Outsourcing: The Past, the Present and the Future

Years ago, shops worked to keep as many of the manufacturing processes in-house as possible (see "The Customer Component" by Jim Hommer, MoldMaking Technology magazine, March 1999). The few processes that were sent out included heat treating, plating, engraving and welding. Apprentices were taught to run a wide variety of machine tools as well as secondary operations. They held onto their knowledge closely, since it represented their worth at time of review. A toolmaker's greatest strength lay in his ability to correct his mistakes and perform unique machining operations. Machine tools, hand tools and experience were all that separated the good from the best. Outsourcing represented an inconvenience to the company and its employees. Those were the "good old days."

With the current climate of faster deliveries, high-cost machine tools and shortages of skilled labor, outsourcing has grown to become a new science. As one gentleman put it, what was just-in-time is now rush, and rush orders are now the impossible jobs.

Companies look for ways to establish relationships with specialty shops in order to get faster turnaround on their orders. We've seen more and more machinists become specialists at the controls of the ever more sophisticated and productive machine tools available today.

Today's challenges have created new jobs. Besides purchasing agents, companies have outsourced managers, procurement engineers and supplier development managers. Customers have demanded the necessity to create weekly activity reports and weekly update reports, and the latest in computers in order to communicate with their suppliers quickly and effectively.

Apprenticeship programs have been broken down into many different areas—including moldmaking, tool and die making and precision machinist. These programs are struggling with low enrollment due to the lack of companies training, as well as young adults being steered away from manufacturing. As companies outsource more routine components—mold bases, for example—apprentices lose the opportunity to do the basic machining operations used to teach and gain experience. Apprentices are required to work at higher degrees of accuracy on more difficult work with less experience and knowledge. The industry has set itself up for failure. Apprentices have fewer opportunities for learning, are less in demand and are directed into one specific area in order to become productive as soon as possible. Finding bright young adults and training them has become extremely difficult.

 

The Future

But that's the past and the present. What's in store for us in the future? Will there be mold shops and moldmakers? I don't have a crystal ball, but there are some very innovative ideas surfacing.

First, let's look at Midwest Mold Builders in Stillwater, MN. In the article, "Midwest Mold Builders: Proof That There Is Strength in Numbers" (MoldMaking Technology magazine, October 2001), Sherry L. Baranek introduces us to Scott Wahl. Wahl had a vision on how to sell molds. He created his company as a brokering house, taking in multiple mold projects and outsourcing them to very specific mold builders he knew could do the best job. By doing so, he provided the resources to coordinate the designing and building of large tooling packages as if he were a single shop. With thirty-five million dollars in sales, Wahl could seek volume discounts. As his network of shops became better acquainted through monthly meetings, it was discovered that work could be outsourced dependent on backlog and machining operations. High priced equipment could be used on a greater percentage, justifying its existence and possibly lowering tool costs.

Are large engineering firms the future for our industry? Can mold builders continue to maintain and support their own engineering departments while keeping up with the latest technology in machine tools?

Next, let's look at United Technical Products, Inc. In an article by Sherry Baranek entitled, "Using a Network of Outsourcers Concurrently Helps Moldmakers Shorten Delivery Times" (MoldMaking Technology magazine, November 2000), we were introduced to Chuck Digney. Digney found a way to produce tools faster by breaking them down into subcomponents. Through a network of companies ranging from designers to chip makers, Chuck would distribute the work to the different vendors based on individual strengths and backlogs. What if we took this idea to a higher level?

How about mold manufacturing centers made up of specialized companies offering specific services necessary for the construction of molds? These cells would be located in industrial parks and identified by the markets the molds are going into. The areas being serviced would be broken down into the smallest common denominator. Imagine, very specialized designers designing very specialized tools to be built by very specialized machine shops in record-breaking time. Some assembly required-just add water!

In this environment, shop owners could meet monthly to discuss strategies for future projects, exchange knowledge gained from experience and review business plans that enhance the well being of the community. The owners could review performance records and find ways to correct challenges in their plants. Employees could be outsourced, as well as machining. Mold assemblers could move from plant to plant, co-coordinating the progress of the tools from designer to machinist. Linked by a common computer network, design changes would be known instantly, while programmers made the necessary program changes ready for downloading. In order to minimize travel time, the community would be sharing one or two common buildings. What would appear as one very large and well-equipped company would be separate and individual ones. Does this seem too futuristic, too idealistic and too impossible to imagine? Well, maybe not. Ford Motor Company has put nine companies together to create the first U.S. supplier manufacturing campus located near its Chicago assembly plant. Ford Motors changed just-in-time to just next door.

Apprentice training could be restructured as well. Rather than having one company taking on the burden of cost and responsibility for training, outsourcing could be used. Within the community, an apprentice would pay for an education that would include schooling and hands-on experience. The program leading to an associate's degree and bachelor's degree in manufacturing, would include technical training in all aspects of the industry. The company would teach each process. The apprentice would become exposed to all aspects of mold building, in short increments, taught by the specialist in that field. He or she could stop at any time and select one area of expertise or finish the training and work as a process design engineer.

 

Concerns for the Future

Communication is a very important concern. Many people still prefer to communicate face-to-face, but when dealing with accounts across the country, it's impossible. Wouldn't worldwide video conferencing be great? To have the ability to discuss orders face-to-face while holding the parts or samples in our hands would make manufacturing so much more efficient.

Another concept to consider would be to require the designer to review tool drawings with vendors in order to eliminate confusion over dimensions and tolerances. After final approval of the design and price, the vendor and customer would coordinate schedules and search for ideas on how to streamline the manufacturing process. One must eliminate unnecessary delays and establish a clear understanding of what is expected at the beginning of the manufacturing process.

One final idea is vendors becoming part of the bidding process. The mold builder would assume a percentage of the tool at his estimated cost. The vendors being outsourced to would do the same. At the end of the project, the major players involved would share their results and redistribute the profits in order to maintain a balance rather than a win/lose scenario. Too often, after losing money on a job, vendors are told, "We'll make it up to you on the next job." When it doesn't come to pass, those vendors then consider looking for ways to make up losses on other jobs.

Fortunately, vendors are aware that this approach will only end up alienating their faithful customers. The emphasis is to find ways to work together, planning and sharing the responsibility of delivering very complex tools in a very short time.

What does the future have in store? With such previously unimaginable developments as hard turning and hard milling inserts to size, and grinding non-round shapes in CNC OD grinding machines, it is clear that today's technology makes anything possible.