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Supply Chain

  • Rubber Gate Seals for Water Filtration Systems

    Rubber Gate Seals from Elasto Proxy Rubber Gate Seals from Elasto Proxy

    In this case study, you’ll learn how Elasto Proxy provides complete sealing solutions to manufacturers of water filtration systems. Rubber gate seals start with seal design and compound selection, are crafted with water jet cutting and infrared splicing, and add value with inventory management and shipping.

    In wastewater treatment plants, metal gates are bolted to concrete frames to control flow and channel the effluent for disinfection. To prevent leakage, a rubber seal is fitted to the bottom of the frame. This seal attaches to the gate with bolts, and must withstand prolonged exposure to water and contact with a concrete base. In water filtration systems that use ultraviolet (UV) light, UV resistance is essential.

    When a manufacturer of water filtration systems wanted a custom gate seal, Elasto Proxy provided more than just a replacement part. First, our solutions providers listened to the manufacturer’s requirements and analyzed all of their needs. Our technical team then applied its expertise in compound selection, and identified a seal design that could solve the manufacturer’s specific sealing challenge.

    Next, our skilled production personnel in Boisbriand, Quebec used water jet cutting and infrared (IR) splicing to craft a custom sealing solution. Yet that’s not where this case study ends. Today, Elasto Proxy stocks rubber gate seals for water filtration systems at our warehouse in Newmarket, Ontario. To meet our partner’s business requirements, we ship quantities according to their annual sales forecasts. Continue reading

  • Why Robots Need Rubber and Plastic Parts

    Robots Video | Rubber and Plastic Parts Watch the YouTube Video

    Rubber and plastic parts for robots are strong, lightweight, durable, and cost-effective. That’s not all.

    When you were a kid, did you play with Rock ‘Em Sock ‘Em Robots? Part toy and part game, this childhood classic features two boxers – both robots – that are mechanically manipulated by the players. The Red Rocker and the Blue Bomber have been hitting each other since the 1960s, but today’s version of this simulated boxing match features less metal and more plastic. Plastics are generally lighter and cheaper than metals, but is plastic really tough enough for robots – even toy ones? Is rubber right for robots, too?

    The answers may surprise you. Continue reading

  • Rubber Auto Parts, Plastic Auto Parts, and Automotive Suppliers

    Strengthen Your Automotive Supply Chain Strengthen Your Automotive Supply Chain

    Learn why Tier 1 and Tier 2 automotive suppliers source rubber auto parts and plastic auto parts from Elasto Proxy, a custom fabrication specialist with facilities in Canda, the United States, and China.

    By John Rye Branch Manager for Elasto Proxy

    In the automotive industry, original equipment manufacturers (OEM) supply finished products such as cars, trucks, buses, and vans to the consumer marketplace. These OEMs don’t manufacture everything themselves, however. Instead, they rely upon a network of suppliers who add value through technical design, system integration, and custom fabrication.

    The automotive supply chain is complex, so it helps to have a model to describe it. Instead of a metal chain with links, imagine a pyramid with different tiers. At the top of the pyramid are the OEMs. Right below the automakers are the Tier 1 suppliers of modules or systems. The pyramid doesn’t end there, however, and other tiers play supporting roles.

    As the diagram that accompanies this article shows, there are Tier 2 component suppliers, Tier 3 parts suppliers, and an extensive automotive aftermarket. Companies in the “lower” supply chain tiers don’t directly interact with automakers, but Tier 1 and Tier 2 suppliers depend on them. For reliable rubber auto parts and plastic auto parts, automotive suppliers call upon Elasto Proxy for its design and fabrication expertise.

    The Heart of the Auto Industry

    For over 25 years, Elasto Proxy has helped supply chain partners meet their application requirements for quality, performance, and cost.  Founded in 1989, Elasto Proxy flourished in Quebec and then expanded to Ontario, the heart of Canada’s auto industry. With our sales office and warehouse in Newmarket, we’re close not just to Toronto, but to Oshawa, Windsor, and even Detroit itself.

    Tier 1 and Tier 2 suppliers to the Big Three automakers like that we stock materials in Ontario and can respond quickly to demand. Parts don’t have to be imported from overseas and then shipped across the continent to Canada’s automotive plants. Port slowdowns and dockworker strikers on the coasts won’t constrain these shipments either. Air freight is expensive, and shorter supply chains enhance logistics.

    From our sales office in China, Elasto Proxy can also help international automakers with local sourcing initiatives. By leveraging our strong business relationships, we can help Tier 1 and Tier 2 suppliers to control costs without sacrificing quality. Elasto Proxy also maintains a sales office and warehouse in Simpsonsville, South Carolina, not far from automotive assembly plants in the southern United States.

    Adding Value to Automotive Supply Chains

    Elasto Proxy understands that automotive suppliers need more than just a parts provider, however. As your supply chain partner, we have the application knowledge and technical expertise to offer advice about material selection, additional data on force and deflection, and proof about the life cycle of parts. By listening to all of your application requirements, we add value to your supply chain.

    For example, if you specify that a brake release must cycle a certain number of times before showing a specific percentage of wear, Elasto Proxy can help prove that the part is right for the application. If a custom molded part is in high-demand, we can safeguard your safety factors by releasing parts from our warehouses in response to your sales forecasts.

    Elasto Proxy’s automotive industry experience includes custom-molded stoppers and bumpers for seat tracks, molded plastic parts with the words “press here”, and molded rubber pads and end-pieces for emergency brake pedals. These pedal pads combined a rubber part with a plastic insert for the lettering, and were more challenging to produce than a standard pedal pad. We’ve also supplied lengths of rubber and plastic tubing for automotive wiring, parts for car door assemblies, and U-shaped rubber isolators for hood props.

    Vendor Selection Starts Here

    Are you a Tier 1 or Tier 2 automotive supplier? Are you reviewing your vendor list, or searching for a custom fabrication specialist who can produce rubber or plastic parts for a particularly demanding project? Elasto Proxy has worked with suppliers to some of the world’s biggest automakers, and helps keep assembly lines humming in an industry where stock-outs are not an option.

    How can we help you? Do you need molded parts, tubing, bumpers, edge trim, or window channels? Elasto Proxy keeps over 700 standard rubber profiles in stock, and supplements its extensive product catalog by working with a trusted network of material suppliers. Our production team is highly-skilled, and combines traditional craftsmanship with state-of-the-art technology like waterjet cutting.

    Watch this short video to learn more about us.

    Then, when you’re ready to strengthen your automotive supply chain for rubber and plastic parts, contact us. We’re ready to help.

  • Rubber Prices, Custom Fabrication, and Supply Chains

    How Strong Is Your Supply Chain? How Strong Is Your Supply Chain?

    Paulo Arruda Purchasing and Logistics at Elasto Proxy

    Thailand, Malaysia, and Indonesia supply enough natural rubber to meet over two-thirds of the world’s demand for this plant-based elastomer. When rubber exports to China slowed, industry analysts worried that rubber plantations might put away their tapping knives and stop extracting latex from unprofitable trees. More recently, heavy rains in Southeast Asia caused a contraction in the supply of natural rubber, prompting fresh concerns about price increases.

    Supply and Demand are Elastic

    As with any global commodity, the price of natural rubber fluctuates. That’s also true of man-made or synthetic rubber, which is made by the polymerization of a variety of petroleum-based precursors called monomers. When crude oil prices topped $100 (USD) per barrel and analysts worried about “peak oil,” elastomers such as styrene-butadiene rubbers (SBR) were more expensive to produce. More recently, oil prices have plummeted, a trend with implications for the world marketplace for petroleum products.

    Meanwhile, global demand for rubber continues to grow. China’s current rate of economic growth isn’t as strong as it was in 2011, but that doesn’t mean the country’s gross domestic product (GDP) is falling. In fact, global demand for industrial rubber products is expected to rise by 6.6% per year through 2018, with more than half this demand coming from China. Tire manufacturing consumes much of the world’s rubber supply, but demand for rubber seals and insulation is also strong and growing.

    Macroeconomics and Microeconomics

    What do these global trends mean for your company? What will your business do to minimize risks such as material shortages and significant price increases? By choosing a custom fabrication specialist with a strong supplier network, you can strengthen your supply chain and reliably source high-quality, cost-effective industrial rubber parts. That’s why manufacturers in many different market segments choose Elasto Proxy for specialty seals and custom insulation.

    As a global supplier of low-to-medium volume quantities of industrial rubber products, Elasto Proxy works with suppliers from around the world. The semi-finished products that we buy come from compounders who share our commitment to meeting your application requirements and business needs. So whether you need extruded rubber profiles or molded rubber parts, our solutions providers can source the right rubber and custom-fabricate solutions that meet all of your specifications.

    Leveraging Logistics

    Choosing the right supply chain partner is important, but it’s only the first step. Once you’ve selected a custom fabrication specialist, how will you the make the most of the relationship? If the price of rubber is getting ready to rise, should you buy more materials now and have the custom fabricator store them? Not necessarily. Logistics isn’t that simple. There’s a lot to consider, but a trusted partner can help. Let’s consider a few general guidelines.

    Consider all of your costs, including storage. Share projected usage with the vendor, and create a blanket order that lets your partner make the most of the best price. Some customers prefer to issue monthly releases, but this isn’t the most cost-effective approach if you know your projected monthly usage for the year. Blanket orders may represent a greater commitment, but these agreements enable the custom fabricator to order more material than just a minimum quantity when the price is right.

    How Can We Help You?

    Do you have questions about rubber prices, supply chains, custom fabrication, or logistics? For 25 years, Elasto Proxy has been working with companies in industries such as automotive, construction, defense, electronics, food equipment, green power, mass transit, medical equipment, and mobile specialty vehicles. How can we help you? Contact Elasto Proxy today.

  • Is Outsourcing In Your Plans for 2015?

    Outsourcing in 2015 Is Outsourcing in Your Plans for 2015?

    Doug Sharpe President of Elasto Proxy

    Are you thinking about outsourcing some of your fabrication in 2015? Chris Coghlin, the CEO of Cogmedix has some good advice – and it’s not just for medical device manufacturers. “Often,” he explains in an article for Medical Device Technology (MDT) magazine, “the temptation is to choose a contract manufacturing partner based solely on the price per unit cost. Don’t be too short sighted.”

    Outsourcing Costs and Challenges

    Whether you make medical equipment or agricultural machinery, it’s important to consider all of your costs – and all of your potential challenges. Otherwise, your company could face problems ranging from “poor product quality” to “high field service costs”, Coghlin explains.

    For example, if you’re a medical equipment manufacturer, poor-quality EMI shielding could fail to protect sensitive electronics from electromagnetic interference (EMI). If you’re a maker of tractors, the cost of replacing defective door seals could involve both labor and materials.

    Before outsourcing a project, however, it’s important to determine whether a potential partner has the custom fabrication capabilities and supply chain strength to deliver. In short, you’ll need to decide whether their internal operations are strong enough to meet all of your requirements.

    Offshoring and Outsouring

    Chris Coglin examines this idea in a white paper called Solving the Outsourcing Equation. As the CEO explains, an electronics OEM that brought outsourced operations back home realized a significant cost savings. Offshoring was cost-effective when production volumes were high, but not when demand fell.

    Cost containment is critical, of course, but it’s not the only factor to consider. Technologies and regulations evolve, and your company’s products need remain competitive – and compliant with standards and regulations. Your business is ready for the New Year, but what about beyond 2015?

    Today, a potential outsourcing partner’s per-unit cost may seem paramount. But does the contract manufacturer have the technical expertise to help you address tomorrow’s challenges, too? For that matter, how well do they understand factors such as FDA regulations and vehicle safety requirements?

    How Can We Help You?

    For over 25 years, Elasto Proxy has custom-fabricated specialty seals and custom insulation for a wide range of industries, including makers of mobile specialty vehicles and manufacturers of medical devices and equipment.

    How can we help you make 2015 your greatest year yet? Deciding whether to make it or buy it is an important business decision, and Elasto Proxy has the technical knowledge and application expertise to help you evaluate the outsourcing of high-quality rubber parts such as custom gaskets.

    Are you ready to talk about outsourcing? Look for us on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. There, you’ll find our Capabilities video, as well as other informative content. Finally, please subscribe to our free e-newsletters.

  • How to Source Custom-Fabricated Rubber Parts

    Hand Crafted

    Doug Sharpe President of Elasto Proxy

    Did you know that there’s a difference between manufacturing and fabrication? Although these two terms are sometimes used interchangeably, they’re not exactly the same. Manufacturing is a process that creates something new from raw materials, or that produces a high-volume of parts. In the rubber industry, for example, manufacturers make sheets and profiles – as well as tires for trucks, buses, and cars. Fabricators customize manufactured stock to meet a buyer’s precise specifications.

    For over 25 years, Elasto Proxy has specialized in the custom fabrication of small-to-medium quantities of high-quality parts made of rubber, plastic, and composite materials. Our slogan, “The Art of Sealing”, illustrates how we create components through a unique combination of time-honored craftsmanship and modern production technologies. Today, Elasto Proxy stocks over 700 molded and extruded rubber profiles, and can source many different materials in a variety of form factors.

    From Catalog Pages to Custom Fabricated Rubber Parts

    Elasto Proxy’s catalog of standard products is extensive, but we understand that engineers and product designers want to see more than just a catalog page when making procurement decisions. That’s why we don’t just sell products. Instead, we offer custom-fabricated solutions. As your partner and problem solver, Elasto Proxy applies its technical knowledge and application experience on your behalf. In short, we find innovative ways to solve your sealing and insulation challenges.

    For example, by partnering with trusted suppliers and sourcing high-quality materials, Elasto Proxy can create custom components such as bulb trim seals, edge trim, floor mats, weather stripping, window channels, and tubing. We can also produce custom-molded parts, thermal and acoustic insulation, and EMI/RFI shielding. Rubber bumpers, inflatable seals, and rubber sheeting are also part of our extensive catalog, and parts that we can custom-fabricate to meet your specific requirements.

    Cutting, Splicing, and Taping

    Material selection is important, but custom fabrication isn’t just about choosing the right compound for rubber parts. At Elasto Proxy, skilled production personnel apply their expertise with state-of-the-art cutting, splicing, and taping technologies. For example, our water jet cutting machine can make fine, fast cuts as small as 1/2” x 1/2”. With gaskets, we can create holes with diameters as small as 0.01”. For highly precise, cost-effective cuts without tooling charges or long leads, water jet technology sets the standard.

    Elasto Proxy’s splicing solutions also promote quality and efficiency. Depending on the run quantity, performance requirements, material type, and tooling, we may recommend film splicing, cold bonding, C-press injection molding, or vulcanizing for joints, corners, and ends. Elasto Proxy also offers taping with a pressure-sensitive adhesive (PSA) or heat-activated taping system (HATS) to keep profiles in place for temporary or permanent fastening.

    How Can We Help You?

    Taped gaskets are ready-to-install right out-of-the-box and speed production operations on automotive assembly lines. Custom insulation consists of sandwich-like structures made with coated fabrics, foams, fillers, barrier materials and adhesives for applications such as thermal and acoustic insulation. EMI/RFI shielding protects sensitive medical and military electronics. For a wide range of industries, Elasto Proxy delivers. How can we help you solve your sealing and insulation challenges?

    Please contact us for more information about custom fabrication, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. There, you’ll find our Capabilities video, as well as other informative content. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

  • Custom Weatherstripping Closes the Door on Sealing Challenges

    Weatherstripping

    Doug Sharpe President of Elasto Proxy

    Here in the northern hemisphere, the nights grow longer and the temperatures colder. In Canada, where Elasto Proxy is headquartered, the snow will arrive before December 21, the first day of winter. For building managers and maintenance personnel, the time to insulate doors and seal windows is now. Weatherstripping helps to stop air leaks, increasing occupant comfort and saving heating costs. That’s not all that that rubber weather strip can do, however.

    In the southern hemisphere, maintenance crews are preparing for summer temperatures and higher cooling costs. By filling gaps and plugging leaks, sealing and insulation prevents air conditioning from escaping via drafty doors and windows. During our own summertime in the northern hemisphere, we share these same concerns. All year round and across the seasons, it’s important to protect against precipitation, too. Standard weatherstripping is available, but sometimes a custom solution is required. That's where custom weatherstripping comes in.

    How Weatherstripping Works

    Weather stripping is installed between two surfaces to prevent the flow of gases or liquids. In outdoor applications, the gas is usually air and the liquid is usually water. Static seals are used when there’s no relative motion between mating surfaces, such as the windows in a skyscraper. Dynamic seals are recommended when there’s motion or movement between two sealing surfaces, such as the front door and door frame in the entrance to an office building.

    Standard weatherstripping is suitable for static environments, and can be supplied with an adhesive backing for ease of installation. Closed cell foams made of a medium-density neoprene are a popular choice, and provide both oil and aging resistance. Rubber weather strip that’s made of other materials, such as silicone or EPDM, are also available. For dynamic sealing and environments with changing weather conditions, compound selection is critical and a custom-fabricated seal may be required.

    The Case for Custom Fabrication

    Some manufacturers use off-the-shelf weather stripping to seal gaps. Often, these materials are mainly fillers that form a static seal. Since they’re not meant for dynamic sealing, however, standard weather strip may demonstrate poor compression set recovery with repeated opening and closing. That’s true not just for commercial doors, but also for car doors and the doors to electronic enclosures. Winter will soon be upon us here in Canada, but a sealing challenge from several summers ago comes to mind.

    When a cold-weather manufacturer needed to supply electronic highway signs to a warm-weather customer, the supplier learned that the standard weather stripping on the metal enclosures couldn’t withstand the summer sun. That’s when the manufacturer asked Elasto Proxy for a custom-fabricated sealing solution, and we delivered high-quality rubber seals that were used to retrofit hundreds of cabinets. The supplier kept the highway contract, and the electronics inside the enclosures stayed dry.

    How Can We Help You?

    Do you have questions about rubber weatherstripping for doors, windows, or HVAC hatches? For 25 years, Elasto Proxy has been solving sealing and insulation challenges in a variety of industries, including construction, automotive, and electronics. By listening to all of your application requirements and analyzing all of your needs, our solutions providers can help.

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

  • FDA Approved Silicone Sponge for Custom-Fabricated Rubber Products

    Silicone-3D-vdW

    John Rye Branch Manager at Elasto Proxy

    Food grade silicones are used in food processing facilities and industrial kitchens to help keep food items from coming into contact with equipment surfaces. Products include non-stick baking molds, pads, and trays; sanitary door seals for refrigerators, freezers, mixers, and ovens; and protective rubber profiles for the sharp edges on stainless steel surfaces such as food prep tables.

    A type of synthetic rubber, silicone is an inert compound that will not react with food products or food ingredients. This flexible, durable synthetic material doesn’t off-gas fumes either. Suitable for high and low service temperatures, silicone seals can be used with both ovens and freezers. Applications for silicone extend beyond the food equipment industry, so suppliers use the term food grade silicones.

    Not all food grade silicones contain the same ingredients, however, and silicone sponge and solid silicone have different material properties. There’s also the matter of meeting standards such as those from the National Sanitary Foundation (NSF) and the Food and Drug Administration (FDA). Although the FDA’s regulatory jurisdiction is limited to the United States, FDA standards are used worldwide.

    Food Grade, FDA Compliant, or FDA Approved?

    Many suppliers offer food grade silicones, but some describe their materials as “FDA compliant” or “FDA approved”. Typically, these compounds comply with only the FDA’s extraction requirement, or contain only a subset of ingredients that are FDA approved. In other words, these silicones are food grade, but they’re not fully FDA compliant – and they’re not fully FDA approved.

    What does this matter? In an article entitled Is It Really FDA Approved?, the agency explains how and what it approves. Materials such as silicone, which were once known as indirect food additives, are now called food contact substances (FCS) instead. If an FCS contains multiple additives (as compounds do), then all of the additives must be approved in order for the FCS to be fully-approved.

    Technical buyers also need to understand the FDA’s extraction limit. CFR 21.177.2600 specifies multiple extraction test limits for rubber that comes into contact with food. Using distilled water and n-hexane, suppliers must prove that their rubber does not exceed allowable extractive amounts. Yet meeting this standard alone doesn’t make a food grade silicone fully FDA approved.

    A Silicone Sponge That Fills the Gap

    As an experienced custom fabricator with expertise in compound selection, Elasto Proxy offers sealing solutions that are made from fully FDA approved silicone sponge.  The sheets, rolls, and extrusions that we convert are made from a special silicone compound that meets the FDA’s extraction test, and also contains only FDA-approved additives.

    Food and beverage equipment manufacturers, the pharmaceutical industry, and medical manufacturers now have a new option for meeting application requirements. Moreover, because this fully FDA approved silicone is a sponge, its features include excellent compression set and recovery. This is important not just for door seals, but also with baking mats where food products fall onto a packing line.

    How Can We Help You?

    Do you need help sourcing silicones for sanitary applications? For 25 years, Elasto Proxy has been working with partners in a variety of industries to solve sealing challenges. By listening to all of your requirements and analyzing all of your needs, our solutions providers can recommend silicone seals that are right for your application.

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

  • Custom Gaskets Speed Production and Reduce Costs

    Custom Gasket Kit

    Doug Sharpe President of Elasto Proxy

    Ready-to-install rubber gasketing speeds production, cuts labor costs, and reduces material waste. As we learned in our recent Make It or Buy It? series, it’s critical to consider custom fabrication in light of your manufacturing overhead (MOH) and opportunity costs. By choosing rubber gaskets that are ready right out-of-the-box, your installers can attach seals quickly, easily, and accurately. By partnering with a custom fabricator who delivers on your needs, you can also strengthen your industrial supply chain.

    As a global supplier of specialty sealing solutions, Elasto Proxy provides bonded gaskets, spliced gaskets, and molded gaskets to a variety of industries. Instead of tightening screws or performing time-consuming cutting operations, production personnel install custom-fabricated components that come pre-cut, labeled, and with a removable plastic liner and pressure-sensitive adhesive (PSA). From gasket design and custom fabrication to logistics and shipments, Elasto Proxy supports your company’s operations.

    Gasket Design and Custom Fabrication

    Elasto Proxy helps solve a wide range of sealing challenges. Some partners submit 3D CAD files and ask our sealing specialists to design and extrude custom gaskets. Others save time and money by choosing bonded gaskets, spliced gaskets, and molded gaskets that we keep in stock, and that require more limited custom fabrication. With our fast, efficient water jet cutting capabilities, Elasto Proxy can cut gaskets to size with speed and precision – and without the tooling costs associated with die cutting.

    By keeping hundreds of rubber profiles in stock, Elasto Proxy can also offer quick turn-around times to meet the most demanding prototyping and production schedules. In addition to water jet cutting, our custom fabrication capabilities include film splicing, cold bonding, C-press injection molding, and vulcanizing. If taping is right for your application, our solutions providers may suggest either PSA or HATS, a high-bond tape that adheres well to automotive paints and plastics.

    Logistics and On-Time Shipments

    Elasto Proxy can supply custom-fabricated gaskets in limited quantities at first, and then increase deliveries as production scales-up. With warehouses in Canada and the United States, we can also store your ready-to-ship rubber parts and then send them according to your sales forecast, or on-demand. Just-in-time (JIT) deliveries reduce the amount of goods and materials that you hold in inventory, and support your lean manufacturing efforts.

    Do you need help sourcing custom gaskets? Would you like to learn more about the value of custom fabrication, too? For 25 years, Elasto Proxy has been working with partners in a variety of industries to solve sealing challenges. By listening to all of your requirements and analyzing all of your needs, our solutions providers can recommend sealing solutions that are right for your application.

    How Can We Help You?

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

  • Make It or Buy It? Part 2: Opportunity Costs

    Can You Find Your Opportunity Costs? Can You Find Your Opportunity Costs?

    Doug Sharpe President of Elasto Proxy

    In Part 1 of this blog series, we considered manufacturing overhead (MOH) costs – and how failing to account for them can cause companies to produce parts in-house even when outsourcing is more cost-effective. By adding these indirect costs to direct labor and direct materials, however, you can capture all of your expenses and make more informed buying decisions. Yet there’s another type of “cost” that doesn’t appear on your general ledger. Ultimately, it’s related to productivity – and quality.

    What are Opportunity Costs?

    Opportunity costs are the loss of a potential gain when you choose one option instead of another. For example, let’s say that your factory has four machines. All can do the same type of work, but the fourth machine can perform some additional, higher-value operations. If you’ve allocated all of your equipment to running lower-profit jobs, you can’t use Machine #4 to complete a higher-profit job that requires its advanced machine functions. The lost profit differential is your opportunity cost.

    Did you know that opportunity costs can apply to personnel, too? For example, let’s say that a welder who normally makes $35/hour is cutting rubber profiles into gaskets, a task that could be performed by an employee who makes $20/hour. Even if the welder didn’t having any welding to do, your opportunity cost is $15/hour, the difference between the higher and lower pay rates. The more time that the welder spends cutting rubber instead of joining metal, the greater your opportunity costs.

    Productivity Meets Quality

    Some readers may argue that it’s better for a welder to cut gaskets than to remain idle. Yet that doesn’t change the fact that the welder’s higher pay rate is now part of the job’s higher overall costs. There’s also the possibility that relying on this welder for gasket cutting means that a second welder must now work overtime (at an even higher rate) because the first welder is unavailable. As skilled as both welders are at metalworking, neither specializes in gasket cutting.

    By contrast, a gasket fabricator’s equipment does all of the work for you – and to your precise specifications every time. If your workers are cutting gaskets by hand, is the quality of work on Monday morning the same as on Wednesday afternoon? Does it vary by shift? Using a template and utility knife to do the job of a water jet cutting machine is just part of the challenge. Even if splicing goes smoothly, the gasket still must be installed.

    By outsourcing gasket fabrication, you can find out-of-the-box sealing solutions that are cut-to-fit and ready-to-install every time. Just remove the gasket from the box and install it on the assembly line. There’s no cutting or splicing involved, and no special training or tooling required.  Workers can install more gaskets per hour, or complete an installation and then perform other duties that add value to your operations. Outsourced, fully-finished gaskets can perform better, too.

    Quality Meets Sales

    Would you buy a new car with a door that didn’t shut securely? If you were in the market for heavy equipment, would you invest in a half-million dollar machine where the gasketing hung off the door frame? First impressions matter – and you may not get a second chance.  If a car’s door doesn’t shut properly, a buyer may discount assertions that the automobile is well-designed. If a gasket is hanging from a door frame, a buyer may doubt claims about low maintenance costs for mobile specialty vehicles.

    Losing the sale isn’t the only way that gasket failure can hurt a company’s bottom line. Let’s say that you’re a manufacturer of food equipment, and one of your customers is a chain with hundreds of stores nationwide. What’s the cost of replacing defective oven seals at every location? If your designers correctly diagnose the problem, do your production personnel have the tools and training to fabricate the replacement seals in-house? Who will do their jobs while they’re busy with re-work?

    Skeptics may claim that buyers don’t pay much attention to door seals, or that gasket failure is unlikely. Remember, however, that opportunity costs are only one part of picture. What do the manufacturing overhead costs that we examined in Part 1 of this blog series tell you? Are you ready to reconsider whether in-house manufacturing is really more cost-effective than outsourcing?

    How Can We Help You?

    Do you need finished gaskets for applications such as automotive, construction, defense, electronics, food equipment, green power, mass transit, medical equipment, or mobile specialty vehicles? For 25 years, Elasto Proxy has been helping partners to solve sealing and insulation problems. From compound selection to seal design and custom fabrication, we’re ready to listen. How can we help you?

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

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