How Outsourcing Your Tank Components Can Save You Money

Decreased Variable Cost Risk

There are many cost variances involved when you manufacture stainless steel tanks. Variances may occur from each of these three manufacturing costs:

• Direct materials
• Direct labor
• Manufacturing overhead

Instead of allocating the exact cost for each factor, manufacturers will determine a standard cost—the expected amount to be paid. Even so, the manufacturer still pays the exact cost, and the discrepancy between the two becomes a cost variance.

If the cost is less than estimated, there is a favorable cost variance. If the cost is higher than estimated, there is an unfavorable cost variance.

Labor can be inconsistent and hard to price because it depends on work efficiency, priorities, and scheduling. Material prices also fluctuate depending on the current market and other factors.

Trying to price these objectives may result in going over or under budget on a specific project. Your company will directly absorb all those variances by attempting to manufacture your components in-house. Choosing to outsource your component parts means no variable cost risk.

Efficient Labor Hours

In the world of manufacturing, timeliness equals profit. Creating your own tank components requires many labor hours.

By choosing to buy your component items, you can expand your company's capacity. Letting a trusted partner manufacture your tank components allows for freedom and flexibility. Plus, some tank component manufacturers can ship the pieces wherever you need them.

Your company can place workers where they can focus on vessel assembly, the heart of your business. Your company can prioritize special projects, boosting efficiency and profitability.

Increased Sales

Outsourcing tank components can expand your company's production capabilities. A missed opportunity to expand your product offerings equals lost sales, and nobody likes to lose a sale because they can't deliver the product feature a customer needs.

By partnering with a company to produce your components, you can broaden the range of products you can offer to your customers.  

Perhaps you want to build larger vessels that may be beyond the capacity of your rolls or presses. Purchasing your tank parts can help by giving you access to complex systems or processes without having to invest capital funds.

Or maybe you wish to utilize welding methods or code stamps your shop is not certified for. Purchasing tank components can provide these benefits without requiring complex certification efforts.

Becoming more versatile in your offerings will attract customers. Whatever your goals, expanding upon these capabilities can help you increase your customer base and become more profitable. Future prospects may even decide to purchase from your company for this very reason.