1. Production factors
The production of sealing compounds, adhesives and casting resins has become increasingly complex. More complex products demand more complex procedures. This leads automatically to more elaborate and expensive production facilities which require a utilisation of more than 70% to be economically viable.
Moreover, as products become ever-more high-performance, they require ever-more extensive quality controls. Expensive laboratories and costly test runs are essential, new testing devices may even need to be acquired just for a single product. This expansion is also true for raw materials, meaning that we produce and fill chemical formulas based on the widest range of raw materials and for the widest range of applications. The result of these technical tendencies means many companies today are faced with the classic “make or buy” decision – assuming that they can find the right partner.
This is where the portfolio of a service provider like epple plays a role. We can master the complexities on behalf of our customers. Today we are able to manufacture a diverse range of product groups with our production plant – from different viscosities, from fluid to paste, solvent-based or solvent-free, aqueous, reactive or physically drying. We can refrigerate our plant or warm it to 150°C. We can produce in a vacuum or with inert gas. Currently we manufacture hi-tech laminates, waxes and lipids, from peroxides to highly reactive materials, for customers in a wide range of industries, e.g. renewable energies (wind and photovoltaic), chemicals or sealing compounds for the mechanical engineering and automotive industries. The key factor is that we take care of the continuously increasing demands on behalf of our customers.
2. Capacity and cost factors
The limits of one’s own production capacity are an important aspect, not only in terms of amounts but also regulatory requirements and conditions. Working with solvents requires, for example, explosion-proof production facilities. Cost considerations are a further aspect. It may make sense to outsource production to a job order manufacturer. Here job order manufacturing can be part of a rationalisation process. For example, although a production facility is closed, the demand from an existing market can still be supplied. Sometimes the manufacture of by-products from a b- or c-article is no longer profitable, i.e. the amounts for one’s own large-scale production are too small, or production fluctuates seasonally.
Structural aspects may also be crucial. Companies from abroad sometimes need a production partner in Germany, close to the customers, in order to facilitate their orders. Short sell-by dates may prohibit long and costly transit. Or a company may have an extensive product development and the appropriate distribution network, yet not have their its own production facility or suitable plant.
In fact there are no hard-and-fast benchmarks for when in-house production is worth it. The decisive question is whether the specific creation of goods and services represents a core competence for the company, now or in the future. A related question is whether one wishes to gives one’s know-now to the wider world (admittedly an aspect which has become less relevant in recent years). Today it is rather the question of whether in-house production is possible with existing operating resources without the threat of capacity bottlenecks. And whether the external procurement price is significantly higher than the unit-cost variables of producing in-house.
If the answer to these two questions is “yes”, then in-house production is the better choice. However, the calculation should always include personnel resources and the total value-added chain, i.e. services from various company departments.
3. Management and time factors
Project management and time are both factors often underestimated. Sometimes there is no detailed and diligent project plan. Furthermore, the form and schedule of the implementation is often unclear. Often a product requires initial technical testing before it can be finally assessed. Or during product innovations, the marketing aspects may be overlooked. Moreover, it is often unclear is what volume a product can be marketed. Quantity scales are, however, a significant price aspect for job order manufacturing or filling. Product outsourcing is often begun before an analysis of the situation, before the desired improvements have been carried out and in-house resources have been sufficiently evaluated.
For new products with complex formulas, a Full Service in-house production means that all company departments must interact smoothly. Small companies with only development and distribution, but not procurement, manufacturing or filling facilities, are often unable to appreciate the associated expenditure. Many orders are received last-minute, without considering that raw materials and packaging may have long delivery dates so manufacturing schedules require appropriate lead time.
However, partnership cooperation has a solution to all these points.
We see ourselves are your trusted partner with the necessary know-how in all matters of job order manufacturing.
4. Procurement factors
What does the buyer need to consider when commissioning job order manufacturing? As well as the bottom line, qualitative questions should also determine the choice. Which job manufacturer can meet the mechanical and packaging requirements to reliably deliver the product? Has the manufacturer had experience with this type of product, or is it a new venture? Does the service supplier have sufficient capacity? Is the supplier willing to increase capacity should the volume requirements sharply expand? Is there a specific contact person to handle the needs of the product?
The answers to these questions cannot simply be expressed in figures, but are significant for the final result. A further important aspect is the detail of the initial enquiry. Without sufficient information, no query can receive a speedy and targeted reply, nor can a detailed cost estimate be made. The necessary information ranges from an exact description of the formula to be produced, to an exact bill of materials, including information on packaging, labelling, cardboard packing (with applicable specifications, etc.), to the desired service extent.
A Full Service compromises advice, management, procurement, research and development for possible raw materials substitution, preparing safety data sheets etc., production, quality control, packaging, logistics. Or if only some of these services are required, this should be clarified early on.
In practice, production with Full Service has proved its value as having fewer interfaces ensures a smoother procedure.
5. Quality factors
Quality management means that a job order manufacturing commission must consider not only the quality of the product but also the entire procurement and production procedures and overall quality. Beginning with the lead disposition and ordering, to receiving and inspecting incoming goods, to monitoring the relevant release documentation – all supported by works and acceptance test certificates.
6. Human resource factors
The human factor plays a considerable role in the question of “make or buy”. Suitable personnel are not always available to meet all requirements. For example, we are currently manufacturing for a new customer using sensitive raw materials which require operatives with a high degree of training, professional competence and reliability. A further project involves the technically accurate manufacturing and packaging of a material made very difficult by its unusual physical properties. Our years of ongoing investment in plant, packaging and storage capacity ensure continuous optimization and modification of existing processes. Recruitment of qualified personnel, as well as regular training of current staff, are an important part of this expansion. We take this particularly seriously in order to guarantee our customers the right product quality, delivered at the right time and in the right amounts