The Rise of Small "Speed Factories"

According to the Kellogg Insights article How “Speed Factories” Help Companies Adapt to Capricious Consumers, speed factories are:

... a local-market facility designed to quickly pump out products with shorter life cycles and less predictable demand, like apparel sported by Kendall Jenner or LeBron James that suddenly becomes a must-have item.

Speed factories tend to be small, highly flexible and able to quickly adjust to changing, local market demand or new customer requirements. 

Adidas, for example, is using speed factories to quickly get customized sneakers to market.

There are several drivers of the speed factory trend:

1. Overseas labor costs are rising, making local production more cost competitive
2. Transportation and logistics costs are also rising.
3. Markets are moving more quickly than in the past, making time to market an increasing important competitive metric.
4. Local markets are increasingly different and need customized products.

None of these trends are new. One of the first articles we wrote on Small Business Labs back in 2007 covered this trend. 

And while the Kellogg article focuses on consumer manufacturing, but the trends also hold true for B2B manufacturing. 

But what is new are the risks of trade wars, tariff increases and the growing number of countries pursuing mercantile trade policies (including, of course, the U.S.).

These make cross border supply chains riskier and more costly. Which makes locating manufacturing facilities closer to final demand even more attractive.

We expect small manufacturing firms to continue to be beneficiaries of these trends.