Outsourcing and the Bottom Line
Whether a manufacturer is doing it to stay “lean and mean” or their hand is being forced by the emerging skills gap, outsourcing can keep a firm’s bottom line on the up and up.
Alongside Deloitte, the Manufacturing Institute’s most recent data shows the skills gap is widening and will leave more than 2.4 million open positions by 2028. The study included an online survey of more than 400 US manufacturers, interviews with executives from manufacturing organizations, extensive analysis of secondary data and economic projections.
Of the manufacturers surveyed, 42 percent indicated a strong affinity toward outsourcing as a solution to the current skilled worker shortage.
In addition, staying lean and padding the bottom line on outsourcing things like maintenance have always been part of the standard protocol, especially for the smaller companies that can’t afford to retain specialists on their staff.
“That’s why we’re in business”, Paul Kumler said, SC Aerospace board member and President of KTM Solutions.
“In-house engineering is expensive, particularly if not fully utilized,” he said. “It’s much more cost effective to purchase what you need when you need it.”
Because a manufacturer’s true merit is based on production and the delivery of goods, reducing cost at all positions is mandatory. As a result, a firm’s greatest advantage is standing around them.
By utilizing an outside firm to manage maintenance on equipment and buildings, John Brasher, VP of Operations at Renfrow Industrial, said “it will prolong the life of the larger assets.”
“Capital expenditures are not always approved, so manufacturers must take care of these assets,” he said. In addition, “they can reduce their cost and only use labor when it is fully needed. Also, a manufacturer can avoid the extra W2, wages, taxes and insurances.”
The bulk of South Carolina’s manufacturing firms are small companies competing for a spot along one of the larger OEM’s supply chains. Production, efficiency and cost-effective services are paramount here.
CEO of Manufacturing, said outsourcing services can increase responsiveness, especially at smaller companies without multiple dedicated resources.
“Maintenance is usually shared, and let’s face it, issues are placed on the back burner and deferred maintenance becomes the new standard,” he said. “Third-party vendors have the expertise, skills and resources necessary to drive traditional management services costs down. As a result, companies end up paying less for outsourced services than the costs of operating an in-house maintenance team.”
Whether a firm is plugged into the state’s automotive sector or the emerging aerospace industry, operating lean and finding the most cost-effective method of producing and delivering components to the BMW’s, Michelin’s and Boeing’s of the world will remain.
Supply chain management and logistics are very important in an industry that fine-tuned the concept of “just-in-sequence” Thomas Koehler said, General Manager of Berrang.
A missing component could bring down a whole assembly line of a manufacturer, he said.
In this industry, it is simple. Build quality and cost-effective goods and deliver them on time to customers.
After all, “the cost of downtime is immeasurable,”
“Outsourcing maintenance increases responsiveness and ensures timely service to customers.”
By: Joe Toppe
If you would like to discuss how Renfrow Industrial can help you call us at: 1-800-260-8412 or via email at: email@example.com.