Outsourcing CNC Machining for OEMs.

The involvement in any kind of manufacturing nowadays will most probably have some factor of outsourcing, there are countless 3, 4 & 5 Axis CNC Machining Companies in operation in Ireland and abroad. In the past, most companies strived to make everything in-house as they felt it was the only way in which they could control quality and did not trust another company to be involved. Of course, small items like fasteners and the like would be outsourced but little else.

However, this manufacturing strategy quickly changed as companies grew to learn that it was not possible to have expertise across such a wide range of manufacturing processes like CNC Machining. Not to mention the economies of scale required to maintain competitiveness within the market.

There are many other important reasons to outsource and this is now a key strategy deployed by a majority of small to medium-sized manufacturing companies in the world today.

While reducing costs and overhead liabilities are the main objectives of any outsourcing program other benefits include reduced inventory, greater cash flow, a reduction in overall factory size, and greater flexibility.

These benefits are mainly associated with the physical movement of products, but the indirect benefits can have a greater impact on the overall performance of a company over time.

The benefits of outsourcing CNC Machining can be realised by OEM Manufacturers in different sectors such as Hydraulic Cylinder Manufacturers, Automotive Components, instruments and equipment used in optoelectronics, the list goes on.

Outsource Manufacturing: A Key Business Strategy For OEMs.

Outsourcing the production of precision-engineered parts is a key strategy that every OEM in the world needs to consider as a viable business strategy, no matter what the manufacturing process may be.

In truth, outsourcing is no longer the sole function of purchasing and operations managers but needs to be considered by design engineering, production, and senior management. Companies gain the most from outsourcing when they have a well-established supply chain that includes strategies developed over many years that fully integrates the operations and functions of both supply chain management and outsourcing.

Once trust has been established over time, companies can share technologies and experiences which can benefit the OEM immensely.

OEMs can develop better solutions that can be a lot more cost-effective using manufacturing processes that quite often would never have been considered by their design or production teams.

CNC Machining is a widely outsourced activity by manufacturing companies, which is down to a number of reasons. Most companies focus on the key outsourcing matrixes like cost, quality, and on-time delivery (JIT). The broader benefits need to be also considered.

Key Benefits Of Outsourcing CNC Machining.

Cost Savings

• The high upfront investment cost of CNC Machines may not be financially viable for many businesses. This equipment can be very expensive to own and operate along with ongoing maintenance costs.

• Outsourcing CNC Machining results in lower overhead costs such as labour, factory size, and holding inventory. Many companies could not justify owning a CNC Machine outright, so outsourcing this requirement makes the most sense financially.  

Access to Precision Machined Parts

• OEMs that choose to outsource gain access to precision parts from an experienced CNC Machining Company and the volumes required.

• CNC Machined parts received from the outsourcing partner are to exact requirements and can be delivered using the just-in-time (JIT) system, to avoid holding inventory.

Refocus Company Efforts

• Once the decision has been made to outsource CNC Machining the OEM can focus its efforts, time, and money on the areas in which it excels in.

• The manufacturing company will save time and money as an investment into additional staff can be both financially draining and time-consuming. A CNC Machining operator is a highly skilled role with the experience and qualifications necessary. A company may not be in a position to take on or train staff so will look to outsource to save time and resources.

• This can really help a company be a competitive force in the market they serve by achieving economies of scale and keeping existing customers satisfied with the high-quality product they are receiving.

An Effective Outsourcing Strategy Solution For OEMs.

In the past, many companies put their arms around everything and had no interest in considering outsourcing certain functions as a viable solution. The culture was further ingrained into the individual functions of the company which actually stifled growth and development and had a huge impact on the life of companies and how they performed in the marketplace.

By denying to consider outsourcing as a strategy, companies got left behind as they could no longer be considered competitive in an already saturated market.

The companies that had adopted an outsourcing strategy early on had larger portions of the market share and continued to grow as a company due to the cost savings to be had.

Today, any successful OEM is sure to be outsourcing the production of specialised parts. A company that produces hydraulic cylinders, will most likely outsource the manufacture of certain components to contract manufacturers. Hydraulic Cylinder Components require elements of Forging and CNC Machining that the OEM may not specialise in.

With proper outsourcing strategies and well-established instructions in place as to how the OEM and suppliers can function together with the best effect, companies can be given the breathing space to look outside the internal operation but look outwards towards their customers. The most effective and successful companies in the world look at what their customers really need from them and the true “value add” they provide and create for these customers and deploy strategies that maintain a focus on these key goals at all times.

About Donlouco Ireland Ltd.

Outsourcing CNC Machining to China

At Donlouco Ireland we are CNC Machining Specialists, with machining from Solid, Turning & Milling, and have a vast amount of experience in assisting companies with their need to outsource the production of engineered parts.

We have a modern CNC Machining shop located in China with a team of managers and engineers on the ground overseeing design, tooling, testing, and manufacturing.

Complete Manufacturing Solutions

We provide full customer support from engineering to planning and delivery from our head office in Cork, Ireland. With a track record in helping customers achieve cost targets while maintaining quality standards and eliminating any indirect or unforeseen costs in the supply chain process.

Outsourcing, Manufacturing and New Strategies for 2023!

We have just entered a new year and manufacturing companies in Europe are still facing uncertainties in many areas of business but specifically the supply of critical components. OEMs may now be looking for new suppliers that can guarantee the security of supply throughout 2023 and beyond.

Between growing our business with existing customers and onboarding new customers, Donlouco Ireland Ltd looks set to make this our busiest year to date.

Make 2023 the year you solve your outsourcing and supply chain problems.