Sometimes certain portions of a job extend beyond the capabilities of a shop and require outside help. It’s not uncommon for a shop to send such work out, particularly when the need will be short-lived or will remain outside the shop’s core competencies. But often it makes sense to bring this work in-house, even if it requires the purchase of new equipment, because it can save time and money and possibly even lead to a new revenue source. Once such an investment is made, though, keeping a steady workflow is vital.
Arsenal Products (Austin, Texas) started operations in 2012 as a medical device consulting firm. Using his mechanical engineering background, company founder Chris Swaim assisted research and development teams in early-stage device development, often taking responsibility for a specific component. He sent his designs to outside machine shops for manufacture, but soon saw this step as a business opportunity for his then one-person company.
Knowing that he could create a new revenue stream by doing the machining himself, he began leasing machine time at a local shop to manufacture the components he designed. The venture demonstrated that precision machining could be a good source of additional revenue and led Mr. Swaim to expand the precision machine shop side of his business. He continued to do a lot of work for his engineering customers (design and production of initial prototypes), but also subsidized the work by doing contract CNC machining.
First, he increased the time on the leased machines and eventually purchased a vertical CNC mill and, more recently, a CNC lathe.
Although word-of-mouth promotion was essential in building the medical device consulting side of the business for Arsenal Products, the machining side was going to require further assistance. Mr. Swaim learned about Mfg.com through the shop manager at the company from which he leased machine time. Mfg.com is a global online contract manufacturing marketplace designed to bring sourcing professionals and engineers together with suppliers of CNC machining, injection molding, metal stamping, metal fabrication and other manufacturing processes. Subscribing contract manufacturers such as Arsenal Products can quote open RFQs every day to help fill open manufacturing capacity.
Mr. Swaim says the early advantages gained from the online quoting tool were learning to effectively quote jobs. It took him some time to land work consistently, but tools in the system such as ShopIQ allow him to retrieve data that details where his quotes fall relative to those that got the jobs so that he can adjust future quotes accordingly.
A week after a job has been settled, he can use the ShopIQ function on the website to go back and see how the bidding played out. This feature compares his bid with the low, high and average bids. It shows statistics by region, how bids compared with ISO certification and other significant data points. “It gives users insight into their legacy quoting habits and actions so they can dial in and be more successful,” says A.J. Sweatt, vice president of product strategy at Mfg.com. “That goes toward selecting regions, technology and customer profiles. It gives them a greater depth of knowledge about their own behaviors they might otherwise overlook.”
Mr. Swaim found that most of his early quotes were substantially higher than his competition. As he fine-tuned his approach, he quickly saw results. “The method for quoting prototype work is different from larger production volumes, but I was able to apply what I learned for both situations and quickly begin to increase our customer base,” he says. He plans to continue going after more high-volume work to keep the machines running longer and maintain a steadier revenue stream.
Although the company had its basis in medical design work and continues with that part of the business, almost none of the machining work he does is medical. “Any medical work we do is prototype stuff that we are designing in-house—medical devices, early stage tooling, and so on,” Mr. Swaim says. Most of the work they’ve found on Mfg.com has been related to consumer products, with occasional semiconductor parts.
In a typical Mfg.com session, Mr. Swaim logs onto the system and goes straight to RFQ searches where he can view a variety of pre-defined features such as part quantities and locations. Sometimes he will view all part RFQs; other times he may limit the search to those for 100 pieces or less. He then takes a quick look to exclude parts that are not a good fit. He then pulls up the remaining drawings, gets the material take-offs, prices out materials, estimates the time required for the job, and puts together a quote to submit through the website. “It’s a simple, straightforward process,” he says. “As you pull up an RFQ, the tabs are ordered in an intuitive sequence to quickly complete the quoting process.”
Arsenal Products has averaged about a 20-percent success rate in landing jobs through the system, although Mr. Swaim points out that he is above that now, considering his slow start. To further increase the success rate (although it would not be reflected in the system), follow-up contact with potential customers is important. He says sometimes, for a variety of potential reasons, the original winner of the contract has fallen through, and he’s been in the right place at the right time to pick up the work.
“When jobs are not won on the first attempt, it’s important to stay in touch with the buyers to remind them you’re still available,” Mr. Sweatt says. Things sometimes come up that disrupt a job, whether mistakes or other unfortunate circumstances. If a buyer runs into a bind, he’s likely to contact someone who is top of mind. That’s what differentiates the successful from the very successful, not only on Mfg.com, but in any other networking opportunity; it’s marketing and staying persistent—staying in touch with the buyers. When things invariably go wrong, someone whose name is out there stands a better chance of capitalizing.
Since opening his facility in August 2016, Mr. Swaim has seen the company continue to grow. The addition of his own CNC equipment has minimized the need for leasing machine time at the other facility, but business has been strong enough to justify hiring two part-time operators and running a second shift. Jobs are currently booked five weeks out. Much of the company’s success, according to Mr. Swaim, can be attributed to Mfg.com.
Original article at ProductionMachining.com