‘Outsourcing’ can help machine builders come through the perfect storm

Posted on 10 Oct 2016 by The Manufacturer

Tony Hague, managing director of PP Control & Automation, explains why machine builders should try to get by with a little help from their friends.

UK machine builders have a lot to contend with currently. An uncertain post-Brexit landscape is dominating media coverage, but there are other factors to consider such as low cost Asian competition, the productivity puzzle and the constant bombardment of Industry 4.0 and how the sector should be embracing it at all costs.

Add to this scenario an incessant appetite from customers for more customisation, bespoke configuration and shorter lead times and you could be forgiven for feeling like you are in the eye of a ‘perfect storm’.

Machine connectivity & data

You’ve heard all of the phrases, Industry 4.0, IoT, Big Data, Connected Enterprise…the list goes on.

Putting all of this aside, what is a ‘game changer’ for machinery builders is technology that is now available to capture and process data at high speed that results in machine optimisation and performance.

Data is now power, but how you choose to process this data is key. PP Control & Automation work with the leading technology providers in machine automation to support machine ‘connectivity’, in order to maximise the customer’s offer to the end user.

The forward thinking machinery builders are already taking action to offset these concerns and investing in strategic collaborations with companies that can provide outsourcing solutions. If anything, this has increased following the EU vote in June.

Tony Hague, managing director of PP Control & Automation, knows more than most about this growing business trend. His company provides outsourced solutions to many of the world’s best firms and has observed some notable changes in behaviours and attitudes when it comes to sub-contracting out non-core activities.

“We speak with many different machine builders, those that are based in the UK and overseas, some large, some small, some with different styles of ownership and different technologies – despite all this the challenges they face remain the same.

“What does vary significantly is the way they face these challenges, either with energy, determination and vigour, accepting that change will be needed in their production and supply chain strategies.”

He continued: “On the other hand they prefer naivety, believing that trying to do the same things ‘cheaper’ or ‘faster’ will enable them to remain competitive. Doing the same things and expecting a different result is called a ‘miracle’ and we don’t believe in those!”

So why do some of the World’s largest and most successful machinery builders have strategic outsourcing at the very heart of their operational strategies and how does it enable them to continue to grow and outperform many of their competitors yet to grasp that particular nettle.

Tony believes that if you look at his firm’s customers and ask them about the benefits they’ve secured they will fall into the following areas.

Lead time reduction

There is no doubt that outsourcing solutions – engaged within an organisation – can lead to a production process being shortened, creating a more agile and responsive service for the end customer. PP hear it all the time…lead time can be the biggest differentiator for an order won or lost for a machine builder.

Capacity & costs

A worker works on an electrical assembly - image courtesy of PP Control & Automation.
A worker works on an electrical assembly – image courtesy of PP Control & Automation.

For some machine builders, production capacity can vary significantly, whether a seasonal or cyclical market or just a market which has external demand volatility. This could include the semi-conductor sector that has seen rapid growth followed by rapid decline.

Planning the correct manpower and associated costs can be tricky and chances are that you will either have too much or too little, which means unnecessary cost burdens or the need to pull in sub contract labour and use overtime – again adversely affecting cost and performance. Outsourcing can help both in the reduction and improved utilisation of internal resource by focusing resource on those processes that add real value in an organisation. You will have a greater ability to flex and scale up production without carrying the high burden of overhead costs when demand drops.

The focus of the machine builder realigns to ‘Revenue Growth’, whilst maintaining fixed overhead costs. You can talk to any of our customers and one overriding message is constant – strategic outsourcing has enabled them to significantly increase capacity, without the need for additional people and space, at least proportionally.

You imagine the effect on the bottom line of a business if you grow sales by 25% and keep costs the same – the impact is significantly greater than tasking your purchasing team to save a few percent on materials or your production team to perform certain processes a bit quicker!

Technology & design

When you select an outsourcing partner, you should be seeking more than just ‘capacity’. Simply buying ‘hours’ is not going to give you a result of any real significance.

What you should be expecting is that the company you choose can help you develop your machine design and associated technology in order to drive, quality, performance and cost.

Their expertise should complement your own. In our case, we have developed great expertise in ‘design for manufacture’ and ‘value engineering’, derived over many years of working in diverse industry sectors. These skills help us work with our customers to assist in standardisation, modularisation, late configuration and machine connectivity.

We also engage our technical partners, who have a wealth of knowledge, to review the automation platforms used by our customers and look at new technologies they could use to improve their machine performance, whether it be speed or accuracy. Industry 4.0 and the associated need of data capture, processing techniques and communication methods also needs to be considered.

The outsourcing conclusion

One thing is clear, the market conditions for machine builders is not suddenly going to get easier. Challenges will always exist – whether political, economic or technology based.

However, the way in which such challenges are faced will ultimately decide success or failure. The UK has some great, highly innovative, forward thinking machine builders in the UK, who are taking on the world.

It also has some underperforming, change averse companies that simply cannot see the ‘wood for the trees’.  You would assume these group of firms will sadly follow lots of other manufacturers in becoming the next site for a new supermarket.