We are looking at a new machine for our shop. Not cheap. Probably a $250k investment.
The machine is a waterjet. It can literally cut anything you put under it up to 6 inches thick. We plan to use it to cut the bases for our various QuadHands products. The steel parts that the arms mount to.
The reason for this equipment update is our current process (plasma cutting) leaves something called dross on the underside of the parts. We have to grind this off which takes a good chunk of time and manpower. In addition, while plasma is fast and relatively inexpensive, it doesn't do a great job of cutting precise small holes. So if we need a perfect hole, we have to drill or punch this. More time, more manpower.
I was mentioning this acquisition to a friend and he asked why we didn't just outsource all this to another company. A company that already has the asset and maybe available machine time.
Here is how I answered him -
1- Outsourcing adds a different level of complexity. Primarily logistics. You essentially trade one headache (making) for another (buying). Someone (and system) has to keep up with all that inventory.
2- Lack of Flexibility - We cut small batches of products everyday. If something goes wrong, we catch it early. We can also "throw" another product in the mix if demand changes for a particular product. That is difficult when you are working with a vendor with 2 to 4 week lead times.
3- One piece flow - We practice lean in our factory (I'll be posting more on this topic) and outsourcing our cutting to another company would make this nearly impossible. Instead of making 12 of something (a case quantity) we would have to order hundreds of each type of product. This is overproduction at its worst because then we have to pay for and manage all those parts.
4- I like making stuff - This is the emotional side of it. I like manufacturing stuff and I like having the asset (the waterjet or plasma cutter) available to me 24 hours a day. When creativity strikes, it's awesome to be able to throw piece of steel on the table and cut a part within a few minutes.
The bottom line is you lose so much when you outsource. Your design skills atrophy because it becomes more cumbersome to try an idea. When you manufacture your own stuff and you are engaged in the process, you become a better product developer.