While outsourcing fabrication processes can sometimes result in cost savings for Original Equipment Manufacturers (OEMs), there are often hidden expenses that are not terribly clear until it’s too late. Often this is the result of outsourcing to too many contract fabricators, rather than consolidating operations under one or two outside manufacturers. Last week, we talked about how contractor management and additional shipping and logistics costs can eat away at potential additional profit. Two more common expenses are the costs of rework and scrap due to errors on the part of contractors, and the other is the cost of unforeseen risks. The latter two are the subject of today’s blog.
Cost of Rework
There’s no way around it: the more contractors involved, the greater the chances of something going wrong. And when something goes wrong, it means a part is either going to need to be scrapped completely, or reworked. In manufacturing, there are very few errors that are inexpensive to fix. When this extra cost is added to the expense of having to manage multiple fabricators in the first place, you can be sure that most of the savings that would have been expected from outsourcing in the first place are likely null and void. In fact, it’s not uncommon for OEMs to lose money in situations like these.
Cost of Unpredictable Risks
As mentioned previously, the more processes that are out of an OEM’s direct supervision, the more chances there are for problems to occur. This doesn’t just mean errors in fabrication. It can also mean circumstances outside of anyone’s control. These include “acts of God,” such as hurricanes, tsunamis, earthquakes, floods, fires and other natural disasters; however, it can also involve man-made issues, including physical theft or theft of intellectual property. When considering outsourcing to multiple contract fabricators, it’s easy to overvalue the savings realized by cheaper labor, while completely underestimating the potential costs that may be incurred by undervaluing risk.
EVS Metal: One-Stop Contract Manufacturing and Fabrication
The above “hidden” costs are all reasons why looking for a one-stop fabrication partner like EVS Metal can be an important strategy for reducing the expenses related to outsourcing. From design and engineering assistance, to finishing, assembly and integration, EVS is able to perform the full range of metal fabrication processes, all under one roof. This allows OEMs to realize the cost savings of outsourcing, while minimizing additional expenses and risk.
EVS Metal is an American precision metal fabricator headquartered in Riverdale, NJ. We utilize the latest technology to cut, bend, weld and finish stand-alone items as well as parts for integration or assembly into more complex products. Our four ISO 9001:2015-certified facilities comprise over 250,000 square feet of vertically-integrated manufacturing space and feature the most modern equipment available, from welding robots and laser cutting solutions to automated powder coating lines.
We serve a diverse customer base across North America, providing a range of services from ITAR-compliant, quick-turn prototypes to high-volume production runs. Request a personalized metal fabrication quote online, or call (973) 839-4432 to speak with a specialist today.