When to manufacture it yourself - and when not to

Value-added Services:
How and When to Use Them

By Sandia Harrison, Director of Marketing, FPE Automation

In today's post, let's tackle a question that is arguably one of the most difficult in manufacturing 

If Shakespeare were alive today and working in production ops, instead of the famous quote, "To be or not to be," he might ask, "In-house or not in-house?" This, folks, is as close as we come in manufacturing to an "existential question". 

What should you produce, and what should you outsource? When is it worthwhile? Are there times when it's a bad idea? And why, throughout the decades, has this remained such a challenging topic? 

Let's break it down. 

First, why can't you find a clear answer?

Even using the most sophisticated artificial intelligence (AI), you have probably already discovered that you won't find a simple answer online. We are all practically bombarded by webinars, industry publications, and blog posts. Sure, you might come across some very helpful information. However, there are too many variables. One size does not fit all. What works well for another manufacturer might not work at all for you. 

You could bring in vendors, consultants, and reps. Maybe you already have. You can schedule appointments, have them stop by, and listen to their pitch. They are probably helpful - to a point. They'll tell you that they can produce sub-widget x for a specific price. You might know how much that item costs you to produce. You might not. It can be tricky to calculate. Or, you might be looking at the wrong sub-widget entirely. It's nearly impossible to tell. 

It's an open-ended question with too many valid answers. 

Assuming you do know the exact cost for you to manufacture the sub-assembly, and you are confident that it is the ideal spot in your manufacturing process to consider outsourcing, there are still several other factors in play.

1. Who can produce the item more optimally? Sometimes, having the parts come off one assembly cell and immediately brought to the next one can help optimize your production. For some, it creates a bottleneck. Be careful not to lose sight of the bigger picture. Your goal is not to outsource. Your goal is to streamline your operations. If it doesn't do so, look elsewhere. 
   
   
2. How specialized is the item? Certain highly specialized items might be a "custom" even for an expert in that particular area. Do the size, design, or other characteristics make it a good fit for outsourcing? If you can purchase an off-the-shelf item that is a drop-in replacement, it will often be your best choice. Protecting your intellectual property is a priority. There are certain items you may not want to outsource to protect trade secrets and avoid sharing confidential design details. 
   
   
3. Are you facing longer production times and other interruptions? If you're short on bandwidth, it can be a lifesaver to outsource an item. On the other hand, it adds an additional layer of delivery and potential delays that someone at your company will need to manage. 
   
   
4. Can you make it better? Or not as well? Quality and consistency are key, of course.
    
5. Factoring in labor costs: Do your employees have the knowledge and time to manufacture them? Will it involve overtime or delay production? 
   
   
6. Do you have the space to store the items? You may be able to roughly calculate how many sub-assemblies you would need on your shelves to get you through a day/week/month/quarter. Do you have the physical space/square footage to both manufacture and store the item until it is ready to use?
   
   
7. Do you have the equipment and production space? Perhaps you have aging, inefficient machines. When they break down, will it be cost-effective to invest in new ones? If you were to discard, sell, or write off that machinery, could the floor space be used for higher-value processes? 
   
   
8. Transportation costs: If you are able to outsource the items nearby, you may be in luck. If there is no local supplier, it might be very costly to get the goods to you from a distant location.
   
   

While you were reading this list, did a specific pain point in your production process cross your mind? If so, you might have just discovered a great candidate for outsourcing. Still not sure? Here are some things to consider. 

Value-added services like those provided by FPE Automation offer flexibility in manufacturing operations. Our specialized teams are well-equipped with the necessary expertise and equipment to handle specific tasks efficiently. 

Countless manufacturers in the region have partnered with us for specialized sub-assembly. This is some of the actual feedback we receive.

Expertise and Specialization: 

"I can rely on FPE Automation's knowledge and skills. They have been a key contributor to our initiative to produce higher-quality products and make our processes more efficient."

Cost Efficiency: 

"For us, outsourcing certain production stages to FPE Automation has led to cost savings due to streamlined processes, reduced waste, and optimized resource utilization."

Focus on Core Competencies: 

"Partnering with FPE Automation has allowed us to focus on our core competencies while leaving other manufacturing tasks to the experts in that niche area."

Innovation:

"FPE Automation's Handshake Solutions team is more up-to-date with the latest technologies and innovations than we have the ability to be. Working with them gives our medium-size manufacturing company access to cutting-edge solutions without heavy R&D investments."

Scalability: 

"Collaborating with FPE Automation gives us the flexibility to scale production up or down based on demand fluctuations, reducing added costs associated with fixed production capacities."

Time Savings: 

"Our value-added partner, FPE Automation, works with us to meet our production deadlines."

Enhanced Product Quality: 

"The boost in quality and consistency we saw when we partnered with FPE Automation's value-added team has truly allowed us to make a better product."

Saving Labor: 

"Embracing automation and efficient processes can significantly save labor costs. By automating repetitive tasks and utilizing advanced technologies, we can allocate our resources to more creative and strategic roles, ultimately boosting productivity. FPE Automation's Handshake Solutions team is friendly and knowledgeable - a pleasure to work with."

Ease of Ordering: 

"By creating highly specialized kits, FPE Automation's value-added team has turned various components into easily manageable ordering units. They're happy to accommodate our own part number and can build items others can't. For us, that has really simplified our purchasing experience. It reduces confusion, minimizes errors, and accelerates the order fulfillment process."

You're in capable hands with both of FPE Automation's manufacturing partners.

Relying on the right manufacturing partner has advantages. At FPE Automation, we have two separate divisions to do the job. Our value-added team can efficiently assemble products that may be challenging and inefficient for you or even for other third-party subassemblers. Tried and true, they regularly eliminate many of the pain points discussed in this article. Manufacturers have relied on our value-added services for more than 60 years.

Our Handshake Solution team specializes in engineered solutions and turn-key automation. For robot cells, vision systems, palletizers, and more, they are your highly regarded, go-to source you can add to your process to optimize production. 

Because this is a much bigger topic than a simple article can address, FPE Automation is here to help you tackle it. Reach out to us for an introduction to our teams. Let's start a dialogue. We exist to help you reach (and exceed) your production goals, hence our motto:

What you do is what we do. 

For more information about value-added and sub-assembly services, visit the Design/Assemble page on our website. For our Handshake Solutions division, which delivers robot cells, vision systems and other ready-to-implement solutions, you can learn more here. Or, you can reach out to us directly here. 

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