Digitally driven custom manufacturing is still new

Modern equipment enables more complex products, produced with higher accuracy and repeatability, more quickly and economically. Software has allowed complex organizations to manage production more efficiently at scale. Offline programming and simulation make programming equipment more efficient and predictable. On the balance, it’s safe to say that today’s manufacturers are far more productive than they were just a few decades ago.

On the other hand, the shape of the market, particularly in the U.S., hasn’t really changed. Sure, most manufacturers today have a website and email, but those are “old” technologies. A handful of companies have grown on the back of digital-first ordering experiences, but the bulk of the productive manufacturing output in the United States is driven by 1990s-era technology. The space is fragmented, and customer experience is inconsistent.

For all but the largest of customers, quality of experience depends on winning a three-part lottery—geography, capability, and capacity. Customers might have a good experience if they are close to a responsive shop that can meet their needs and has the capacity to take more work. With most U.S. capacity spread across tens of thousands of regional shops, the odds can be poor.

In contrast, companies like Amazon and McMaster-Carr have set new standards for fast, streamlined buying experience at scale. Customers can comfortably and painlessly browse and buy, with same- or next-day delivery, at a fair price, anywhere in the U.S. These great experiences are enabled by dynamic “web 2.0” websites, cloud computing, tightly integrated physical infrastructure, and scale. Young people today never knew a world without this kind of immediacy.

With that backdrop, today’s custom manufacturing marketplace feels incredibly dated. The experience is almost jarring. To be fair, manufacturing is far more complicated than retail, and it spans industries in different ways. Amazon might be the “everything store,” but warehousing and shipping books isn’t all that different from warehousing and shipping cutlery or anything else.

But making cutlery isn’t anything like making books. Manufacturing is far more complex and difficult to do well at scale across industries and product categories. This is in part why the manufacturing space remains so fragmented: There is no such thing as an “everything manufacturer,” nor will there ever be. Even so, customers demand better experiences, and some companies are listening.

The scope of the opportunity is highlighted by how quickly web-first manufacturers and marketplaces have grown. For example, Xometry, an online manufacturing broker, scaled to nearly $600 million in annual revenue in just over 10 years. Xometry’s platform provides instant pricing and certain manufacturability checks for uploaded 3D models. Their network of third-party manufacturers then fulfills orders.

Xometry is an interesting case study. All other things being equal, brokers are de facto worse than direct manufacturers: They’ll be more expensive, slower, less communicative, and less consistent than a dialed-in manufacturer. But “all other things” aren’t equal. Most manufacturers can’t provide instant pricing and design for manufacturability, and Xometry’s network acts as a one-stop shop for customers who might be otherwise frustrated with a fragmented marketplace running on 90s-era tech. There isn’t an “everything manufacturer,” but Xometry brings lots of manufacturers to the table.

Xometry’s rapid growth highlights customers’ appetite for speed and simplicity. It has aggregated over half a billion in revenue, and they are still growing. My personal conviction is that Xometry nails half the problem. They add a layer of coordination over an inefficient, fragmented marketplace, and while that’s an improvement over the legacy state, it’s still not optimal. They resemble what Amazon might have been without vertically integrated warehouses and shipping infrastructure, perhaps more like eBay than Amazon. The true optimum is more vertically integrated.

The good news for direct manufacturers is that the type of job online brokers can aggregate is exactly the kind of job a direct manufacturer can tackle at scale through in-house software automation. In other words, if a broker can auto-quote a part, then so can a direct manufacturer. It’s only a matter of time before manufacturers bring that capability in-house and pair it with great execution, yielding better prices, faster turnaround, better communication, and more relationship-based growth opportunities.

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Read the full article at The Fabricator

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