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Inventory or On-Demand: Which Should You Choose?

INVENTORY OR
ON-DEMAND:
WHICH SHOULD
YOU CHOOSE?

Blog Post

Weigh all factors when choosing production and delivery methods

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Daffner_David 11-19-18

David Daffner, Vice President
Managed Services

Every business model carries risk. Your success depends, at least in part, on analyzing and mitigating risk. One key area of risk is your production and delivery systems. Specifically, you’ll want to compare the risks and rewards of using on-demand services, such as print-on-demand, against those of manufacturing and holding inventory.

As you may know, print-on-demand covers a range of products, including printed materials (brochures, flyers, etc.), promotional items (pens, tote bags, awards, etc.) and apparel. With improved technology and more efficient ordering capabilities, today’s on-demand service providers make it quite easy for you to outsource both design and fulfillment.

This doesn’t necessarily mean, however, that on-demand is always the right answer for every situation. Let’s look at the pros and cons of both on-demand production and warehoused inventory.

The benefits of on-demand

  • Potential cost savings: Using on-demand services means you won’t face up-front bulk production or manufacturing costs, and you won’t have to pay for storing inventory.

  • No risk of obsolescence: When refreshing your brand, correcting a mistake or implementing regulatory changes, you may need to trash all or part of your inventory. But with on-demand services, your product and materials exist in a digital format until they are ready to be produced, so it’s easier and less expensive to make changes.

The drawbacks of on-demand

  • Surcharge for quick-turn: With on-demand services, expedited service or delivery fees might be incurred to meet a tight deadline for a special event or a firm go-live date.

  • Longer shipping times: When shipping inventory, you can typically get your products to customers quickly. But with on-demand services, it can take a week or longer — and thanks to online retailers like Amazon, customer expectation for delivery speed is quite high.

From 2014 to 2019, retail e-commerce sales worldwide grew from $1.3 to 3.5 trillion and sales are projected to grow to $6.5 trillion in 2023 (Statista).

The benefits of inventory

  • Quality assurance: When you carry your own inventory, you can verify product quality, packaging and shipping.
  • No order minimums: Some on-demand services require minimum orders with a high per-piece cost. But with inventory, you can set your own order minimums.

The drawbacks of inventory

  • Obsolescence risk: Changes in consumer preferences branding or regulations could cause you to hold inventory that ends up being wasted or heavily discounted.

  • Cost of maintaining inventory: You could end up with higher production and storage costs if you’ve stocked items that aren’t popular or used frequently.

There really isn’t any one right answer for whether you should use on-demand production or warehouse inventory. During the course of your business, you may end up using both models, depending on your circumstances. Weigh your options carefully, do your research and make the moves that make sense for your business. You may find that partnering with a marketing supply chain expert can help you evaluate options and find solutions to potential drawbacks, allowing you to make the right choice for your company’s long-term objectives.

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