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Microfactories and the new economies of scale and scope

2019, Microfactories and the new economies of scale and scope

https://doi.org/10.1108/JMTM-07-2018-0213

Purpose-The purpose of this paper is to explore the microfactory model, the elements that enable it and its implications. The authors argue that microfactories reduce the risks and costs of innovation and that they can move various industries toward more local, adaptive and sustainable business ecosystems. Design/methodology/approach-This conceptual paper explores several processes and practices that are relatively new; hence, it uses online secondary sources (e.g. interviews with CEOs, videos, blogs and trade magazine articles) extensively. Findings-Given its versatility and high automation levels, the microfactory model can fill the gap between artisanal and mass production processes, boost the rate of innovation, and enable the local on-demand fabrication of customized products. Practical implications-Currently, manufacturers generally need to make large investments when launching a new product, despite high uncertainty about customer acceptance, thus risking considerable losses. The microfactory model offers a safer alternative by allowing a firm to develop and fabricate new products and test their acceptance in a local market before mass producing them. Microfactories also enable the local on-demand fabrication of highly customized products. Originality/value-This paper contributes to the discussion on the economic advantages and disadvantages of scale and scope, which have been insufficiently explored in the digital domain.

The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/1741-038X.htm Microfactories and the new economies of scale and scope Microfactories and the new economies Jose Orlando Montes Science, Technologie et Société, Université du Québec, Montreal, Canada, and F. Xavier Olleros École des Sciences de la Gestion, Université du Québec, Montreal, Canada Abstract Received 19 July 2018 Revised 8 November 2018 21 February 2019 Accepted 22 February 2019 Purpose – The purpose of this paper is to explore the microfactory model, the elements that enable it and its implications. The authors argue that microfactories reduce the risks and costs of innovation and that they can move various industries toward more local, adaptive and sustainable business ecosystems. Design/methodology/approach – This conceptual paper explores several processes and practices that are relatively new; hence, it uses online secondary sources (e.g. interviews with CEOs, videos, blogs and trade magazine articles) extensively. Findings – Given its versatility and high automation levels, the microfactory model can fill the gap between artisanal and mass production processes, boost the rate of innovation, and enable the local on-demand fabrication of customized products. Practical implications – Currently, manufacturers generally need to make large investments when launching a new product, despite high uncertainty about customer acceptance, thus risking considerable losses. The microfactory model offers a safer alternative by allowing a firm to develop and fabricate new products and test their acceptance in a local market before mass producing them. Microfactories also enable the local on-demand fabrication of highly customized products. Originality/value – This paper contributes to the discussion on the economic advantages and disadvantages of scale and scope, which have been insufficiently explored in the digital domain. Keywords Digitization, Manufacturing technology Paper type Conceptual paper 1. Introduction Manufacturing technologies, production processes and business models have changed significantly in recent years. Advanced technologies today are more interconnected, “smart,” flexible and pervasive (Stephen, 2014). Production processes are faster and more efficient (Ghobakhloo, 2018). And some business models have become leaner by tightly integrating several functions while using crowdsourcing and crowdfunding to be more innovative and agile. Many of these changes converge most notably in the microfactory (MF) model. Initially, MFs were defined as small-scale facilities that combine production and retailing functions in one site serving local or regional markets (Wells and Orsato, 2005). We update this definition and consider MFs as fabrication units optimized for the small-to-medium-scale manufacture of a variety of products by heavily using digital manufacturing technologies. In this paper, digital manufacturing refers to the integration of computer-based capture, simulation, visualization, prototyping, fabrication and data analysis tools to create and reproduce a product. This paper argues that MFs allow the efficient customization of products and can bridge the enormous gap between artisanal production (i.e. custom goods produced in low quantities) and mass production (i.e. standardized goods produced in large quantities). In other words, MFs can help colonize the current “no man’s land” between artisanal and mass production (Rogers, 2014) by enabling the gradual scaling of manufacturing beyond a few exploratory prototypes and toward the efficient fabrication of hundreds – rather than millions – of units per year. Thus, with MFs it becomes possible to develop, produce and test new products faster and more The authors declare that there is no conflict of interest in this research piece. Journal of Manufacturing Technology Management © Emerald Publishing Limited 1741-038X DOI 10.1108/JMTM-07-2018-0213