These are truly exciting times for manufacturing, as advances in technology and changes in marketplace expectations are making it possible for relatively small decentralized manufacturers to gain traction and thrive in an industry where scale through centralization was once an imperative.
Until just a couple of centuries ago, most communities around the world had to produce most of what they consumed. The industrial revolution introduced economies of scale and mass production systems to serve the newly forming national markets. Globalization then led to an increased global concentration of production as advances in IT-enabled the outsourcing of manufacturing to emerging countries as factories became mega-factories providing global supply chains. As a consequence manufacturing, until recently, was a daunting space with high barriers to entry and hefty initial capital investments; while products had to navigate multiple intermediaries before reaching the consumer.
Today, however, huge shifts in technology and the broader economic context have eroded barriers that once impeded the flow of information, resources, and products. Barriers are starting to fall everywhere; lower barriers to accessing the machinery needed, to learning, lower barriers to commercialization and financing. Traditional manufacturing companies are now facing a nexus of challenges, under pressure to optimize increasingly complex supply chains that lack visibility, new environmental considerations, changing customer demands as unmet needs around customization, and co-creation are causing niche markets to proliferate.
At the same time, a whole new world of the Internet of Things is opening up new possibilities. The technological advances of IoT are enabling modularity and connectivity to transform products from inert objects into “smart” devices. The nature of these products is changing, with many goods transcending their roles as material possessions that people own to become services for accessing. These objects are becoming linked into larger and larger information service systems where they have to interoperate and coordinate to deliver services.
In an IoT world, labor-intensive factories and assembly lines could be a thing of the past through automation and distributed production. Peer networks of coordination and smart contracts could result in greatly fewer stages in the production chain from primary material extraction to end use. A massively complicated set of siloed centralized systems along the supply chain could evolve into much more fluid and direct peer networks of production
The centuries-long process of centralization and standardized mass production is starting to turn. We are witnessing a renaissance in manufacturing, where connectivity, automation, and digital fabrication are replacing the production lines of large factories. While large-scale production may well always have advantages in some areas of the value chain, distributed, small-scale, loosely coupled manufacturing ecosystems, are emerging and flourishing in this new context.
There is now an opportunity to rewrite the protocols that structure and coordinate manufacturing systems, to make them distributed, integrated, user-centered and circular. Systems that are transparent, that are resilient through decentralization and are truly built for the end-user.
To achieve a sustainable form of manufacturing system will require a holistic perspective and approach, looking at all relevant factors, not simply factories and products, but also the context; the context of usage, the social and economic context, the environmental context, the full lifecycle, etc. This paper is a holistic analysis of our systems of manufacturing, where they are today, the forces shaping their evolution and where they might be tomorrow. We focus on the decentralization of production networks, in particular, looking at blockchain technology as an enabler of new forms of distributed, modular, on-demand manufacturing networks.