Elevate Your Production Capabilities with Outsourcing:

W H I T E PA P E R

www.axenics.com

Partner with a Strong Contract Manufacturer for Complex Assembly Solutions

www.axenics.com

Elevate Your Production Capabilities with Outsourcing:

www.axenics.com

It Begins with Component ManufacturingProduction challenges continue to hound Original Equipment Manufacturers (OEMs). Often, an OEM will work with a vendor on a one-time or short-run component manufacturing project. Maybe they need tubing bent, welded, or otherwise manufactured, and they don’t have the internal resources to get it done in a timely and cost efficient manner. In some cases, a vendor will prove themselves to be dependable and valuable enough to become an ongoing business partner with the OEM.

Axenics finds itself in this situation often. We start by manufacturing individual components for our customers, and, because they are happy with the work we’ve done, they will come to us on a consistent basis for component manufacturing products. We work hard to ensure that each of our customers receives exceptional customer service and the highest quality products, so that long-term partnerships can be built and maintained, promoting the success of both Axenics and our customers.

This whitepaper aims to shed some light on the benefits of outsourcing and will disassemble some of the myths out there relating to moving from component manufacturing to contract manufacturing.

Why Switch to a Contract Manufacturer Partner?Imagine taking your basement from a storage area to a fully-finished-useful space, with a media room, workout spot and a wet bar. Sounds great! Plus, you can handle some aspects of it, like the demo, painting and putting in a drop ceiling, right? Save a few bucks by not having an experienced contractor handle all aspects of the project.

What you may soon discover is that your work is not up to par with the professionals. There are costs for materials you didn’t anticipate. Plus, it’s taking you longer than you planned to complete your portions of the job, and in the meantime, the contractor had to push your project back as they needed to get to other clients who were on time.

You thought saving a few bucks handling things literally in-house made sense, but in the long run, it ended up costing you more time and money. This happens quite a bit with OEMs looking to control all aspects of production under their roof. But, by considering using a contract manufacturer for not just a component but for complex assembly services, there are several cost and timer savers involved:

Lower Operational CostsYou may not realize it, but performing the component manufacturing at your site can actually impact your OEM operations. You need dedicated technicians and workspaces,

www.axenics.com

which decreases the amount of floor space dedicated to your core production processes. A competent contract manufacturer can provide tube bending, welding, and sub-assemblies manufactured at their site. Then, you can optimize your industrial space to focus on what you do best — creating end products for your specific industry.

Start-to-Finish Turn Key SolutionsContractors can handle each aspect of the work, including initial design engineering to evaluating space requirements and project specifications, and prototyping services for plastic and metal components to verify the work before moving to manufacturing and testing services. By handling the entire project, you don’t have to worry about hidden fees, overlap with other contractors or extra overhead costs.

CostControlofMaterialsandStaffingPurchasing limited quantities of individual materials and shipping it to the contract manufacturer, only to have them ship it back to you having it shipped will always cost more than buying materials in bulk and sending them to one destination. Utilizing your contract manufacturing company to handle all the tube bending, welding, cutting, brazing and other component fabrication can keep material costs manageable because they’re ordering in bulk and fulfilling orders based on your schedule.

Utilizing a contract manufacturer allows OEMs to leverage a partner that has already made a significant investment into the research and development required to build and deliver a consistent, successful solution. Further, contracting the finished product can lower real costs if the direct and indirect expenses of outsourcing are lower than the costs of keeping the work in-house. As is the case for many businesses, expanding capacity without hiring staff or investing in capital equipment makes good business sense.

Misconceptions of Contract ManufacturingAn often-misunderstood solution, contract manufacturing is a highly cost-effective method for completing manufacturing projects that are reliable, on time and within budget, without having to invest in additional staff, increase facility space or add equipment. Some businesses don’t understand the advantages of contract manufacturing, and often underestimate the time and cost savings that can be achieved by working with an expert contract manufacturing firm.

www.axenics.com

With outsourcing, you must rely on another company to produce quality results, while also delivering the project on time, and within budget. For many manufacturers, the challenge lies in taking a project off their floor and putting it in the hands of a contract manufacturer.

Regrettably, there are many misconceptions out in the marketplace about the risks associated with contract manufacturing. While some may be valid concerns, working with the right contract manufacturing partner can help to eliminate these risks altogether. Here are a few outsourcing misconceptions that should instead be considered unlikely outcomes that can easily be avoided.

Misconception 1: Loss of ControlMany organizations cite a loss of control as one of the main reasons they are hesitant to consider outsourcing with a contract manufacturer. Despite a number of business leaders being unwilling to outsource key processes due to the fear that they will lose control, according to a 2018 study of business process outsourcing worldwide, the global outsourcing market is currently at $279 billion annually, with a 25 percent increase predicted each year.

Some business owners may feel that because they don’t have direct control over all aspects of the manufacturing process, they will lose their ability to be involved in everyday decision-making. Or, perhaps, that they won’t be nimble enough to keep up with changing consumer demands.

However, the right contract manufacturing partner will work with a business to determine a process where it can maintain ownership and a healthy level of control of the product from start to finish. By clearly communicating needs and desires regarding production procedures and specifications, a business can maintain as much or as little control over the process as you’d like.

TIP: Ask a contract manufacturer how processes have been built for previous or existing customers that keep the company agile and competitive.

Misconception 2: Low PrioritySome businesses feel that because a third-party contract manufacturer has other customers, they won’t always be a high priority, and therefore production times will suffer. However, by establishing a strong working relationship with a contract manufacturer, one where communication is valued, there will be little concern about

www.axenics.com

quality or production times. The right contract manufacturing company will want to provide top-notch service every time so that they can continue to earn business. They’re aware that there are always other partners available if they are not delivering satisfactory business, so contract manufacturers are typically motivated to keep their customers happy.

TIP: Ask a potential partner how they handle the competing priorities of their customers.

Misconception 3: Lower QualityCompanies sometimes believe that a third-party manufacturer can’t possibly meet, let alone exceed, the standards of excellence that they aim to achieve themselves. How can another company possibly produce the same or better quality of products than they could produce themselves? A good contract manufacturing company will have both the specialized skills and the proven quality assurance processes in place to ensure the delivery of top-quality results every time.

TIP: Ask potential suppliers about their quality standards and how they assess them.

Misconception 4: Loss of Intellectual PropertyMany businesses are hesitant to provide contract manufacturers with proprietary methods, processes, technologies and more, for fear that the information may make its way into the wrong hands. By having your contract manufacturer sign a NDA (Non-Disclosure Agreement), businesses can avoid the risk of having important information accessed or stolen by members of the third party.

TIP: Ask a contract manufacturer how they’ve handled proprietary information in the past.

Misconception 5: Negative Impact on EmployeesMany companies are hesitant to outsource manufacturing projects due to the risk that it may have a negative impact on their current employees. However, outsourcing specific projects can help re-focus existing employees to fulfill roles where they can be more

www.axenics.com

efficient. This can ultimately result in improved operational efficiency, increased profits and even happier employees.

TIP: Ask yourself if the cost and disruption of building the competency is worth handling the work in-house.

Advantages to Working with a Contract ManufacturerThere are many advantages to working with a contract manufacturing partner, and each advantage can be applied to specific aspects of a business’ day-to-day operations and resource management. By partnering with a contract manufacturer, businesses can effectively decrease many of the common risks associated with growth and success.

How?

Advantage 1: Leverage Existing Expertise and SystemsBusinesses of all types and sizes can benefit from working with a contract manufacturer that has an existing staff of highly skilled workers; state-of-the-art, specialized equipment; and, deep industry expertise. By partnering with a contract manufacturer that already has proven practices in place, your business can effectively leverage the industry knowledge, labor force, equipment, facility space, and more, resulting in considerable time and cost savings overall.

By working with a certified and highly experienced contract manufacturer, businesses receive the benefit of the contractor’s established expertise and staffing, without the added expenses associated with acquiring such assets.

Advantage 2: Improve Space and Resource UtilizationOutsourcing also allows businesses to free up expensive facility space for more effective utilization. Space that may otherwise be set aside for inventory supply storage can instead be used for current employees to conduct business processes that are more directly related to the core of their business. The additional warehouse space can also be used to house inventory for other projects that may otherwise have had to be put on hold due to space constraints.

By working with a manufacturer that employs inventory programs like Kanban and JIT (Just In Time), components and assemblies can be delivered when businesses need them,

www.axenics.com

rather than taking up valuable space while being stored unnecessarily for long periods of time. In some cases, an entire assembly that is ready to go into production can be delivered, avoiding the need to store components altogether. Buyers can also easily order repeat products, knowing they will arrive on time and fully assembled.

Advantage 3: Increase Product and Process InnovationThe lack of a consistent and experienced labor force, and sufficient space to store components and machinery, combined with the need to acquire state-of-the-art equipment and technology, can significantly affect an organization’s potential for growth. When the tedious manufacturing work and facility maintenance is left to the experts, businesses can focus their efforts on bettering their products and services to meet consumer demands as they change.

Advantage 4: Keep Overhead Costs DownThe overhead costs associated with running many brick-and-mortar businesses can be overwhelmingly challenging, especially for, but not limited to, companies that produce large quantities of products; require a lot of back- office paperwork; or require a large and consistent labor force. Outsourcing some, or much, of the manufacturing process, eliminates the need to purchase raw material components, invest in expensive equipment, or consistently maintain a large staff. This frees up cash that can in turn be spent on future projects or improvements, or to fall back on when business is slow.

Advantage 5: Improve Competitive AdvantageTo stay competitive in today’s markets, companies that rely on manufacturing products must achieve cost reductions wherever possible. Outsourcing manufacturing materials, facility space, staffing and other overhead items allows businesses to keep their costs down, which in turn lowers costs for the end-user as well. Time and resources saved by outsourcing processes also allows businesses to increase profitability by concentrating on customer relationships, engineering, sales, and marketing efforts to ultimately grow their business.

OutsourcingBenefitsandStatisticsOutsourcing can help manufacturers to:

Leverage Existing Expertise and Systems

Improve Space and Resource Utilization

Increase Product and Process Innovation

Maintain Consistent Cash Flow

Improve Competitive Advantage

www.axenics.com

Choosing the Right Contract Manufacturing PartnerWhether you’re considering outsourcing some or all of your manufacturing processes, choosing the contract manufacturing outsource partner that’s the best fit for your needs can be overwhelming. The most important thing to look for in an outsourcing partner is their full investment in the success of your business.

Once you’ve narrowed down a list of potential contract manufacturing companies, be sure to request a tour of their facilities before signing any contracts. By seeing how they operate first hand, you can make a more educated decision about choosing the right outsourcing partner to help you achieve your goals.

Be sure to research potential contract manufacturing partners thoroughly with regards to the following:

Ensure they have quality assurance procedures in place

Confirm the variety of contract manufacturing services offered

Confirm the variety of industries served, or identify that they serve your specific industry

Research the expertise and certifications achieved

Research company values and quality policy

Determine whether they offer customized services

Ask for testimonials or references

A great contract manufacturing company will provide all of the above without hesitation.

Making the MoveComponent manufacturing solves a variety of problems and pain points for manufacturers. However, what many purchasing managers and engineers don’t realize, is that there are added benefits that come with working with a contract manufacturer that is willing and capable of providing complex assembly services as well.

At Axenics, we have several customers for which we only do component manufacturing, because that is all they have a need for. However, we also service customers who require component manufacturing services, in addition to complex assembly services.

Whether you’re considering outsourcing some or all of your manufacturing

processes, choosing the contract manufacturing

outsource partner that’s the best fit for your needs can

be overwhelming.

www.axenics.com

In fact, much of our growth as a company is in part due to one of our first customers making a move from receiving simple component manufacturing services, to full complex assembly services. Because we needed more space to do both component manufacturing, as well as assembling components, we expanded to a larger facility, the one we occupy today. We’ve since been working with this chemical manufacturing client, providing component and assembly services for more than 30 years.

Industries and ApplicationsSimple and complex assemblies, including subassemblies, are critical to building a variety of applications, machines and systems for a wide range of industries, including the Medical Device, Semiconductor, Life Sciences, Alternative Energy, Chemical Manufacturing and Aerospace industries, to name a few. Individual components and entire assemblies can be built using a variety of manufacturing processes, and utilizing both metal and plastic tubing and components.

Manufacturing ProcessesSome of the common manufacturing processes that go into creating end-to-end solutions for building simple and complex assemblies, and sub-assemblies, may include: tube cutting, TIG welding (both automatic orbital and manual), tube bending, wiring and testing.

Testing ServicesTesting services may include: helium leak testing, pressure testing and electrical testing, depending on the type of assemblies produced.

Sometimes, however, assemblies and sub-assemblies only require labor to put together components that will make up a final assembly. It all depends on what the manufacturing company is looking for with regards to assembly services, and whether they have the necessary equipment, labor and other resources necessary to build parts of the assembly in-house.

Axenics Assembly Services Capabilities

Axenics has more than 30 years of experience building both simple and complex assemblies, using both metal and plastic materials. Our certified technicians can produce a variety of assembly services, from individual components, to simple assemblies, to sub-assemblies and even highly complex top-level assemblies.

www.axenics.com

Some specific examples of the assembly services we offer include; cleanroom assemblies, prototype assemblies, gas box assemblies and skid builds, which include wiring and electrical components. Axenics can build a wide range of sub-assemblies that are needed to make top-level assemblies. Top-level assemblies can be a simple assembly or weldment, made up of welded or fastened components, and may or may not include components such as regulators, valves, tees, elbows, and Mass Flow Controllers (MFCs). We build components and subassemblies that can be easily integrated into your existing systems.

Metal and Plastic Assembly ServicesThe majority of the plastic and metal tubing that Axenics uses contains raw tubing that has been purchased, professionally cleaned and bagged by the supplier, in order to prevent any contamination prior to the production process at our facility. Once the raw tubing arrives at our facility, it is manufactured in our Class 100 cleanroom, to ensure the integrity of the process.

Our plastic pipe welding and tube bending services work well for tubing designed for liquids, due to plastic’s high purity and transparency. When it comes to metal tubing assembly services, we excel in providing stainless steel tube assemblies for the semiconductor industry. Most of the stainless-steel tube assemblies we manufacture are commonly used for carrying high purity gasses, and therefore must be kept exceptionally clean throughout all steps of the manufacturing process. Axenics also works with copper, Inconel, aluminum, alloy and other metals.

Complex/Custom AssembliesAxenics specializes in building complex assembly projects that contain many parts, complicated processes, and/or that require testing upon completion. Complete assemblies may consist of various valves, regulators and fittings, and can be made in multiple configurations and quantities as needed.

Axenics tests all assemblies to industry standard requirements, in addition to specifications required by our customers, upon request. Axenics also offers custom fabrication, design fabrication and prototype tube assemblies such as valves, solenoids, pneumatic and flow restriction devices and additional unique types of fittings, when necessary.

www.axenics.com

Cleanroom AssembliesCleanroom assemblies are performed in cases where the introduction of small particles can adversely affect the manufacturing process. As such, they are built in a cleanroom environment to eliminate unwanted particles. These assemblies can vary in size and complexity. They are used in all industries, such as semiconductor, life sciences, bio-tech, aerospace and more.

Some types of assemblies which are typically built in a cleanroom environment include gas boxes, or panels that will have valves, regulators, MFCs transducers and fittings. Many of these components can be welded in the Axenics cleanroom facility. Additional examples of assemblies requiring cleanroom assembly include manifolds that are welded, or specific types of components that need to be built in a cleanroom environment.

Prototype AssembliesA prototype assembly can be as simple as a weldment with a couple of components welded or fastened together, or they can be complex, with many fittings and welded components. Some prototypes start out as “napkin sketches” and change before, during or after the build process. These changes are often made to help improve the build process, or to help the yield of the final product. In some cases, changes are made because of potential cost savings.

Gas Boxes, Skid Builds, and Electromechanical AssembliesGas boxes, chemical delivery systems, and skid-build assemblies are used in the Semiconductor, Life Science, Chemical and other industries. These assemblies may contain manifolds or weldments, (sub-assemblies) that will include fittings, valves, regulators, mass flow controllers, (MFCs) and/or other components. Axenics can also produce electromechanical tube assemblies, which can come in any shape or size, with wiring harnesses, ready to be installed into larger assemblies.

Quality Testing ServicesEverything we ship from Axenics is inspected and/or tested to industry standards and/or customer specification. We test all the components and assemblies we build, because we understand the importance of having quality parts within a system. We test

www.axenics.com

thoroughly to prevent parts from failing, since this could result in a company losing potential revenue due to “down time,” or worse, an entire system failing and needing to be completely rebuilt.

BenefitsofUtilizingAssemblyServices

Provides Control Over Components and Labor

Saves Time and Space

Decrease Lead Times

Improved Product Quality

Provides Control Over Costs and Delivery

Consider Growing Your Success with AxenicsAxenics understands that outsourcing is often a scary, risky or unfamiliar option for many businesses. To ease the uncertainty associated with outsourcing, Axenics is willing to visit our customers’ facilities to assist in making the transition smoother. We do this by working closely with their employees to document work procedures, discuss inventory requirements, packaging, etc.

Our Quality PolicyAxenics is in the business of meeting the needs and requirements for the manufacture and assembly of precision clean process piping and specialized assemblies for commercial and industrial customers.

We are dedicated to performing quality workmanship while striving for continuous improvements in our methods.

Our CapabilitiesAt Axenics, our technicians are certified to the tasks and processes they perform, which allows us to excel at each of the manufacturing services we provide. Axenics utilizes our combined 20,000-square-feet of manufacturing space, including our 1,000-square-foot cleanroom for all our contract manufacturing processes. Plus, our use of ultra-high purity argon allows us to maintain the cleanest welds in the industry.

We have the capability to handle contract manufacturing services of all types, and can handle projects of all sizes and specifications. Our use of Kanban allows for building ahead of schedule, while JIT helps us decrease inventory and reduce overall cost for our customers. Our contract manufacturing solutions allow companies to save costs by

Frees Up Space & Cut Down on Labor

Ability to Leverage Expertise and Purchasing Power

Ability to Leverage Facility and Labor

End-to-End Solution

www.axenics.com

providing components and assemblies at a lower rate than what it would cost for them to undertake the manufacturing process themselves.

Axenics’ expertise in specific manufacturing operations, combined with our purchasing power and ability to ship globally, makes us the perfect contract manufacturing partner. At Axenics, we are dedicated to providing contract manufacturing services you can rely on. Axenics prides itself on being one of the most reliable providers of contract manufacturing solutions in the industries we serve.

About AxenicsAxenics provides quality metal and plastics manufacturing services to a variety of industries, including the medical device, semiconductor, life sciences, alternative energy, chemical manufacturing and aerospace industries. For over 30 years, our team of certified technicians has been committed to helping customers identify and resolve manufacturing systems issues using a customized problem solving approach. Offering production facilities in New Hampshire and Massachusetts, Axenics is committed to consistent high-quality within variety of complex assembly and manufacturing services, utilizing both metal and plastic tubing and piping.

Benefit with Actual Costs TransparencyIn today’s economy, manufacturers need to reduce their unit costs to stay competitive in the world market. Axenics has become a valued partner in achieving and surpassing these goals, enabling customers to realize efficiencies and deliver products to the end users at lower costs and premium quality.

When customers come to Axenics to manufacture their component for the first time, a detailed bill of materials and construction schedule are created. When that document is compared to the customers’ in-house cost model it’s not unusual for there to be a disconnect between our bid and the internal accounting for developing that component. We find that the customer may not have accounted for all Cost of Goods Sold (CGS), nor Sales and General Administration (SGA) costs.

Generally, manufacturers have excellent financial accounting. However, overall burden numbers on a macro scale do not typically represent a true sum of the burdens from each product. We call the difference between the macro burden and the sum of the product burdens: CNIB, Cost Not included in Burden.

That is, the expenses of the operation are not fully covered by the burden allotted to each of their products. This figure often represents 10% to 15% of the total costs. Two examples of CNIB are: one, companies may not completely account for transfer costs (internal costs between divisions or subsidiaries) and, two, shipping and delivery costs are often not in the product managers’ control and thus are not included in the product burden. Customers often become aware of these cost elements only during detailed discussions of Axenics’ bid.

www.axenics.com

When Axenics and a customer have the opportunity to fully evaluate the option of outsourced manufacturing, the customer gains two benefits immediately. First, the customer has a better understanding of actual costs to produce their product in quantity; and second, the customer gains a viable option for production that is typically less expensive and of equal or better quality to their in-house manufacturing.

Contract Manufacturing Quote ConsiderationsHere are some elements to consider once you receive a quote from

your next potential contract manufacturer:

What’s Included?

When reviewing a quote from a contract manufacturer, it’s important to understand what is included in the price. Are they just quoting you for materials and labor? If so, it’s possible that there will be hidden costs that get added on later, such as overhead fees for equipment and tooling, as well as any packaging or shipping that they might provide for you as well.

Be sure to outline as specifically as possible what you want the company to do for you — beyond the manufacturing — so you can get a clear picture of the total cost. Otherwise, you may think their pricing is better than the competitor’s and yet the services aren’t comparable.

What’s Their Skill Level?

Don’t assume that all contract manufacturers provide the same level of skilled labor. It’s important to verify the expertise of the technicians that will be performing the work for you. It’s also important to verify what certifications and processes the company has in place to ensure the project is completed to specification, and on-time.

Do They Offer Quality Testing?

Some contract manufacturers may not clearly indicate whether they offer quality testing services along with — or as a part of — their fabrication services. This is a highly valuable service, because it ensures the quality of the components and/or assemblies produced matches industry standards, as well as any specific requirements your organization may have. If this service is included, it will be reflected in the price.

Is it a One-Time Project, or Ongoing?

If you have a contract manufacturer that you use for ongoing work, the price estimate you receive for additional projects may be lower than if you were to price out a new provider for a one-time project. Contract manufacturers often negotiate volume discounts from material suppliers, and will pass on some of that savings to you. If, however, they are being hired for a one-time project, or one that requires uncommon materials, the estimate may be higher. It’s important to keep this in mind when shopping for a contract manufacturer.

Contact us at 603-595-9939 or email sales@axenics.com

Find out how you can boost your quality by moving from component manufacturing to complex assembly services