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There’s “outsourcing” and then there’s “PP outsourcing”

Machine builders and OEMs will likely have considered outsourcing at some point, or have implemented an outsourcing strategy for their manufacturing operation. There’s nothing new in the decision to outsource, but there is a clear distinction between the types of outsourcing undertaken and the business benefits that materialise for each.

Most outsourcing is based on a decision to sub-contract out a particular product at a ‘piece part level’ to a number of different suppliers. This will provide some benefits, but the added value to operations, along with the commercial impact that a strategic outsourcing partnership can identify, will be missing.

PP Control & Automation operate at that higher level, where an outsourcing strategy is all-encompassing and acts as a foundation for a mutual partnership. A more considered and focused approach compared to outsourcing through numerous channels will offer significantly higher benefits to the customer.

outsourcing machine build

Be careful not to add complexity where it isn’t needed

Outsourcing to multiple suppliers will create additional complexity where machine builders and OEMs actually require simplicity. An outsourcing partner with a streamlined approach, acting as a single source of communication and operational activity, is hard to come by – there are very few specialists that are capable. PP C&A, however, are one of those capable specialists.

Consider a machinery builder that outsources the following:

  • Printed circuit board assemblies to one or two suppliers
  • Cable harnesses to another supplier
  • Fabrication work to several suppliers
  • Backplate and rail assemblies to another supplier
  • Pneumatic sub-assemblies to a specialist supplier

It isn’t hard to understand why this approach becomes too complex too quickly. It is important to break that proposition down and…

Ask the following questions:

  • How many piece parts?
  • How many suppliers to manage?
  • How many orders to process?
  • How many parts to stock?
  • How much time is taken in final assembly?

The answers to those questions will paint a very complex picture. One that could be blocking efficiencies in vital areas, reducing costs in one area but adding to them in another, generating laborious administrative tasks and creating a model that becomes difficult to manage.

Combine and conquer

Now consider a higher-level outsourcing solution where one partner can manage every activity in the supply chain for you. The benefits would be much healthier, and they would include:

  • Higher-level complex assemblies delivered straight into your business
  • Options configured to meet your precise production needs
  • Massive reduction in vendors and piece parts to order and stock
  • Reduced production times and increased manufacturing agility
  • Increased rate of responsiveness to meet your customer’s demands
  • Outperforming competitors with improved lead times, leading to more orders

 

Most outsourcing methods allow manufacturers to focus more time on core competencies such as product innovation, research and development or sales and marketing. A decision to outsource often hinges on various barriers to growth, including people, space and production lead times.

Whether a machine builder is struggling for available workers with the necessary skill, has a lack of space for new builds as orders grow, or is falling behind schedule and seeing lead times rise; outsourcing alleviates these pain points.

Operational benefits are one thing, but a strategic partner like PP C&A will also have the capability and capacity to manage a complex supply chain, leading to commercial benefits. Outsourcing supply chain management allows the customer to focus less on tactical ‘day-to-day’ purchasing activities (typically, placing and chasing) but focus more on strategic supplier development activities that reap greater rewards.

Access to extensive supplier networks, providing additional opportunities to establish new relationships or build on those already embedded, is also an area that manufacturers can only benefit from with a strategy developed with a high-level outsourcing partner.

machine build outsourcing

Managing the entire supply chain with the infrastructure embedded within PP C&A ties manufacturing processes together in a streamlined manner and carries numerous commercial benefits. Explore them in ‘The tangible commercial benefits behind the transfer of supply chain ownership’ blog.

The tangible, real world and potentially massive benefits of a strategic partnership with a high-level outsourcing supplier are many and varied. The Outsourcing page will offer further insight.

outsource supply chain

The demand for flexibility

The ability for a machine builder to maintain high levels of production flexibility in relation to changing demands has never been greater. Some markets are more predictive than others. Certainly in some sectors, where for a new sales opportunity to be realised for a machine builder, they require a fast ramp up in capacity to meet an expected customer lead time on a potentially larger order. OEMs that work closely with a strategic outsourcing partner will always have the ability to scale up quickly compared to a more vertically integrated business with multiple internal constraints.

Equally, with so much economic uncertainty in the world, it is quite possible that demand could drop off. Perhaps a short-term ‘blip’ or perhaps something more significant. Again, if a company has greater flexibility on resource and fixed costs by working with outsourcing partners, they will no doubt be able to weather any storm in a more positive manner.

What do you outsource?

Are you currently outsourcing to a variety of suppliers, potentially missing out on the operational and commercial benefits achieved by outsourcing to one strategic partner?

Use the form below to tell PP C&A what that procedure looks like. Using this information, the strategic and engineering experts at PP C&A will be able to tell you where efficiencies can be made, costs managed better and how your growth potential will be unlocked.

PP C&A strategic outsourcing solutions are the fastest way to profitability.

 

Strategic outsourcing

1. Do you outsource?

If yes
Do you outsource to multiple suppliers?

2. Are you considering outsourcing or considering changing supplier?
3. Are you experiencing barriers to growth?


4. Would you like to arrange a consultation (call or visit) with us?
5. Would you like to receive more information on strategic outsourcing?
6. If you have a more specific enquiry, question or pain point, please let us know:

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Control & Automation | Contract Manufacturing | Strategic Outsourcing

 

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