What is a Microfactory?

January 4, 2022



min read

What is a Microfactory?

Businesses are sandwiched between the siren's call of lean and hyper-digitized processes and the very real barriers to hyper-agile ecosystems. Seemingly universal truths are turning upside down. Size and robustness are struggling, while agility, innovation, and integrated delivery seem to breed success. Conglomerates like Johnson and Johnson and General Electric are retreating from their near-monopolistic positions in favor of fractured, lean, and tech-driven segments in order to compete with upstarts and new entrants.

But there's still a tangible gap between innovation and manufacturing. Seventy-three percent of companies face issues with their suppliers and 75 percent struggle with production. And virtually every company faces significant issues prototyping low-volume orders and ramping/de-ramping manufacturing plants during chaotic and hectic periods.

To solve these issues, thousands of businesses are turning towards microfactories to reduce their product debt, increase their agility and flexibility, and remove those once-enormous barriers between financial strength and innovation. So, what are "microfactories?" How did they get started? And how can they help your business break down barriers between production, design, and ideation?

The Microfactory Explained

In 2018, Tesla was lost somewhere between a rock and a hard place. Investors had poured billions into the company, hundreds of thousands of consumers were eagerly throwing their hard-earned money at pre-order pages, and Musk's California factory was "bursting at the seams." At the same time, Tesla needed to produce +5,000 Model 3s per week to reach profitability, investors needed to understand that EVs could reach mass-production potential, and Musk himself was struggling to meet promises he parroted over social media and quarterly meetings. Something had to give.

And that something was the traditional manufacturing process.

Large car manufacturing plants cost billions of dollars and take many years to construct. Tesla needed cars immediately. So, instead of turning towards facility planning blueprints and complex machinery, Tesla built a mini-factory in a large tent in their parking lot. This low-cost, hyper-agile manufacturing method worked, helping solidify Tesla as a de facto competitor in the big car space.

Now, imagine setting up small manufacturing "tents" in key production areas across your entire market. Microfactories are agile and "lightweight" manufacturing spaces established in localized areas to meet regional demands. Typically, microfactories are driven by a combination of AI, automation, and robotics. So, most microfactory installations are technologically-driven in nature, not just smaller versions of larger factories.

For example, intelligent robotic arms can leverage AI to automatically learn and adjust behaviors to meet production demands. Cutting-edge IoT sensors and cameras can help fine-tune robotic movements (e.g., screwing, soldering, etc.) And intelligent back-end software can translate complex CAD files into real-life actions. Combining these technologies can help you build smart robotic equipment capable of producing goods in a contained area.

Launchpad’s Digitool and Digiline are examples of compact, microfactory-ready robotic solutions. However, microfactories aren't defined by a single technology or solution. New tools need to be adopted across the design, procurement and manufacturing space to build a successful microfactory strategy. 

Microfactory vs. Traditional Manufacturing

"Microfactories will take off in the next few years, and there is evidence of a few players already developing them." — Lisa Lang, CEO at ThePowerHouse

Eighty-five percent of companies believe they can benefit from agile, tech-driven, and lean manufacturing processes. Unfortunately, despite 74 percent of companies investing in these core tenants, less than 25 percent actually realize any of those values. It's incredibly difficult to breed lean and agile into bulky traditional manufacturing. But that's partially by design. Traditional manufacturing isn't made to be lean or to meet modern consumer demands; it's made to quickly and cheaply mass-produce a few goods.

Key features of traditional manufacturing:

  • Large, expensive facilities
  • Purpose-built to handle specific use cases
  • Capable of mass-producing a few different goods at incredibly low costs
  • Difficult to absorb new technologies
  • Rigid processes requiring hefty investments and significant energy
  • Requires lots of skilled labor

The traditional model of production involves expensive facilities, significant amounts of skilled labor, and intricate shipping and storage processes. The benefits that come with these large-scale factories include low costs per unit, high volume and high yields. They're capable of spreading large capital expenditures across a large volume creating a significant cost advantage. For companies that rely on cornerstone products, having a factory purpose-built to create those few products is incredibly rewarding.

But traditional factories don't work for every situation. Microfactories are lean, efficient, and capable of quickly capturing strategic business value in regional markets and low-production-volumes.

Key features of microfactories:

  • Small, agile facilities (or areas)
  • Capable of scaling to mass-production if necessary
  • Agile and able to absorb new technologies
  • Adoption of new technologies can require less skilled labor
  • Creates supply chain resilience
  • Capable of quickly meeting personalized consumer demand

To be clear, both microfactories and traditional manufacturing plants can intersect. In fact, 86 percent of manufacturing leaders believe factories should have a "more flexible" and "multidirectional layout" with a "modular line setup." And agile processes, best-in-class technology, and modularity are set to reduce the overall costs of manufacturing by 20 percent. Manufacturing leaders are embracing many of the principles of micromanufacturing, whether they go "all-in" on microfactories.

Benefits of Microfactories

Let's quickly cover a few of the key benefits of microfactories:

Low-Cost Innovations

Traditional manufacturing factories are cost-effective at producing parts. But they're not cost-effective for innovation or mixed market production. The smaller frame and scalable nature of microfactories make them perfect for innovation, while the lean nature allows quick setup to meet regional demands.

Agile Tech Adoption

With whispers of "Industry 4.0" and massive amounts of tech lying on the outskirts of manufacturing, the use cases and cost-savings surrounding manufacturing tech are drool-worthy. Unfortunately, adopting that tech at scale is incredibly challenging, and virtually all manufacturers are struggling (with most failing) to embrace this tech (examples include IoT, AI, ML, automation, robotics, VR, etc.)

Microfactories give you a chance to purpose-build tech into the heart of your production without sacrificing significant liquidity, undergoing serious change management, and threatening the core of your business strategy. You can immediately implement tech into specific microfactories (some businesses even use microfactories as test launches). Common microfactory technologies include:

Best-of-Breed Customization (Hyper-Scalability)

By their modular nature, microfactories confer higher production customization. You can quickly scale microfactories in specific areas to meet production needs. So, you can create small microfactories for prototyping and piloting, and you can lean on larger microfactories for production volume manufacturing. To be fair, at the highest volumes most microfactories struggle to compete with more traditional production factories. They're naturally lean. You can turn an idea into a tangible, finished product in weeks — not months. Better yet, microfactories give you the scalability to enable product creation (from prototype to production) in multiple regional markets simultaneously. This allows you to create more mix, embrace more intricate, low-volume runs, and establish production outposts in key markets. 

Supply Chain Resilience

Due to the sheer upfront costs of traditional manufacturing, very few businesses "own" their output. They rely on multiple, high-fractured manufacturing suppliers to deliver their products on time. Obviously, this resilience is attractive in the backdrop of COVID-19 (93 percent of businesses admit that "supply chain resilience" is a business priority.) But embracing supply chain resilience goes beyond crisis preparedness. Lean microfactories give you a chance to accelerate tech investments, avoid cash constraints, and enjoy self-reliance against broader economic forces.

The Future of Manufacturing is the Microfactory

Technology is changing the face of manufacturing. Companies crave efficiency, resiliency, scalability, and productivity located in tight labor markets. For most, traditional manufacturing can't meet these needs. Not only do many companies lack the raw liquidity to invest in a massive facility, but technical barriers and change management prevent large-scale tech adoption in these set-in-stone facilities.

Are you ready to embrace a resilient, tech-first manufacturing ecosystem? Interested in testing out the microfactory concept yourself?

Launchpad supports the varied goals of startup and veteran manufacturers by helping turn complex and expensive manufacturing into automated, easy-to-use, AI-powered processes.  Contact us to discuss how the latest developments in manufacturing processes can benefit your business.

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