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Converting to contract

The 'make or buy' decision is one faced by many managers. Engineered Films specialist Mark Chappell highlights current issues and the benefits of using specialist manufacturers for coating.

Many companies in the medical, electronics and graphics industries make use of external resources to meet their manufacturing needs. Even those who traditionally con-sidered manufacturing a core compet- ence are under increasing pressure to consider the risk of capital investment and react quickly to market dynamics.

In the coating, laminating and converting industries, the investment in capital and people is particularly high. Even though the initial cost of a fully equipped coating line may be reasonable, often the unidentified cost is in the training and expertise of the people who are responsible for its design, running and operations.

A specialist contract coating company can offer extremely versatile coating capability both in technology and size, from large scale operations down to small scale trial facilities. With shorter product life cycles and rapidly developing technologies, markets are demanding changes that need to be adjusted to, preferably without significant additional investment.

It is unusual for a single coating technology to be optimal for every coated product. A number may be appropriate, depending on the type of solution to be put down and the thickness required. During market and product development it can be beneficial to have a range of coating options or equipment with stations that can accommodate a variety of coating techniques, and sometimes multiple coating stations available in one pass.

Such flexibility is effective in reducing the overall production time and optimi zes the amount of time spent on expensive equipment. However, for some construct- ions, the application of one coating directly onto another during one pass may be the only suitable approach. Other desirable product characteristics can be achieved through choice of drying/curing method – the ability to dry off solvent based systems before cross-linking with UV can offer unique properties.

Product quality and consistency play an ever increasing role in determining competitive advantage and it is important that contract manufacturers acknowledge this commitment to quality through certification to the newly revised ISO 9001/ 2000 quality standard. Under its guidelines manufacturers are responsible for the design of their own processes and internal standards. This extends to planning, setting of objectives and management of all quality systems. The measurement, collection and analysis of quality data are also tightly regulated.

This process-led approach to quality management systems helps to fine tune the customer focus in all operations, by placing a greater emphasis on the monitoring of customer feedback and the measurement of customer satisfaction. Process improvement measures are also addressed through preventative action and review processes.

Receiving most emphasis in the 2000 update of the ISO guidelines is the measurement and improvement of customer satisfaction. It is not always easy to measure until business is lost. As well as keeping constant vigilance through measurement of parameters such as delivery performance and customer returns, regular formal customer surveys should also be performed.

For specialist contract manufacturers, such tight control is simply the way of doing business. Six sigma is an additional tool available to manufacturers. It can provide a valuable platform for maintaining quality and driving down cost.

With ever increasing regulatory issues concerning the safe and environmentally friendly disposal of hazardous waste, the associated cost of monitoring and updat- ing compliance with manufacturing practices can be costly. This situation can be greatly improved through the outsourc- ing of coating processes, as the ‘supplier’ is responsible for all of these issues and their implementation. Contract coaters are obliged to be expert in solvent handling.

Investment in environmental control equipment, such as incinerators or oxidizers, is likely to be significant and can often only be fully justified when the machine utilization is high. Given a downturn in the market, a change in technology, or solvent type, such equipment still needs to be maintained and kept running. A contract manufacturer who is active in a range of industries is in a better position to absorb these fluctuations in market demand.

A critical saving with outsourcing is time. As contract manufacturers have experi-ence in handling a range of coating materials, investing in external contract coating greatly reduces the time and risk taken on by OEMs to invest during the learning curve for new processes. Commissioned equipment and fully trained teams can immediately meet a range of challenging requirements.

Outsourcing eliminates the investment in time required for the building and commissioning of specialist manufactur-ing facilities, and enables companies to respond rapidly to new developments in their markets. Contract manufacturers have the flexibility and expertise to react quickly to new product manufacture on the basis of OEM customer research.

Other associated costs include develop- ment of new manufacturing infrastruct-ures, and quality production equipment and monitoring. Clean room manufact-uring is also becoming increasingly important for meeting stringent cosmetic and visual standard specifications.

Whilst manufacturing alone provides benefits to customers, their needs often fall outside that of pure manufacturing. Formulations developed in R&D laboratories may not be appropriate for the demands of large scale manufacturing, or for example, web materials may require special treatments to achieve the desired adhesion performance.

Teams of chemists, material scientists and process engineers are needed to ensure that products under development meet the performance, quality and cost targets required. These technical teams’ experience allows them to adjust and adapt formulations accordingly to match process conditions to product perform- ance. Close co-operation is essential between commercial, technical and operations teams of both parties to ensure the learning process that accompanies new product development is quick and free from risk.

It is essential that contract manu- facturers recognize the need to safeguard confidentiality at all times. There are many factors involved in the outsourcing decision, and whether or not the contract manufacturer will meet the specific needs of the company. Customer satisfaction can vary widely for reasons that go beyond technology, capacity and cost.

Customers have first to identify their strengths and weaknesses, and decide on which processes to outsource. Next step is to locate specialist contract manufacturers with the appropriate expertise and agree requirements for price, services and performances. Other considerations include the labour required to perform the task internally and the best methods of minimizing the long term financial risk.

Companies such as Engineered Films are experienced in making such decisions ‘evidence based’. They regularly perform pilot and large scale manufacturing for those deciding whether to outsource or consider in-house coating options, but who may lack sufficient scale-up capability for the European market.

Trials and cost/risk analyses reveal the potential benefits of outsourcing particular manufacturing processes. They may enable companies to meet high volume manufacturing requirements cost effect-ively at relatively short notice and provide OEMs with the flexibility to respond to the market at the rate required to maintain competitive advantage.