MAKING IT

An Uber model for manufacturing is ready to upend the industry

Nazareth Ekmekjian was on a tight deadline, and news from the machine shops wasn’t good. A designer for Boston-based Piaggio Fast Forward, a transportation and robotics subsidiary of Piaggio Group, Ekmekjian needed a prototype of a component made within a week and a half. But every shop he contacted said it would take at least two.

Finally, Ekmekjian found a company that could meet his deadline, and at half the cost. The difference? It didn’t own any machinery, but ran a network of equipment leased from manufacturers.

“It was really simple,” Ekmekjian says. “I uploaded the geometry, provided a few specifications and they took care of the rest.”

“They,” in this case, are the employees at MakeTime, a startup launched by architect turned manufacturing entrepreneur Drura Parrish in Lexington, Kentucky. Under a model known as distributed or on-demand manufacturing, MakeTime is meeting small businesses’ manufacturing needs in much the same way Uber meets the needs of passengers looking for rides. Companies, entrepreneurs, and inventors can rent time on nearby equipment, be it CNC milling machines, water jets, or laser cutters—any of which can cost from $50,000 to $250,000 apiece to purchase.

The approach could have timely benefits. As US president Donald Trump continues to emphasize the importance of revitalizing manufacturing in America, distributed manufacturing could make that prospect more appealing by reducing lead times and costs.

Taking advantage of idle gears

An an architect, Parrish spent a lot of time creating custom items in machine shops, where he noticed how often expensive manufacturing equipment sat idle. As part of a Kentucky manufacturing family, Parrish knew this was a common problem. (His grandfather started Scott Industries—a contract manufacturer, Scott specializes in insulation cutting, HVAC vents, and pipes—in the 1950s.) On average, US manufacturing equipment sits unused about half the time.

“If I’m a small US manufacturer and I have one machine, I might win a bid from Ford and they need three machines. I wouldn’t think twice about buying the other two machines” he explains. “But the economy shifts a lot faster. We’re not looking at 10-20 year production cycles anymore. It’s more like two years-plus.” Parrish says that’s how so many manufacturers end up overinvesting in equipment.

Ironically, there’s also a large group of people—primarily small business owners—who need access to those machines but can’t afford to buy them. To solve that disconnect, Parrish started out by renting blocks of idle time from machine shops to artists and designers, and later to business owners and original equipment manufacturers (OEMs).

Parrish says companies that use MakeTime can get things made in about a quarter of the amount of time it would take through a traditional process. “We streamline [the process], so 100 to 200 machine shops can operate with the same level of control as one,” he says.

Jeff Rizzie, senior manager of business development at Sandvik Coromant, a major manufacturer of machine tools, says on-demand manufacturing provides “really good opportunities for the industry to start sharing resources and assets that have largely been wasted. If we can get to a marketplace where we are utilizing more machine capacity without buying more machines, that’s a good thing for everybody.”

An industry ripe for change

While many industries are profoundly changed since the emergence of the internet, manufacturing has been a holdout. Most of the industry is not digitized or standardized, meaning you can’t go to a factory with the manufacturing equivalent of a PDF—there’s no such thing. Different manufacturers use different descriptors, standards, and software. Smaller manufacturers often still rely on paper drawings.

The process for sourcing manufacturing capability has also remained more or less unchanged for decades. A company that wants to make a bicycle wheel, for example, sends out requests to a few manufacturers, then waits weeks for price quotes. Add to that a global manufacturing chain with shipping times and port inspections and you have an inefficient process that can take months for even basic goods.

“The industry exhibits a number of characteristics that show it’s susceptible to efficiency improvements on a major scale,” says Daniil Stolyarov at Almaz Capital, a venture capital firm that has invested in MakeTime.

It can also be hard for buyers to find supply (i.e. machine time), even when there’s a lot of it, because of the many silos in manufacturing. Because of the way supply chains are set up, as well as the many certifications needed, a car parts maker isn’t likely to also manufacture parts for the oil and gas industry, even if the equipment and materials needed are similar. Shifting to an Uber model promises to break down what Seth Levine of Foundry Group, another MakeTime investor, calls “a misalignment of supply and demand in machining.”

This year, particularly with the Trump administration’s renewed focus on US manufacturing, could be an inflection point. Rick Smith, CEO and co-founder of Fast Radius, an on-demand parts manufacturing company, sees 2017 as “a major tipping point” for the industry.

Already, several large companies have made sizable investments into “on-demand” manufacturing. Last spring, UPS and SAP announced an initiative with Fast Radius to build an on-demand manufacturing supply chain that operates a network of 3D printers, CNC machines, and rapid-injection molding. A few months later, Alcoa opened a 3D printing metal powder production facility and in September, General Electric offered to pay $1.4 billion for two European 3D printing firms.

Just the beginning

For all the promise that distributed manufacturing holds, it’s still early days.

“It’s extremely nascent, I would say in its infancy as a concept,” says Justin Rose, managing partner at Chicago-based Boston Consulting Group. “I find it hard to believe that a major automotive supplier would at some point have a production line entirely running [leased production facilities].”

Indeed, while the Uber model has made huge inroads in the taxi and hospitality industries, Parrish says manufacturing has “a higher bar in terms of consistency and traceability of production.”

For now, companies using on-demand manufacturing are doing so cautiously—often for small, non-critical parts, with orders in low volumes. Entrepreneurs like Smith and Parrish say the next step is shifting traditional manufacturing toward common standards and more digitization, which will make equipment-sharing easier.

But it’s an uphill battle. “It’s always a risk with a new idea,” Sandvik’s Rizzie says. “Convincing a generally conservative population of machining people to move to a new platform and change what they’ve known for the last 50 years—that’s really the risk.”

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