We all know that bulk buying from a local wholesaler would save us money on our shopping bills; and the same can also be achieved in manufacturing. Due to the general rules of “economy of scale”; the more parts you can afford to buy, the better the piece price will become.
Not only does buying the raw material in bulk decrease the price per piece; but it may also mean that it can be manufactured on a more efficient machine; or moved to offshore manufacture; to further increase the savings.
Spreading Material Costs
Buying larger amounts of material, and spreading the costs over larges production batches, means that the price per piece naturally reduces.
For example, we have quoted a part this week in batch quantities of 1,000 pieces, 5,000 pieces, 10,000 pieces and 15,000 pieces.
Just by increasing the batch size from 1,000 to 5,000 pieces; we were able to offer a saving of 48% per piece. The difference between 1,000 pieces and 15,000 pieces was over 55%.
Often, increasing the volumes means we can open up a wider range of manufacturing options.
Something that would be made on a simple CNC lathe at low volume in the UK; could be ran on high-speed CNC lathes at our manufacturing facility in Asia; or even cast/forged to further increase the savings.
Case Study – Moving to Offshore Supply
A recent quotation we worked on was for a knurled thumb screw for a plastic injection moulding company.
The customer has had increased demand of the end product the screw goes into, so the projected annual usage has jumped up from a few thousand pieces, to 100,000 pieces per year.
Buying these in small volumes from UK manufacture would cost around £0.70 to £1.00 each but the increased volume means that offshore supply is a more suitable option.
We are able to manufacture these at our facility in Asia, in batches of 50,000 pieces at a time, for less than £0.12 each; saving over 80% for our customer.