Buy Your Own Vacuum Impregnation Equipment or Outsource?
The classic use of the Buy vs. Make analysis in the context of impregnation involves deciding whether it is better to send parts to an impregnation service center or to install impregnation equipment in your own facility. Depending on the circumstances, each approach to sealing castings has merit.
While outsource cost, freight and value held in WIP are obvious considerations for the BUY option, ensuring part quality remains the most important criteria for a program. Typically, a decision to outsource would be made when a program requires impregnation of low volume, low value parts for obvious reasons.
A capital expenditure would be difficult to support in such a case, and the nature of the part makes it an easy part to be run in service center equipment that is designed to handle a variety of materials, part sizes, etc. As volumes and part value / complexity grow, an outsource solution may still make sense if the service center has available capacity which is capable of ensuring that the parts can be processed without damage and without risk of residual sealant contamination. Qualifying the supplier in this context is very important.
The Make option is dependent on many variables but annual spend and program longevity are the main considerations. The range of the spend is not set in stone as equipment costs vary significantly between used and new, batch and continuous flow. The program longevity should be at least three years. Make costs to be assessed include:
- Equipment cost
- Floor space
- Modifications of plant infrastructure and existing layouts
- Operating costs, all of which can be, and should be, controlled by the equipment design
- Electric
- Water
- Sealant consumption
- Effluent regulations
- Availability of qualified labor and maintenance resources
- Reliability of approved sealant sources
- Internal cost of funds and payback period requirements
- Whether the process fits in the organization’s strategy and structure (i.e. is it to be regarded as a core competency)
There are certainly many examples of high volume high value programs that are handled by qualified impregnation service centers without quality issues. With that said, equipment technology has advanced to the point where it is feasible to bring impregnation in-house in an operation that requires full automation with minimal operator interface. The decision can only be made with a simultaneous assessment of both process quality and cost considerations.
If you have additional questions to help you make a decision on whether to outsource or buy equipment, please contact us.