search engine. Or did I miss something?
But the modern version with instant pricing function is now being built by CADDi in Japan. The startup has been able to win over larger funds as investors and is driving the digital procurement of sheet metal and other industrial parts in Japan now. Like its international peers, CADDi relies on instant quoting and a wide-ranging manufacturing network as its manufacturing platform.
Iran: The rising tech country
Despite its controversial policies, Iran reliably produces a high number of tech talent, many of whom end up in elite universities and top companies in the West. But in recent years, a tech and startup scene has also emerged in the country, quickly picking up on new global trends and implementing them locally.
Among these startups is Fabry Next, an online platform for component manufacturing. Fabry Next is the brand of Abri Sharif Component Manufacturing Company. From private companies to government agencies, the platform offers prototyping or mass production services to customers. FabriNext’s extensive network of national workshops enables them to shorten parts manufacturing time and offer a wide range of services, including CNC machining, laser cutting, 3D printing, assembly and mounting sheets, and industrial parts design. Online estimating works very well.
So it’s interesting to see how quickly digitized industry trends are also transferring to emerging markets and how efficiently competitors are emerging there.
Conclusion: Digitalization in manufacturing is international
So it’s not at all the case that industrialized countries like Japan or Germany will leave the field of industrial manufacturing to American companies so easily. In fact, “cultural fit” plays a major role in these two countries in particular, so it remains to be seen how the market will develop here and in other countries.
But one thing seems clear: The manufacturing market is moving in the direction of online procurement. Big investments, mergers and take-overs can be observed. The many international examples show this impressively. But will one player be able to build a global monopoly like Amazon in the world of industrial manufacturing? Or will we see more local players serving individual countries? What do you think?