How to Leverage AI, Data & On-Demand Production To Dynamically Respond To Consumer Needs

Driven by ongoing disruptions in the global supply chain, brands and retailers are bringing manufacturing and design processes closer to the consumer – both physically and digitally. To better meet consumer needs, companies are utilizing new types of data to inform front-end R&D as well as operational decision making. They’re leveraging creative AI applications to streamline product concepting and design phases and using 3D printing techniques to build a more efficient on-demand manufacturing model, effectively moving away from mass to bespoke. What’s more, production lines are being reconfigured into smaller footprints, allowing factories to be located closer to the communities they serve. Taken together, these innovations help identify unmet needs in the marketplace, enable enhanced customization at scale, and bring products closer to their end consumers. These new manufacturing techniques save transaction costs, give companies more oversight on production, and power more ethical and sustainable supply chains.

At the same time, companies face increased competition for consumer loyalty, which has led them to consider how they can offer consumers a more personalized product experience. As a result, brands are embracing more agile processes across product development and production. Digital tools like AI, AR, and 3D printing can bring consumers into the production process as collaborators, which in turn creates new opportunities to gather insights, feedback and data in real-time, closing the loop between needs and finished products. By giving consumers greater control and confidence over their purchase decisions, companies can not only drive repeat sales but reduce operational and environmental costs associated with unsold merchandise and returns.

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In a report analyzing trends in on-demand manufacturing and sustainable business, the PSFK research team has identified the 5 key trends shaping future product design and manufacturing. Developed through the lens of technological advancements, digital behaviors, and sustainable business models, these trends highlight the innovative ways organizations are reimagining not only product design, but the final consumer experience as well.

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Insights Driving Radical Approaches To Product Manufacturing & Design

There is an expectation among consumers for the retailers and brands they shop with to demonstrate responsible and sustainable practices. 

Consumers are demanding that manufacturers take environmental measures such as sustainably sourcing components and ingredients or employing a production process that reduces waste. In fact, 3 in every 5 US shoppers say they are influenced to buy products from companies with responsible manufacturing.
PSFK US Shopper Survey, Radical Approaches To Product Manufacturing & Design, 2022 

86% of global respondents now expect businesses to play their part in solving big challenges, like climate change or social justice. Meanwhile, 64% of Gen Z say they will actively boycott brands if they are doing nothing to help reverse climate change.
>Regeneration Rising: Sustainability Futures, Wunderman Thompson, 2021

Consumers are willing to share data in exchange for a customized product or experience, but many still need to be convinced of the benefit.

While many people find what they're looking for when shopping, there's a significant portion who need help finding products that are physically right for them. Over 45% of US shoppers say they seldom or never typically find the perfect size, shape or fit.
PSFK US Shopper Survey, Radical Approaches To Product Manufacturing & Design, 2022 

While shoppers are interested in bespoke products made on-demand, there's a limit to the amount of personal information they are willing to share today. 57% of US shoppers say they would only share a little or moderate amount of data to brands and retailers in order to be offered products that are the right size & shape. 14% of shoppers say they don't want to share any data at all.
PSFK US Shopper Survey, Radical Approaches To Product Manufacturing & Design, 2022 

Companies are embracing a digital mindset to capture real-time feedback and speed the time it takes to bring products to market.

“Testing concepts digitally provides powerful consumer insights but also helps Timberland’s commitment to a greener future. People can view virtual concepts and give detailed feedback before we commit to manufacturing or shipping physical samples. The Vurvey AR platform is a faster and more sustainable way to innovate.”
Alex Dardinski, Senior Director Of Advanced Concepts And Energy, Timberland

To improve overall CX and meet demand changes in real time, companies are adopting strategies that shorten supply chains and tailor production to reflect customer needs on a localized level.  

While many US shoppers are happy to have their goods made anywhere in North America (31%) (or even the world (15%)), a high proportion are looking for locally made products. 48% of US shoppers would prefer to buy from companies that make their products within 100 miles of where they live.
PSFK US Shopper Survey, Radical Approaches To Product Manufacturing & Design, 2022 

As eCommerce grows, the environmental impact of deliveries increases too. 43% of US shoppers are concerned or very concerned about the environmental impact made by the shipping and deliveries of their online shopping. Only 7% say they are not concerned at all.
PSFK US Shopper Survey, Radical Approaches To Product Manufacturing & Design, 2022 

PSFK US Shopper Survey, Radical Approaches To Product Manufacturing & Design 

The PSFK quantitative survey was conducted February 16-17, 2022. The audience were US smartphone users between 18 and 75 years old. The survey was a ‘basic census’ balanced in terms of age and gender. The 295 respondents had household income between $0-$200k.

Radical Product Manufacturing & Design Strategies & Best-In-Class Activations

Design Feedback Loops
To better meet consumer needs brands and retailers are taking aggregated information about consumers and their purchasing tendencies to inform product design. By harvesting customer feedback through technology to inform the product development process, retailers are better positioned to accommodate consumers’ lifestyles and preferences, while learning how best to achieve a well-designed product that resonates with customers on a deeper level.

Amazon’s Product Opportunity Explorer is a tool for sellers to track search terms, sales history and pricing trends to determine how successful a product they are working on might be on Amazon. It works by evaluating “niches” or subcategories on the Amazon marketplace. Then, Amazon can provide data on the sales history associated with a particular niche and brand over the past 90 days. The Opportunity Explorer can also display metrics such as how quickly a niche has grown over time, and how well a search related to the niche converts into sales. Since sellers that launch one or more products that resonate well with customers tend to be the most successful, Amazon wants to help sellers identify these next products. In exchange, the company believes that it can encourage sellers to embrace subcategories thereby boosting its own product assortment. 

AI-Powered R&D
Beyond its operational value, AI is writing movies, creating songs and acting as a creative assistant in terms of helping design teams generate prototypes and even select final concepts. For retailers and brands, AI and proprietary algorithms are being used to create a more collaborative and on-demand manufacturing model, where after generating initial specs or a design brief, AI-powered plans are handed off to human design teams for final input and production.

Turing Lab's AI software helps companies quickly discover and optimize product formulations from millions of combinations, all with the push of a button. Turing uses modern AI techniques to improve the speed of product development by building modeling and simulation platforms that do not require data reformatting and eliminates interface complexity. The cloud-based platform integrates data from marketing, R&D, consumer, chemical composition, and costing data from various sources, and enables CPG companies to simulate working through ingredient combinations for new products, creating a smaller subset for technicians to actually create. For brands like Dove and Axe, Turing helps accelerate and innovate the formulation process, which cuts the time brands spend in the research and development phase and accelerates the product’s speed-to-market. 

Scalable Customization
Retailers and brands are increasingly being held accountable by consumers, government agencies and internal leaders to implement effective eco-friendly initiatives and zero-waste practices. To not only conserve raw materials, but also provide consumers with greater control, confidence and trust in their purchase decisions, retailers are leveraging AI, 3D printing technology to provide customization at scale. Allowing consumers to input their measurements, submit body scans captured via their own phone lens and even select specific design details, these “made-for-you” programs ensure greater satisfaction for consumers, reduce returns and wasted resources, and deliver production savings to retailers.

​​Custom clothing retailer Knot Standard’s tech-driven Custom OnDemand platform is garnering the attention of retailers like Bloomingdales and Nordstrom. The AI-powered app combines body-scanning measurement technology and expertise in custom clothing to allow customers to buy tailored clothing without trying them on. Users take photos of themselves, upload it to the app, and artificial intelligence ascertains their measurements and creates a profile in the Instant Sizing System. Knot Standard is selling their technology to retailers to enable them to offer the same personalization, seamless ordering, measuring and custom production for their clothing. 

Made-To-Order Manufacturing
Rather than implement full-scale production runs that often result in unsold inventory, brands are considering the viability of pre-order and made-to-order manufacturing models. Companies are employing production methods like 3D printing, CNC milling and other on-demand techniques alongside new ways to sell to their customers. This approach reverses the mentality of instant gratification by asking them to register their buying intention before a product is made, while opening the door to feedback and bespoke customization.

Supply Chain-as-a-Service company WAZP is making it easier for retailers to produce products on-demand using industrial 3D printing and a distributed manufacturing footprint. WAZP’s global network of strategically located production facilities helps retailers meet customer demand faster, at a lower cost, and sustainably. Using 3D printing to manufacture new products, WAZP is able to minimize the need for inventory, reduce transport costs and vulnerability to supply-chain shocks. WAZP helps its customers throughout the entire product design process, including technical drawings and measuring surface properties. The company’s flexible decentralized approach has attracted customers like IKEA, allowing them to reduce the length of their supply chain. 

Regional Production Hubs
In an effort to cut down on the environmental and operational costs associated with supply chain inefficiencies, tailor products to local needs and quickly respond to changes in demand, brands are taking steps to reposition operations, suppliers, and production closer to regional stores and consumer hubs. To bring physical products and the end consumer closer together, retailers are trialing micro-production lines, regional service centers and domestic vendor sourcing in an effort to reduce disruptions, limit excess materials, and meet local demand in a more efficient manner. 

In an effort to design a more flexible and agile production system, Unilever created a ‘nano factory’ that houses a fully-functioning, mini production line and fits entirely into a 40-foot shipping container and is equipped to produce ready-to-sell product batches, based on local demand. Designed to produce small batches in a more cost-efficient way that produces zero waste, the nano factory is not intended to match the output of a large factory. Instead, the nano factory can help bring production lines closer to the consumer.  The factory is fully digitized and can be programmed and controlled remotely, only requiring three on-site operators per shift. 

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In this report, the PSFK research team has identified the 5 key trends shaping future product design and manufacturing. Developed through the lens of technological advancements, digital behaviors, and sustainable business models, these trends highlight the innovative ways organizations are reimagining not only product design, but the final consumer experience as well.