Elasto Proxy's Sealing Solutions Blog Blog

Elasto Proxy's Sealing Solutions Blog

Elasto Proxy's Sealing Solutions Blog is the place for conversation and discussion about the design and manufacturing of rubber and plastic parts and products. In addition to regular content from Elasto Proxy, you'll hear from companies across the rubber and plastics industry.

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Is Outsourcing In Your Plans for 2015?

Posted January 05, 2015 9:23 AM by Doug Sharpe

Are you thinking about outsourcing some of your fabrication in 2015? Chris Coghlin, the CEO of Cogmedix has some good advice - and it's not just for medical device manufacturers. "Often," he explains in an article for Medical Device Technology (MDT) magazine, "the temptation is to choose a contract manufacturing partner based solely on the price per unit cost. Don't be too short sighted."

Outsourcing Costs and Challenges

Whether you make medical equipment or agricultural machinery, it's important to consider all of your costs - and all of your potential challenges. Otherwise, your company could face problems ranging from "poor product quality" to "high field service costs", Coghlin explains.

For example, if you're a medical equipment manufacturer, poor-quality EMI shielding could fail to protect sensitive electronics from electromagnetic interference (EMI). If you're a maker of tractors, the cost of replacing defective door seals could involve both labor and materials.

Before outsourcing a project, however, it's important to determine whether a potential partner has the custom fabrication capabilities and supply chain strength to deliver. In short, you'll need to decide whether their internal operations are strong enough to meet all of your requirements.

Offshoring and Outsouring

Chris Coglin examines this idea in a white paper called Solving the Outsourcing Equation. As the CEO explains, an electronics OEM that brought outsourced operations back home realized a significant cost savings. Offshoring was cost-effective when production volumes were high, but not when demand fell.

Cost containment is critical, of course, but it's not the only factor to consider. Technologies and regulations evolve, and your company's products need remain competitive - and compliant with standards and regulations. Your business is ready for the New Year, but what about beyond 2015?

Today, a potential outsourcing partner's per-unit cost may seem paramount. But does the contract manufacturer have the technical expertise to help you address tomorrow's challenges, too? For that matter, how well do they understand factors such as FDA regulations and vehicle safety requirements?

Join the Conversation

For over 25 years, Elasto Proxy has custom-fabricated specialty seals and custom insulation for a wide range of industries, including makers of mobile specialty vehicles and manufacturers of medical devices and equipment. If outsourcing is in your plans for 2015, I hope you'll comment on this blog entry.

About the Author: Doug Sharpe is the President of Elasto Proxy, Inc. (Boisbriand, Quebec, Canada), supplier of sealing solutions and custom-fabricated rubber and plastic parts to a wide variety of industries, including automotive and medical equipment.

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#1

Re: Is Outsourcing In Your Plans for 2015?

01/06/2015 5:40 AM

Very, very interesting. Lots of really valid points to ponder. You need at least two sources to my mind, with new ones on the horizon....

A different problem, but I worked for a short time (they retired me with many others!) for Sun MicroSystems, who outsourced everything, till they had lost most of their customers through dreadfully poor service (outsourced) and Oracle snapped them up!!!

The top managers at SMS were simply AWFUL. No idea of the computer business and did not listen to their tech support people, me for one.....generally the poorest quality top management I have ever worked for......they literally took no advice from anyone at all and were quickly in real trouble after they bought us out!! 3 years if I remember correctly.....

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Re: Is Outsourcing In Your Plans for 2015?

01/06/2015 9:32 AM

All valid points for sure. But a few more you may want to consider.

Does one have the in-house infrastructure and equipment required?? What would be the cost of getting these requirements if you don't already have them? Can you adapt what you have existing to make what you need?

Over the years we have brought some previously outsourced items back in house, but still outsource a lot of components. Why still outsource some?? Because of the cost of developing the infrastructure required and the cost of the equipment required. It takes some doing, but,, finding a reliable supplier(s) with the existing infrastructure and equipment can be done. Yes we may be paying a little extra for the services but that lets us stay lean and focus on the final product. By outsourcing we also can keep our indirect costs/overheads lower.

When you are in a very competative industry with little barrier to entry, you have to be able "get small" quickly when markets shrink or be able to diversify.

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