Contract Manufacturing's on the Rise—Prepare to Ride the Wave

Most contract manufacturers managed to rise above the economic wreckage late in 2010 and are enjoying a turnaround. And, it looks like they can expect to continue climbing through 2011, according to a survey of OEMs on their needs to outsource custom parts and services. Specifically, nearly three times as many OEMs expect an increase in outsourcing/purchasing projects (31 percent) as those that expect a decrease (11 percent).

And just in case you think this trend might not actually be very positive for North American metalformers, the survey shows that a mere 10 percent are looking overseas for suppliers. OEMs now are looking to source contract work locally (32 percent), regionally (29 percent) or nationally (29 percent). Why the trend a from offshoring? OEMs, it seems, prefer quick access to their vendors—for hands-on personal attention and the ability to make site visits.

What do contract manufacturers need to know, as OEMs begin to offload more work to close-to-home contract suppliers? For starters, according to an article in the recent issue of Target magazine (from AME—the Association of Manufacturing Excellence), OEMs are increasing their efforts to identify and track supplier-performance metrics, to better understand success factors from an ROI perspective. As these “supplier scorecards” become more accepted as standard practice, the article notes (using the Toro Co. as a case study) that suppliers should expect to be held to higher standards. Measurables include PPMs (and timeliness of corrective-action response), and deliveries (and how supply interruptions impact the manufacturing schedule).

To successfully ride the coming wave of contract-manufacturing opportunities, job-shop metalformers would be wise to fully grasp the notion of scorecards, their intent and impact. The referenced article is written by Sherry Gordon, founder and president of the consulting firm Value Chain Group. Visit her website at www.valuechaingroup.com to begin perfecting your wave-surfing skills.

On that note, on behalf of the staffs of MetalForming magazine and PMA, I’d like to wish you and yours a happy, healthy and prosperous New Year. There’s much to look forward to in 2011. For us, we’re starting the New Year with a bang—you’ll notice, for example the nice, clean, new design of our magazine, thanks to art director Donna D’Amico.

You’ll also notice one of several new features: Ask the Expert columns (pg. 28). These brief yet informative little tidbits of information are designed to enhance your knowledge of some of the key technology trends in the industry, and also to put a face and name to some of the experts working in our industry. So enjoy the Ask the Expert editorials, and look for more enhancements to MetalForming magazine in the coming months.

My sincere apologies to Link Systems, Nashville, TN, for failing to properly credit the company as the sponsor of the PMA Process Control Award. The 2010 Link Systems Process Control Award, along with a $1500 prize, was presented to Pridgeon & Clay at Fabtech last November. Link Systems produces press-automation controls, die-protection devices and other similar products for the metalforming industry; www.linkelectric.com.

Technologies: Management

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