Outsourcing Just 1 Part to a Roll Forming Company Can Boost Profits

U.S. manufacturing has had its share of bad turns over the last 50 years, with entire industries being outsourced to other parts of the world. This is not good news for roll forming companies.

Starting with products like clothing and electronics, we gradually saw large corporations move their production overseas or to South America to take advantage of cheaper labor and less regulation. In the 1970s, the trend continued with auto parts, furniture, toys, shoes and a host of other items.

Fast forward to today, and we may be seeing a more influential recognition of the value that U.S. manufacturing has to offer, such as:

• Rapid response of supply in close proximity to the largest group of consumers in the world
• The lowest energy costs in the world
• Highly advanced technology and automation
• A fairly stable political and market environment

But as a manufacturer anywhere, what if you could outsource just one component of your finished product to a local supplier and increase your shippable units by 20% to 50%? How could this possibly happen?

When to Turn to Roll Forming Companies

Almost all manufacturers have equipment and processes designed to provide customized features inherent to the uniqueness of their product. Whether these features contribute to unique functioning of the product or allow the manufacturer to offer customers options, they form the core value and differentiation that support sales. It makes sense that investment in equipment, people, processes, and allocation of factory space should favor supporting these features of the product.

Many manufacturers tend to want to use equipment not only for unique, value-driven components of the product, but also for more generic commodity components as well.

“If we can have 100% utilization of our equipment and resources, we get the maximum return on our investment.” … I can hear the plant manager saying that now!

But, what if available capacity for producing the true, value-driven components is consumed by the commodity components? What if the highly skilled labor that understands the custom processes is banging out generic widgets? Have lead times increased because we are so busy? Is the sales group screaming for more custom units with options that need to ship faster? Looks like we have a conflict.

Confront Your Constraints

The higher-volume commodity items are constraining the ability of your organization to increase shippable units. And while you may think investment in equipment to produce these parts will help the company, would you invest here or in core value-producing equipment?

Localized efficiency measures are a fallacy clouded heavily by standard cost accounting techniques. If capacity is being pillaged by even one higher-volume commodity part, outsourcing this one part can exponentially increase your profitability.

Rolling Forward

Profitability is about accelerating throughput of shippable units using the same costs and existing investments. Experienced roll forming companies can help with that.

If you would like to take a deep dive into the aspects that go into creating a great roll formed part, check out our free e-book below:

Editor's note: This article was originally published in September 2017, and has recently been updated.