Machine Shops

Six things that keep shop owners up at night

William Krueger / April 8, 2016

We recently surveyed machine shop owners to better understand how they think about opportunities and threats to their business, as well as how we’ve helped them tackle challenges. Here are the six most common pain points that our shop owners face today:

1. Existing Customers Push for Lower Prices

It is no surprise that purchasers always push their suppliers for a lower cost per part (CPP). In the days of high volume production with little variation, chasing the lower CPP made sense. But in today’s world of rapidly shifting market demand, the best shops are those that can iterate on product lines quickly. Time is their most important asset and total cost of ownership (TCO) is their most important metric. However, there is a disconnect between recognizing time over cost as the real value in 21st century manufacturing, and suppliers continue to feel the squeeze of customers focused on CPP instead of TCO. At MakeTime, we cut production time by 75%, directly lowering your TCO.

2. Competition

Manufacturing is a crowded space. OEMs have been in bed with the same suppliers for decades. International suppliers with below market pricing have forced U.S. shops to operate on razor thin margins. This is why shops are turning to MakeTime for an additional revenue stream. Suppliers can join MakeTime for free, and purchasers now have an easy option for reshoring their production.

3. The Cost of Quoting RFQ's

Working through RFQs only to face rejection is not just a costly scenario, it’s a frequent one. A survey by Modern Machine Shop revealed that the average shop has a quote to book ratio of only 60%. This means that shops lose nearly half of the RFQs they bid on. That’s not just a waste of time for them, but also a waste of time for customers comparing bids. MakeTime tackles this by completely eliminating RFQs with data-driven pricing and real-time visibility into machining capacity nationwide.

6 things that keep shop owners up at night

4. Time lost waiting on Materials and Secondary Processes

Shops can be fined up to $10,000 for each minute that their shipments are delayed (Business Forward Foundation, 2014). Relying on external vendors to supply materials and deliver on time adds to the risk of potential fines. MakeTime minimizes this risk by sourcing materials, secondary processes, and scheduling logistics through partnerships with industry leading vendors. Our distributed model allows for the flexibility to quickly correct mistakes and adjust purchaser expectations.

5. Lack of skilled labor

As stated in IDC Manufacturing Insights, the skills gap is something manufacturers must address. The silver tsunami of aging workers retiring from positions or leaving jobs earlier than expected is real, and there is not enough skilled talent available to fill the gaps. Suppliers use MakeTime as an extension of their team. We take on all the soft aspects of production, shops can focus on their core competency- the actual machining itself.

6. Overbidding on RFQ's

RFQs are such a headache that it comes up twice in the list of things that keep shop owners up at night. There is a large discrepancy between pricing and cost that is negatively impacting suppliers, as well as their customers. Read this recent post on the topic by Drura Parrish, founder and CEO of MakeTime. He attributes this discrepancy to customers not understanding the true cost of manufacturing.

What are some of the pains you face in your shop? What have you found that works to overcome these challenges? Join us in the conversation below.