Make or Buy
When considering whether or not to buy a part from a supplier, or make a part in house, several factors should be considered.
- Quality Assurance
- Meeting your Customer's Delivery Requirements
Cost to Buy from Supplier (note: Rollin J. Lobaugh, Inc. provides free shipping within the San Francisco/Bay Area)
VERSUS MAKING IN HOUSE
Determine hourly rate for in house operation.
- Direct Labor
- Labor Payroll Taxes
- Labor Workman's Comp
- Labor Disability Insurance
- Labor Vacation
- Labor Health Insurance
- Cost of Equipment (versus Rate of Return on $)
- Machine Maintenance
- Inspection Equipment
- Inspection Labor (multiple inspections for multiple operations)
- Overhead Personnel
- Parts Cleaning Costs
- Internal Rejects
- Transportation if several operations
- Que or Wait Time
Determine Set Up Hours & Pieces/Hour
Determine in house cost (Hours * $/Hour = Cost)
- Add Cost of Material
- Add Cost of Outside Services
- Add Cost of Inspection Equipment
- Add Cost of Transportation
Rollin J. Lobaugh, Inc. may be better able to meet your requirements than producing in house. We operate two shifts and utilize productive machines for all sizes,all quantities including close tolerance work, from multiple spindle screw machines, single spindle screw machines, to CNC turning machines and machining centers. With our many years of experience, our established Quality Assurance Department and a computerized shop floor control system, we deliver a quality product on time.
Some Customer trends we have seen over the last 20 years:
- Desire a finished product or subassembly - get turnkey units. Want a supplier that takes the responsibility for the parts that go into the assembly line, thus eliminating the need to transport and inspect parts from platers, heat treaters, painters, etc.
- Reducing the Approved Supplier Base (and the costs that are associated with maintaining it)
- Due to advances in CAD, manufacturing techniques and global communication, products have a much shorter life, which in turn may make it difficult to justify expensive tooling costs.
- A Concentration on core competencies, which often include design and exclude manufacturing.