6 Ways A Metal Manufacturer Helps You Reduce Costs: Part 1
March 18, 2016
Deciding whether to source your metal manufacturing processes to a supplier isn’t always an easy decision. Many OEMs keep their core competencies in-house. However, few do all of their own metal fabrication, industrial welding, machining, metal finishing and assembly. Market leaders often rely on a contract manufacturer for 80 percent of their production.
Choosing to manufacture custom metal fabrications at your facility means you must bear the cost of capital investments for equipment and maintain a sufficient workforce. These are no small expenses. If your employees are unionized, you should also be prepared to mitigate strikes that may shut down your production lines.
Cost overruns are another drawback. You may need more hours from your workforce than originally estimated. Or, issues with quality, inventory and raw material prices may arise.
A low-quality part negatively impacts the price you’re able to charge for your products, hitting your budget hard. Inventory discrepancies often lead to expedited shipping costs. Worst of all, machine and equipment breakdowns bring your production to a grinding halt.
These unplanned costs take funding away from other departments, such as marketing, research, development and design. In other words, you’re putting your business plan at risk when you could be paying fixed prices with a metal manufacturer.
The right supplier helps you achieve the lowest costs without sacrificing quality, service or on-time deliveries. Most importantly, the right supplier provides a sustainable solution for your metalworking needs. In installment one of this three-part blog series, learn one way a metal manufacturer is able to drastically cut costs for your OEM:
1. Suppliers Reduce Material Waste With Lean Manufacturing
To reduce costs, many OEMs try to maximize their use of raw materials, especially if their scrap rates are high. However, it’s very difficult to achieve the low scrap rates of a metal manufacturing supplier. Contract suppliers are able to leverage other customers’ needs for the same materials to increase efficiency and utilization.
Competing needs within your organization may be preventing you from using strategies like lean manufacturing to their fullest potential, as your supplier is able to do. Metal manufacturers have a singular focus on improving manufacturing processes through this systematic method of eliminating waste.
Without having to worry about all of the processes OEMs must handle, your manufacturer has fewer distractions and more opportunities to implement lean manufacturing. Being fully immersed in the model allows your supplier to greatly reduce production time and costs.
If you’re focused on driving revenue at your organization, an expert metal manufacturer is able to help. You receive high-quality parts delivered on time, supporting your production goals. You may choose to increase production when market demand is high or develop a sizeable inventory to fill customer orders faster.
Picture a business model where your supplier acts as a true partner invested in your OEM’s growth. Whether you need to cut costs for a specific part or for your metal manufacturing processes as a whole, the right supplier offers a solution that benefits your overall budget.
Ready to learn more about how Miller can help you drive revenue? Contact us today!