At last! The time has come to scale up production. As an OEM your product is selling and it’s time to ramp. As an End User your product is flying off the shelves and you need more and bigger factories. So you call up your procurement manager and tell them “go get me a bunch of new machines.” A 200-page RFQ is written; all the usual suspect contract manufacturers (CMs) are contacted and bids requested. Beautiful color proposals come in, filled with graphs showing amazing volume pricing—but…
When you should use a CM
CMs may seem cost effective, but those low, low prices come with caveats. Caveats that can ruin things if you are not careful. A CM, meaning a true low cost contract manufacturer is perfect if, and only if:
- You have large volumes of machines. Missing the order quantities will cost you. Missing by a lot will cost a lot, or they may walk away from the business. CM’s depend on volume and on accurate forecasts for their cost model to work. Mucking with those things can cause the wheels to come off the cart pretty quickly.
- Your machines are all identical. Variations cost extra. Changes cost a lot extra, if they can be handled at all. These things also cause delays, and may incur extra costs for re-stocking and scrap.
- Your documentation is perfect, and validated. A CM will build exactly what you tell them to build—whether it’s right or not; whether it works or not. Any CM can, and will, do some cleanup and refinement of your documentation so they can build your systems most efficiently within their systems & processes. But it’s not their job to second guess your documentation, your design, or your functional intent. Garbage in… garbage out.
When CMs are not the answer… or just yet
A CM is simply not appropriate in all cases. In some instances, the equipment may simply not be ready for a CM to tackle. In these cases, a design-build firm is needed to complete the engineering work (all the engineering work) and get through pilot builds to wring out all the gaps in the design and documentation. If you have CIP (ongoing Continuous Improvement Programs), you may need a firm that can develop those changes and get them into the design and production seamlessly and painlessly. In spite of your best efforts to push back, your customers will likely require you to customize your equipment to their special needs.
Design/build firms like Owens Design that have expertise with difficult outsourcing projects (DtOs as we call them) can take equipment and projects with all kinds of issues that stump CMs, and turn them into successful outsourced builds. Some examples of issues they can handle:
- Build documentation is incomplete, untested, inadequate or completely non-existent. Historical builds made broad assumptions as to what constitutes open stock (ex. techs know when to drive to the local hardware store to get plumbing hardware…).
- Legacy products with obsolescence issues, including in the documentation formats.
- Incomplete designs, or designs that require fixing or upgrades.
- The equipment has never undergone a proper transfer to manufacturing (NPI, AME) or validation via a controlled build.
- The build/setup/debug/test requires technical or engineering expertise, or internal machine shop capabilities.
- The one and only guy (or gal) who actually knew how to build it retired years ago and now lives in a memory care clinic in Sarasota. Maybe you’ve heard the local Silicon Valley legend about the old guy and the anodization process…
Firms like Owens Design specialize in building equipment with these sorts of issues and can clean everything up to the point where they can repeatably build the systems in volume at low cost. They can collaborative with you to redesign for lower cost and add or remove features. If appropriate, they can even help you to transfer the build to a CM for high volume production in a low-cost region.
In summary, if CM is the right solution for you, take the time to evaluate your readiness. If you aren’t sure if your equipment is ready for CMs or you realize your need help getting ready, work with a trustworthy custom build design firm. The investment upfront will prove to be well worth the effort in a long run.
Next blog: What if you’re a start-up? We’ll provide some pointers for start-ups in search of Custom Manufacturing Equipment in the next article. Follow us on LinkedIn for our next blog update. If you have questions or comments on the blog or have need for custom manufacturing equipment, feel free to contact us and one of our team members will be happy to help you through this process.