Small to mid-sized businesses often weigh the cost of outsourcing machining jobs vs. buying their own equipment to produce parts in-house.
The process of outsourcing machining projects can make some companies cautious, whether it be cost or a preconceived notion that control over a project is lost. Truth is, for some smaller companies, partnering with reliable service providers is a means of survival to compete with larger competitors.
Building an in-house operation has obvious, direct costs – like facility space and machines. But there are several less apparent investments required, both in time and money, to get an in-house machining operation up and running.
Businesses should consider all factors associated with bringing the process in-house and how it will affect them beyond simple dollars and cents. Weighing the options of outsourcing vs. in-house machining gives businesses a clearer understanding of what will best fit their needs and budget.
The most significant investment of running jobs internally is the upfront cost of necessary equipment.
CNC machines, especially models that offer the full range of capabilities a job shop would possess, can be upward of $500,000 to $1,000,000. This is often too expensive for many small businesses to invest in one piece of machinery.
While larger organizations might find the cost easier to bear, they could still lack the part volume to warrant such a sizable machining purchase.
In contrast, outsourcing has no equipment costs, and parts are paid for as needed. This can help meet fluctuating demand without investing significant capital in one machine.
Materials and Supplies
When weighing the options of in-house vs. partnered machining needs, it is often the indirect costs that are overlooked.
Manufacturing parts require a bigger investment than just the equipment. Job shops can buy material for significantly less because of their volume needs and relationships with suppliers. Through their vendors, machine shops could see material savings of up to 50% compared to the prices paid by businesses who aren’t a regular buyer.
Another critical component often overlooked when considering an in-house operation is tooling. These costs can begin to add up, especially when tooling is needed for a small project or prototype development.
Finding and retaining reliable employees in manufacturing has been a struggle across the U.S. and within many industries. Recruiting, hiring and training workers with the right skill set may prove to be the most challenging aspect of launching an in-house machining operation.
Not only will machines require operators, but trained back-up personnel to account for sick or personal time. Don’t forget about machine maintenance as well. While service technicians can be brought in as-needed, machine downtime will be more significant without in-house staff.
With additional workers comes the responsibility of keeping them busy. Partnering with a machine shop provides the convenience of outsourcing to an equipped team of experts on an as-needed basis.
While the thought of not having to wait for parts might be attractive, partnering with a job shop does offer other capabilities that are lost when taking production in-house.
Engineering consulting, welding and fabrication are additional capabilities that are available through a machining partnership.
A specialty service’s value is derived from more than the hard cost of equipment. A refined process, established material buying power and experienced machine operators and service technicians are just a few reasons why working with a machine shop is an efficient and reliable way to produce parts. Contact us to learn more.