In an era of remote work and decentralization, the concept of Distributed Manufacturing has gained significant traction among those who are willing to accept the future. This approach embraces the idea of decentralized and dispersed manufacturing facilities enabling us to reach a wider geographical spread whilst simultaneously reducing overhead costs. The financial advantages of this model are becoming increasingly evident, with examples showcasing substantial savings in terms of shipping expenses and improved profit margins, while also being increasingly scalable compared to older models of centralized manufacturing.
Distributed Manufacturing
The Distributed Manufacturing Model is a decentralized approach to manufacturing that emphasizes the employment and utilization of a vast network of geographically dispersed facilities or individuals. It embraces the idea of remote work, a model that will continue to dominate the new work environment even as firms push to return to the office. The remote network of manufacturers leverages local resources and talent to produce premium goods and deliver them closer to the customer. The decentralized and distributed manufacturing model has several benefits, including lower shipping costs, improved profit margins, increased flexibility, and the ability to tap into unique, regional expertise, craftsmanship, and resources. This model aligns with the growing trend of remote and decentralized work environments, while also being scalable to new regions both domestically and internationally.
Decentralization in the Manufacturing Industry
As the world shifted toward remote work environments, it was only natural for manufacturing to follow suit. The pandemic accelerated this push, making remote work an integral part of the modern workforce that few are keen on giving up. With remote work comes further dispersion and decentralization, and embracing decentralization in manufacturing allows companies like Lone Birch to establish a network of facilities that are geographically dispersed, ensuring greater flexibility and cost-effectiveness.
Lower Shipping Costs and Higher Margins
One of the most compelling financial benefits of the distributed manufacturing is the ability to reduce shipping costs and improve profit margins across the board. One recent example of this came recently when we received an order from California. The shipping cost from our original New Hampshire location, shipping would have been $24, but thanks to the distributed nature of our maker network, we were able to fulfill the order through a local woodworker closer to the customer, reducing shipping to just $10, saving 60% on shipping costs and adding 30% to our margins, not to mention getting the order to the customer in half the time.
This is one of the many examples that demonstrates the potential savings that can be achieved by leveraging the distributed manufacturing approach. By eliminating the need for long-distance shipping, companies like ours can significantly reduce transportation costs and pass those savings to our customers while simultaneously improving our margins.
The distributed network helps on the back end with shipping costs, but it also is financially beneficial on the front end as different regions can source materials for varied prices, allowing the local expertise to shine through in sourcing the highest quality woods and other materials that may not be available in every region. This allows them to source high-quality materials at different price points further increasing our margins.
Flexibility and Adaptability
Another financial advantage of distributed manufacturing is the inherent flexibility and adaptability. Traditional manufacturing models often require large-scale production runs to be cost-effective, resulting in lower quality products and excess inventory and storage costs. At Lone Birch, we hire skilled makers to produce every product as they’re ordered, cutting down on the need for storage and further increasing the quality of our products. Each and every product is made for the customer, not fished out of some long-term storage facility or mass produced overseas. This flexibility reduces inventory holding costs and the risks associated with overproduction and completely eliminates the need for long-term storage.
In addition to lowering the risk of overproduction and eliminating storage costs, the distributed manufacturing model is very scalable. We can tap into local talent of a multitude of different communities around the country and around the world and have individuals producing products after just a few weeks of on-boarding and training. This allows us to be able to increase our operating capacity with ease and to meet the demands of a dynamic customer base. This flexibility and adaptability allow us to keep up with growing customer demand across the country and the globe.
Conclusion
Distributed Manufacturing offers numerous financial benefits for those who are willing to embrace decentralization in the manufacturing process. By adopting this innovative model, we have reduced shipping costs, improved profit margins, reduced carbon footprint and an flexibility and adaptability that most traditional manufacturers don’t have. We continue to demonstrate how a decentralized manufacturing network can lower shipping costs, while also maintaining a high level of craftsmanship.
As the world continues to evolve toward remote work and decentralization, embracing the distributed manufacturing model becomes a strategic imperative for companies aiming to stay competitive in this ever-changing environment. The financial advantages, combined with the ability to support local communities and leverage unique craftsmanship make this a great financial decision that yields benefits beyond just higher margins.
We’re currently making our software available for other companies to utilize the same distributed model that helps us make products closer to our customers, reduce our carbon footprint, and allows us to scale and remain Made in America. You don't have to make handmade wood products either, our software is perfect for 3D printed products, Leather goods, Clothing, and more. If you can hire skilled makers to make your products from home, you can utilize our software to enable a distributed model and save thousands from not having to open a local shop and warehouse. You can sign up for early access to our software here: www.distromfg.com.