As always, the push to increase profit margins is a top priority in most business models. Smart companies are always looking for ways to reduce costs in their manufacturing operations. One way companies are changing the way they do business is by actively seeking strategic suppliers. Having a strategic partner base is advantageous because a true partner will understand the goals of the customer and use their unique talents to help satisfy the goals. Here at PEKO, we've always believed that increasing the Value Add to the customer is a perfect way to help increase customer margins. By providing Turnkey Mechanical Assembly Services, the customer can realize much more value than meets the eye. Providing CNC Machining and Sheet Metal components is a value-add service unto itself, by stepping up to mechanical assemblies, the customer can realize the following advantages:
Purchasing and Supplier ConsolidationWhat customers are realizing is that Purchasing and Supply Chain specialists are getting overloaded by chasing down suppliers and parts. Time and time again we hear about these hard working folks getting bogged down with BOMs that are hundreds or thousands of items long. Combine that with cumbersome ERPs, planning and scheduling and it becomes a serious bottleneck. By creating a Supply Chain with vendors that can supply turnkey assemblies rather than simply component parts, the efficiency of the Supply Chain team will skyrocket. These teams will be placing less POs and have to manage exponentially less suppliers and components.
Real Estate Reduction and AllotmentEven in bad times, real estate is a significant expenditure. Cost of real estate, building maintenance, taxes and more force the bottom line to suffer. When OEMs build a product from scratch, or even do integration in house, this takes up precious real estate. Low value assembly that can be done by a Supplier is a waste of floor space efficiency. OEMs are now finding value add mechanical assembly suppliers to help in this area. By bringing in turnkey assemblies, the floor space can be better utilized for their core competency and to build more product in less time.
Demand Fluctuation RecoveryIdle labor is a huge factor when bottom line is a concern. Face it, no one is great at forecasting, and that puts a huge burden on the Manufacturing team. When forecasting is bad, the folks on the floor can end up with not a lot to do. That's a huge inefficiency that can certainly be avoided. By utilizing turnkey assembly suppliers, OEMs can reallocate their labor to known profit centers while only utilizing the Contract Manufacturer when demand dictates. By properly balancing internal resources with external resources, profit margins are realized and manufacturing efficiencies can increase dramatically.
Utilizing a Supply Base with suppliers who can provide Turnkey Assemblies is a smart idea for many OEMs. The ability to pull in these assemblies and get right to work by integrating them can take a huge burden off the Supply Chain specialists. Similarly, the reduction in real estate usage or reallocation of manufacturing floor space can help alleviate the same kind of bottlenecks. Using a strategic assembly partner will also help manage the peaks and valleys in manufacturing demand. For more information on how PEKO helps OEMs by giving them a strategic supplier for Turnkey Mechanical Assemblies, please click below and I will contact you.