Are you looking for the most affordable way to manufacture your parts, while assuring quality and timeliness?
In the last 50 years, during economic upturns and downturns, many companies continued to outsource custom machining services rather than buy equipment, hire new staff, create quality control procedures and set up production schedules. It’s not uncommon for large companies such as General Electric to outsource part manufacturing and assembly. If they are doing it, it’s a sure bet that it is saving them money, or else they would bring it in house.
But the question is, even if large companies have benefited from outsourcing custom machining services, will you? How do you find good partners for outsourcing part production? And how to ensure you get parts that match your quality standards? We’ll cover all this in the sections below.
Outsourcing custom machining services is beneficial to companies that would normally have to complete assembly processes manually instead of automating with expensive equipment, but also for companies that only have a few machines that run at a third of their capacity or less.
Contract manufacturers can provide greater savings because they:
- run their equipment all day serving multiple customers,
- buy similar products in higher quantities,
- and focus on improving efficiency on a daily basis.
Those savings — created by buying in bulk, using equipment at full capacity, and focusing on efficiency — are passed on you, their customer, who may be currently assembling items by hand or paying higher prices for materials. Many contract manufactures and machine shops have also had time to fine tune their process, resulting in additional productivity and quality. Below are questions worth asking to see if outsourcing might save you money.
Quiz: Could Using Outsourced Custom Machining Services Save You Money?
1. Would you need to buy and maintain new, expensive machinery?
Outsourcing could save the expense of buying and maintaining expensive machinery. If you have not purchased a precision machine, but have a need for custom made parts, outsourcing could save you the considerable cost of purchasing a new machine.
2. Would you need to hire employees?
If you’d need to hire employees to manufacture the parts, outsourcing could save you money. This includes more than just the cost of salary, but also the expense of training them, providing benefits packages, and the additional time costs of interviewing and recruiting new staff. Depending on the number of employees needed, you may also need to hire a manager, which could be an additional expense easy to overlook initially. By outsourcing, you will have fewer employees to manage and provide for.
3. Is your organization manually producing parts that could have automated production?
If your team is still manually producing parts that could be automated, you likely could save money by partnering with a contract manufacture that has the more advanced equipment.
4. Do you under-utilize the machines you have?
If you have machines that are operating at a third or less of their capacity, it’s likely another company could produce the part cheaper for a number of reasons. Their overall costs are likely to be less because they are able to run their equipment all day, can buy materials in bulk, are experienced at setting up production schedules, and have established efficient quality control procedures. This is a field where practice really can make perfect. That combination of factors allows them to pass the savings on to you, their customer.
5. Do you buy materials in large-enough quantities to get bulk discounts?
If you are buying materials piecemeal or in quantities that don’t qualify for discounts, you could be losing money. By outsourcing production to a larger company that is able to order in bulk, a decreased price is possible. When it comes to saving money, every part counts.
6. Do you already have adequate space for materials and machines? Or would it be an additional cost to expand or rent facilities?
If manufacturing a part requires you to rent more space or modify your existing workspace, that could be an additional cost worth evaluating.
7. Can you save money by partnering with a company that has equipment you don’t currently have?
Ask the companies you are considering partnering with what machines they have, as it can make a big difference on cost and finished product. Manual machining may not offer the savings possible with greater automation. Equipment will also provide more consistency of cut lengths and precision, which can become a mark of reliability and consistency to your customers even though you aren’t producing the products yourself.
8. Do they pay for shipping?
The cost of shipping can add up over time. It’s worth it to ask your potential vendors if they offer free shipping, or if there is a threshold for free shipping. In some cases, upgrading an order to $1,000 instead of $900 may make sense to qualify for free shipping. If you’re getting free shipping and saving money by outsourcing, it can add up to serious savings over time.
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