For equipment designers in processing industries, there are aspects of a system that are more functional in nature and yet still critical. This includes gas, fluid and chemical handling systems that play an integral role in equipment that extracts, dispenses, blends or controls temperature, among others.
For these aspects of the system, original equipment manufacturers (OEMs) face a critical business decision: whether to fully engage as a manufacturer or to outsource certain or all aspects to trusted, qualified contract manufacturers. By doing so, they expect to control and even lower production costs.
However, within the category of contract manufacturing, there can be a broad range of capabilities. Some shops focus solely on build-to-print projects, often in niche categories such as piping or sheet-metal work. On the other end of the spectrum are companies that offer a more diverse range of capabilities, complete supply chain management and engineering services.
According to Jason Medhurst of Aztech Controls, even companies that decide to outsource may not have the in-house expertise to assemble and, in some cases, complete the drawings for a system or execute the required change control. For this reason, there are benefits to a more full-service approach that includes engineering.
"The truth is, OEMs don’t always know how much engineering and design support they actually need," said Medhurst. "They’ll ask us to build a system and say, ‘we’ve engineered it for you,’ and when we get in there, we discover the design is in its infancy.
"In other cases, we receive well-developed drawings and the engineering requirements are minor. Then, we might help them with supply chain management," Medhurst said, explaining that this can include sourcing, purchasing and holding in inventory all the individual component parts of the system.
With this type of support, OEMs are free to focus on higher revenue and proprietary aspects of their system.
"The moment the OEM starts retaining pieces of the project, they are not fully utilizing everything a contract manufacturer can do for them," said Medhurst. "Then they end up still being part of the project they are trying to offload."
Supply chain management at Kurita America
For large OEMs, outsourcing frees up valuable resources: time and attention. The ability to offload some of the "detail work" allows key personnel to concentrate on more important functions such as client relations, scheduling and managing the budget.
"Outsourcing opens up a lot more time for me to focus on other areas of the project instead of having to worry about some of the minor details that eat up valuable time," said Tony Harlan of Kurita America, a large supplier of industrial water treatment systems.
Kurita America’s industrial water treatment solutions range from chemicals to custom-designed and constructed water treatment, reuse and reclamation systems, as well as operation and maintenance services. Given the nature of water treatment systems, no two completed systems are exactly alike. As a result, every system must be engineered to meet the requirements of the individual customer.
However, to create these systems, it is standard practice for companies like Kurita America to outsource aspects of the mechanical, electrical and control system to subcontractors.
"Typically, we would purchase all the valves, pumps — whatever was going on that skid — and only ask the fabrication shop to do the assembly," said Harlan.
There were several motivations for this approach, including the belief that purchasing the parts would ensure the best price without markups. However, this logistical work came with additional costs that were not considered, including the time and effort to create each purchase order, deal with invoices, manage and store parts inventory, ensure it was shipped properly and arrived as scheduled at the fabrication shop, and deal with any necessary returns.
Aztech Controls pitched Kurita on the concept of building the entire system for them, including sourcing all the components. Aztech Controls, founded in 1986 as a distribution and representative company for products used for wastewater and other processing industries, offers full engineering and manufacturing capabilities to build-to-print or design-and-build complete systems from scratch. Kurita felt that the company’s long history as a distributor in the industry gave them confidence that Aztech Controls could source the parts at a reasonable cost.
The project was a success, and Harlan said that in the past year, Kurita America has worked with Aztech Controls to produce six or seven additional skid-mounted subsystems.
Advanced chemical blending
David Radnich, a retired engineer, recounts a project for something that he said is a bit of a rarity in the industry — a just-in-time chemical blending and delivery system.
The project was part of a cost-cutting initiative to eliminate the need to purchase an expensive chemical blend for a large semiconductor chip manufacturer. The company had determined it could save money by blending the chemicals on-site, since the three constituent chemicals were inexpensive. Radnich was asked to participate on the team that would design and build a prototype system from scratch.
"They didn’t have the bandwidth to build advanced systems like that completely in-house," said Radnich. "They certainly could do it, but they want to run more of a streamlined operation, so for a one-off like that, better to go to a trusted source."
After working up an initial design concept, he contacted Aztech Controls. Together, the two groups quickly completed the design, and then the contract manufacturer proceeded to build the entire system at its facility in Arizona. The cost-effective prototype was completed in only a few weeks and was integrated easily into the system. Radnich said the prototype was tested over six months and worked flawlessly.
The next step was a full-scale version of the system. Aztech Controls delivered it in six weeks, as opposed to the typical lead time of six months to a year from other vendors.
"The system from Aztech Controls literally had no capacity constraints, no scheduled invasive PMs [preventive maintenance] and the cost of ownership once it was running was almost nothing," said Radnich.
Radnich said his team couldn’t have designed and built the system without the help of Aztech Controls. To date, the system has been working for almost seven years without issues. The project was also a success in terms of the cost savings the company was hoping to achieve.
"It was a cost savings from an equipment standpoint, installation standpoint and operational standpoint," said Radnich.
Jeff Elliott is a Torrance, California-based technical writer. He has researched and written about industrial technologies and issues for the past 20 years.