What is the business model for machine shops in 5, 10, 20 years?
Increased product diversity and shorter development cycles are changing the face of machining as we know it. Feeding this is an exceedingly demanding end user that is armed with their own abilities to design, engineer, and produce through various channels. This is causing a flattening of supply chains and a need for establishing machining best practices.
The lines are getting very gray, where consumers are producers and producers are consumers. A quick glance at Kickstarter or Etsy shows a small, but very relevant shift. The people behind these new companies and products are having trouble getting traditional manufacturers and machine shops to make their goods. This highlights a clash of cultures; one where technology, transparency, and nowness are keys to success, and another that values “trade secrets” and closely guarded supply chain components.
This new producer/consumer (Prosumer) will forever shift the way we make things, the same way baby boomers created our current manufacturing thinking. At the core of this group are millennials which are already the largest population, representing over 80 million customers. Soon, this will be the demographic that will crush current automotive, aerospace, and industrial sectors with their needs for immediacy and differentiation.
The marrying of new consumer demographics with increased technological capabilities has the ability to create one of the most fruitful manufacturing climates in US history. However, there are many things that need to be addressed. The pillars of future machining should support fault tolerant, just-in-time production that promotes quicker introduction to market, and faster product/market fit testing cycles.
At the core of America’s machine shops are some of the most advanced machines on Earth working in tandem with over 470,000 capable machinists. Likewise, we are spending more and more on machines and becoming more automated. The machines do what they are told and the engineers and machinists do well to put the program together correctly. In order to truly succeed in the next decade, machine shops should also invest in dialogue and communication to establish next-generation business practices.
At the forefront of this conversation should be quality. To feed just-in-time needs, machine shops must operate as close to fault tolerant as possible. It seems very odd that there is no universally supported standard for business fault tolerance in the machine world. Likewise, no matter what the input or management processes, it seems that the final product is all that matters. My favorite response to questions about how front-office opportunity estimation is done is that there are “just so many variables involved.” To the outside buying world, machine shops paint a very magical, opaque picture.
Yet, there are “so many variables” in banking as well, and we have all bought into credit scores. The financial services sector has, by teaching us how to monitor and improve our credit scores, made us all into DIY financial managers. That three-digit number makes us spend or save, and communicates to the world whether we’re worth lending to. Why can’t we have a more accurate scoring and tracking system of the performance of machine shops?
Closely aligned with quality are trust and verification. This is important. More and more transactions will be conducted without meeting. It will be crucial to establish a method to convey trustworthiness and competency. This means digging in and really laying out machine shops’ value add. In the future, machine shops will have more diverse, aggregated work. So to start, a machine shop should be able to convey flexibility, maintenance acumen, and programming excellence.
The future is bright for machining. There is a world of stuff to produce. Machine shops need to focus just as much on core business logic as part of their value add. Ultimately, it is the machinist’s ability and management’s opportunity to maximize the rapidly increasing flexibility and speed of contemporary machines. Xometry’s role in the future is as a facilitator. By providing a network of prequalified shops, data-driven quoting, and support for digital manufacturing initiatives, we address the need for a uniform quality standard, flexibility, and faster production cycles.
This blog was originally posted on MakeTime August 19, 2015 and has been updated and re-posted as part of the MakeTime and Xometry Merger.