Build vs. Buy

[Curious Crater]

Hey all,

I'm wondering if anyone can help me out... I was recently asked why we don't buy our wood crates vs. what we're doing now which is building them in house.

How would i go about determining cost savings of purchasing vs, our current method? I know how many people I have building crates all day long, what else do I need to know or think of?

Any help is appreciated... if I can save my dept. money than I'm interested!

Thanks.

Crater

[Marcel]

Hi Crater,
Yes there are many other things than just the hourly wage of your crater that you have to take into account.
1. You must carry an inventory of wood/plywood/nails to build these crates.
2. You must pay someone to control the inventory & purchase it.
3. You must take into account that the area you are building the crates in could probably be used for manufacturing or production which would increase your bottom line.
4. The electricity used for the machinery for crating, ie: Compressors, saws & equipment.
5. Maintaining the finished crate inventory as well as storing them.
6. The waste that you are likely throwing in a huge 40 yd container & paying someone to dump it.
7. The quality of the the construction of the crate & liabilty thereby decreasing the cost of returns caused by damage.

[CrateTech]

A couple other areas to think about:
ifference of material costs
:Time spent designing crates and doing cutsheets
:Time that your employees are pulled away from other tasks like producing products that your company sells
:Potential difference of labor of a crate guy versus your employees
Many companies practice lean manufacturing techniques, utilizing a reputable crating company that can accomidate different options to suit your needs, should almost be a no-brainer while asking if it is smarter to buy or build. I would contact a reputable company and sit down with them to discuss pricing and different service level options.

Dan McDonald
crating2@aol.com

[hardyfastener]

Could not agree more! We do not build crates or containers, but only supply the fastening system for one-way, returnable/reusable, partially, totally kd
crates or containers. We are in constant contact with OEM companies and
small companies to whom we preach the gospel - "do what you do best" -
and usually that does not include designing (if needed), buying material and
building a crate or a container in-house. It is too easy to lose $ control and before you are aware (even if you can pin-point the $) the economics of producing an in-house crate or container is lost.