There is a lot of talk about outsourcing, and it is often described as a new idea or business model. In fact, the actual term “outsourcing” was not used in general business until the late part of the 1980s. In reality, manufacturers have been outsourcing since the Industrial Revolution, turning to companies with specialized equipment, skilled employees, and facilities to make at least some specific components of their final product.
Today, outsourcing has become a critical part of most OEM business models. Not surprisingly, the same reasons that created the opportunity for OEMs in the 18th century are still valid today, although there are additional factors to consider. Some of the most commonly outsourced work for OEMs today is in machine shop services.
Cost Saving Potential
In choosing to have some parts and components manufactured by specialized machine shop services, the OEM is free from having the cost of purchasing the CNC equipment required for most types of precision machining services today. As these machines are extremely expensive and are constantly upgraded to meet new technology, the cost-savings on this factor alone can be significant.
In addition to avoiding the investment in equipment, there is also no cost for maintenance, repairs, and service of the equipment. There is never a concern with equipment downtime and completing orders, as the machine shops have the capacity to fill orders even with these issues to consider.
The best machine shops providing services for various types of industries are able to attract the top machinists. The expertise and experience these professionals bring to any project can be instrumental in faster, lower cost per unit production, all which would be limited with in-house teams and manufacturing options.
Finally, the top machine shop services include a variety of value-added services. This is cost-effective for the OEM as it helps to reduce the complexity and cost of supply chain issues, while still maintaining the highest possible quality standards.