Distributed manufacturing: the way of the future?
Distributed manufacturing promotes efficiency, flexibility, and reduces costs. Learn all about it and how to implement it.
Choosing between centralized or decentralized manufacturing is a critical decision that can affect your company in the long run. In this article, we explore the differences between the two approaches and guide you in deciding which one is a better fit for your business.
With the recent developments around the world, including a certain virus that shall remain nameless for now, remote work has been increasingly popular.
People have moved to hybrid work, some even working remotely 100% of the time. Home offices are definitely a thing now, especially since more and more tasks are automated and digitalized. Amid all this, a question arises:
Why do businesses need to operate in one place anymore?
For the longest time, manufacturers have been huddled up in huge factories, some the size of an average university campus.
This is the way it has always been and it has proved to be a success. However, a new kid on the block is causing a stir in the manufacturing world — decentralization. So which approach is better and guarantees a bigger payoff?
Let’s compare them side by side, pageant style, and put the conversation finally to bed.
Centralized manufacturing is a production model where all manufacturing processes occur in a single location, often owned and operated by one company.
This manufacturing approach allows better quality control and oversight of the entire production process, as well as adapting to changing market demands.
Centralization in manufacturing is characterized by economies of scale, where mass production leads to lower unit costs. It is commonly used to produce goods that require a complicated and expensive production process.
In centralized production, the company controls all aspects of manufacturing, from sourcing raw materials to shipping finished products.
Centralized manufacturing has several advantages, such as:
Centralized manufacturing can have some disadvantages, like:
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Decentralized manufacturing is a production model where production occurs in multiple locations, meaning that manufacturing is distributed between separate facilities.
This model allows more customization to meet the needs of specific regions, reducing transportation costs and providing local job opportunities.
Decentralized production can be owned and operated by multiple companies, including suppliers, contract manufacturers, and third-party logistics providers. In this model, companies can focus on their primary areas of expertise and outsource other production processes to competent partners.
Decentralized manufacturing can offer several advantages, including:
Decentralized manufacturing can also have some disadvantages, such as:
With both still focusing on manufacturing and putting out the best product, there are many core differences that distinguish centralized and decentralized manufacturing from each other. The main differences between centralized and decentralized manufacturing are as follows:
In centralized manufacturing, all production processes occur in a single location, and all teams operate under one roof. Decentralized manufacturing is a multilocation business, with each step of production potentially happening in a different facility.
Centralized manufacturing is often owned and operated by a single company. Decentralized manufacturing can be owned by multiple companies, meaning that different business entities are responsible for their own operations and production processes.
Centralized manufacturing largely benefits from economies of scale, bringing the cost per unit down but also meaning less flexibility towards customizations. Decentralized manufacturing can be more flexible and adaptable to local market needs but typically has a higher cost per unit.
In centralized manufacturing, the owning business is responsible for all materials, equipment, and operations. Decentralized manufacturing means that all owning companies need to ensure a steady supply flow for their processes, being indirectly responsible for the smooth flow of other related functions and companies too.
Katana is a cloud manufacturing software that can help you tie all your business operations together onto one platform. It has many beneficial features, including the following.
Whether you operate from one central facility or multiple locations, Katana can help you manage inventory in all warehouses. The system offers a live overview of your stock and automatically adjusts the numbers based on sales and manufacturing updates. You can also keep an eye on supplies and raw materials, helping you make better business decisions and prioritize production based on availability and customer demand.
Regardless of your manufacturing approach, production planning and scheduling are still necessary, and Katana makes it easier than ever. Create tasks and assign them to your operators to complete using the Shop Floor App. Gain total shop floor control and keep up with deadlines in your centralized location and across all operations.
Pro tip: If you’re not ready to commit to software yet or are looking for a more hands-on production scheduling solution, try a free downloadable production schedule template.
Katana offers many integrations to enhance your manufacturing management experience. Or, if you’ve already found software you would like to keep using, build it into your workspace and create a custom flow for your business using Katana’s open API.
Track and analyze data based on sales, production, customers, and orders. Katana creates valuable insights and helps you make better business decisions. Manufacturing analytics can be used for demand planning, better inventory management, and production scheduling.
Ultimately, comparing centralized and decentralized manufacturing is like comparing apples and oranges. One is suitable for apple pie, the other for a glass of OJ, but they can never substitute for each other. It all boils down to personal preference.