Original equipment manufacturing (OEM) industries face increasing challenges. Such factors as the global economy, changing markets and the ongoing march of technology combine to influence how they must approach manufacturing. No matter how small or big a company is; it may find itself in a position to consider contract machining. They come to realize the advantages of hiring a machine shop to handle some of the components or items they require to produce their product cost-effectively and efficiently. In doing so, they opt for a lean (and practical) approach to manufacturing.
The basic principle behind contract machining is the replacement or supplement of production for the OEM by qualified machine shops. OEMs make the decision to contract out because they understand the benefits possible from such a partnership. They know it
* Reduces labor costs: Companies do not need to hire specialized/extra personal for production
* Decreases equipment cost: It removes the need to purchase, rent or retool equipment for the new product
* Cuts space requirements: No new equipment means no physical expansion or factory crowding. This also reduces overhead costs
* Allows access to the latest technological: Does so without the expense
* Draws on skilled specialists: Removes need to hire, train and place them on payroll
* Ensures design control: Even though a contract machinist produces your component, it does not have control of the design. As the OEM, you retain this
In contracting out, an OEM is able to increase profitability and productivity while remaining a competitive force in the marketplace.
When it comes to remaining successful in today’s global market, OEMs have to be able to produce desirable products quickly, efficiently and cost-effectively. One way of doing so is to hire out. Through contact machining, OEMs can produce novel and/or specialized items without negatively affecting their bottom line. They draw on the expertise of their partners while adhering to what they, as competitive OEMs, know how to do best.