Build or buy?: Important factors to consider when deciding between building a linear positioner in-house or purchasing an existing technology

Typically, a manufacturer’s main goal in developing or implementing an innovative automation technology is to speed production and boost the bottom line. In this endeavour, it almost always pays to keep an eye on the basics.

For example, in applications involving high-volume, single-axis positioning systems, how does a company decide whether it makes sense to build a potentially more innovative linear actuator in-house or purchase an existing off-the-shelf technology?

Many companies assume that building a linear positioner from scratch and producing the high volumes needed for an application makes for the lowest-priced approach. That’s because at its most basic level, designing or building a positioner in-house versus buying an off-the-shelf unit seems purely a function of cost and volume. The approach seems simple and straightforward because cost and volume directly relate. The cost for building in-house will be higher initially than the cost for buying, but the cost will level over time.

Therefore, producing a positioner in-house might seem to be the best option for companies with plenty of time, resources, product demand and money. Unfortunately, engineers typically learn whether building in-house was the correct decision only after they are well into the development process and have invested heavily in time and money. Engineering decisions are rarely this easy and usually require considering many factors.

Making versus buying guidelines
Following this checklist can help ensure you make the right decision for your organization.

Materials – Make sure that the bill of materials (BOM) is complete, including hardware, bolts, fasteners, bearings, motors, drive mechanisms and other components. Account for all the materials needed to build the positioner in-house and find the suppliers that can deliver the desired quality and quantity.  

Volume – Another significant factor for cost comparison is the actual volume of positioners needed over a given period of time. At higher volumes, it might be worth the effort to build the positioner in-house to ensure integration and quality. On the other hand, spending the required time and labour may not be worthwhile when it detracts from a company’s core competency and more pressing priorities that are critical to the business. When the positioner is being used as a new product, consider market conditions and analyse projected sales. Because demand determines volume, analyse whether your facility is equipped to sustain production demands or whether outsourcing is a more efficient option.

Labour – Don’t forget to factor in time to market and lead times. Time to market includes the time it takes to design and develop prototypes. It also includes the months of work necessary to build a reliable, validated and verified positioner. Also, don’t forget to factor in machining time and labour times for assembly.

Support – Consider support costs and study them. When a unit fails, what are the implications? How long will it take to replace or repair the unit?

Application – The positioner must work well in varied applications, such as a lab instrument, small diagnostic device and semiconductor. Deciding to make or buy can depend on finding a supplier with a compatible product that is customizable to your needs.

Expertise – Is your time best spent designing positioners or focusing on your expertise? It is sometimes tempting to keep engineering in-house, but in some cases, partnering with a company that specializes in positioners reduces risk, costs and frustrations.

Risk of ownership – When building a positioner, a company assumes every risk — from concept to product launch. When buying a positioner, a company should choose a reputable supplier that has already thoroughly tested the product to help reduce risk.

Within these guidelines, be sure to consider hidden costs that are often overlooked. For example, companies usually consider design costs, but fail to note that a larger inventory and higher overhead can also keep lead times short. Labour costs should include the times an employee must touch an order to expedite, track or receive it. They should also include the time it takes for employees to inventory, pick or inspect parts. The issue might not seem significant, but for positioner assemblies that include 30 components, time can quickly become a production concern.

Likewise, companies sometimes estimate business risks too optimistically, which can be a disaster. It is necessary to spend a lot of time early in the design process using concept feasibility and performance tests to build a reliable product.

Coming to a conclusion
The decision between building and purchasing a linear positioner is easier to calculate and quantify when all the considerations have been accounted for. Tools are available and experienced suppliers can help with a discussion to reveal hidden costs. When building in-house, companies should use concept feasibility and performance testing early in the design process. When purchasing a technology, companies must ensure the vendor has application experience and can provide good customer support.

Ben Furnish is a market development manager for Parker Hannifin Corporation’s Automation Group.

This article originally appeared in the June 2014 issue of Manufacturing AUTOMATION.