A client wonders if they can more affordably make their own parts in-house
Close to 20 years ago, we began talking with a potential customer about making some of their components. These are fairly simple parts, just laser cutting, press brake forming and sometimes machining and assembly is also needed.
They had tried a few other suppliers but were not having any luck with receiving quality parts on-time.
We won a few parts initially and that eventually grew to making over 100 different part numbers for the company. Everything was going well. By allowing us to make a few design changes, we were able to lower prices on several products over time. We even we set up an inventory system, delivering them parts twice a week.
Over the next 15 years, the customer’s business continued to grow, and they were looking for ways to cut cost. Five years ago, the decision was made: the company was to purchase their own laser cutting machine and press brakes. They planned to save both time and money by bringing the outsourced processes in-house. They let us know that they had started looking at equipment and sometime over the next year they would make the final decision and install the new equipment. We of course were disappointed, but continued to be a reliable supplier.
For the next eight months the company reviewed the hard data such as technical requirements, machine costs, part-time studies, floor space, infrastructure needs, material flow, software needs, industrial gasses, material racks, dust collection systems, power needs, etc. They also reviewed the soft data like the amount of training needed, skilled operator and programmer needs, as well as a lack of expertise for this type of in-house equipment. At the suggestion of one of their team members, they also began to review pricing and performance of suppliers. After carefully reviewing all the data, the company made their final decision.
Once the company reviewed the hard and soft data, they decided that it didn’t make economic sense to bring the equipment in-house. The company concluded they are best to focus on their core competencies: design, final assembly and sales of core products. We of course were excited to hear the good news. They said that when taking into account all the hard data as well as our quality, delivery and competitive pricing, they were far better off to use the money they had set aside to expand their core competencies.
Since then, they have done just that. Over the past five years the customer has expanded into more automation in the assembly of their products, added onto their facility and have also increased their product offerings. During that time, we have continued to do what we always do, make quality parts, and deliver them on-time.
Contact Staub Manufacturing Solutions today to see how we can help your business similarly thrive.
