Microfactory is a small-to-medium scale, highly automated and technologically advanced manufacturing setup, which has a wide range of process capabilities. Typically, it is a whose output can be scaled up by replicating such setups in large numbers. Microfactory requires less energy, less material, and a small labor force, owing to the high-tech automated processes. The concept of microfactory also promotes the miniaturization of production equipment and systems according to the product dimension which helps in reducing the size of the factory, which, in turn, needs less capital, as well as lowering operating expenses.

With advancements in manufacturing technologies, such as 3D printing, along with other enabling technologies, microfactories has found its use in a variety of industries. New innovative start-ups have embraced this concept challenging the traditional way of manufacturing.

Traditional Manufacturing Model vs. Microfactory

The traditional manufacturing concept aims to reduce costs by building a large factory to achieve economies of scale and mass production. However it needs an extensive and costly distribution network to make products available to customers. Microfactory challenges this concept by setting up multiple small, but high-tech, manufacturing units, close to customers, which can function as retail outlets providing a customized product. Another difference is the sales strategy. In the traditional model, products are first manufactured in large quantities and then pushed to the market through various distribution channels, whereas, in the microfactory concept, products are manufactured only after getting confirmed orders from the customer, thereby generating pull from the market.

The following is an example of a hypothetical business case of manufacturing 250,000 cars per annum, comparing traditional manufacturing versus microfactory. Both setups are different and have several aspects that would lead to a complex comparison matrix.

Increased Innovation – Microfactories are versatile, highly-automated factories that enable lean manufacturing and boost the rate of innovation by integrating several functions. Being a small automated setup, microfactories enable several tests and iterations to be performed on a small scale without impacting the time and cost. Whereas, in a traditional factory, the impact of time and cost on several iterations would be huge.

Lower Costs – Microfactories are small-sized factories that require less floor space compared to traditional large factories. Energy consumption and raw material consumption is less, thus creating reduced waste and emissions. This positively impacts the operating energy, environmental energy, and processing energy of the factory, ensuring cost savings. Microfactories also cuts down on labor costs as the factory is highly automated with the support of artificial intelligence and robotics.

Increased Productivity – Microfactories require a small team of skilled staff for and do not depend on huge manual labor. In addition to the agility and high automation levels of microfactories, the engagement level of workers is also very high which boosts morale and thereby increasing productivity.

Customization/Personalization – This trend is driving manufacturers toward small factory space as it provides high-mix, low-volume manufacturing capability, where products can be customized and manufactured on-demand. The level of customization could range from small-batch with the current trend to individualization, where an individual can design the product via a consumer website.

Manufacturers Using Microfactory and Key Technology Providers

Automotive, garment, consumer appliances, and electronic waste treatment are some of the leading application industries currently using microfactories for commercial production. Local Motors in USA was one of the pioneers in establishing a microfactory for automotive production. Several companies are also investing in the development of new and advanced technologies required for establishing microfactories. Bright Machines has announced the availability of its AI driven automated microfactories. Combining software machine learning, computer vision and adoptive robotics says it can transform the most manual phases of today’s production line.

Manufacturers using Microfactories

Manufacturing technologies have evolved significantly over the years. Presently products are manufactured in large factories achieving economies of scale, and most of these factories are located in low-cost regions, primarily in Asia, and a few in Eastern Europe and South America. This has helped customers getting products at a better price. However, there are signs that this might not be the case forever. Low-cost labor is getting exhausted in these countries as the younger population is not willing to perform repetitive low skilled jobs or the cost has started going up significantly. In addition, the delivery delays, as well as the demands and preferences for indigenous products, are increasing worldwide. This will eventually make it difficult for manufacturers to get products manufactured at distant low-cost locations and bring them to the local market.

Another important aspect that should be considered is changing customer requirements. More and more customers are seeking products that are personalized/customized. Surveys conducted show that more than 50% of consumers in developed countries prefer personalized products and are ready to pay higher prices for it.

Considering the changing consumer dynamics, along with limitations to get products sourced from low-cost countries, large organizations need to rethink their manufacturing strategies. Organizations worldwide will have to understand that opportunity lies in opening multiple distributed manufacturing operations. This can be done by setting up a network of small, technologically advanced, flexible manufacturing facilities, similar to a microfactory, in close proximity to the customer location. It will help manufacturers to produce small batches of customized products suitable for local tastes and save logistics and transportation costs to the tune of 25% to 40% of the product cost. Not only this, but microfactories can help to offer a solution to the possible threats from global protectionism, trade war and disruption from epidemics like Ebola and Covid.

(Source: Futurebridge Analysis)