You can’t build everything yourself. Life is too short to get all the skills, tools and judgement needed to do every part of whatever it is you’re working on. This shouldn’t be a surprise – you probably grow little of your own food, didn’t build your home, don’t educate your kids or even repair your own boots. You rely on specialists – and most of the time you hardly consider how much trust you are placing in the judgement and skill of people you don’t know. I know I don’t!
But when it comes to work – and building things you are passionate about – it gets harder to blindly rely on the judgement of others. Experts aren’t so much more expert than you – and there’s so much riding on every decision. When you hire somebody to help you build prototypes or manufacture your products, you are putting your success in their hands. You’ve got to have a good relationship – and that means thinking about the process from their perspective. You’ll need to know what you want – and what they want. The more you know, the more likely the relationship will be successful.
This article is about my opinions on how to best deal with the process of outsourcing specialized work to other companies – especially composites work. I have been on both sides of this many times and ran my own job-shop for the better part of a decade. You could summarize this whole article by saying: “Be clear about what you need, ask for advice when you don’t know, expect some complications, communicate persistently, pay when you should – and don’t be an a-hole.” This is just my opinion – I hope it helps you out.
If if feels like I am taking the “side” of the job-shop, that’s because this article is about developing a better understanding their world. Maybe I’ll write one someday on “how to run a job-shop” – but all the same advice will apply from the other side. Wait, I never really learned how to run a job shop!
What are Job Shops?
Job shops are businesses that supply small (like, one) to medium quantities of items, products or prototypes for other businesses and customers. They are typically specialists in a certain set of processes and materials and offer their expertise to a wider market on a job-by-job basis. There is a distinction between job-shops and “contract manufacturers” – the latter being focused on larger and ongoing manufacture of stuff for their customers – like “farming.” A job shop is more of a “hunter-gatherer.” When you are starting down the road with a new job or product, you may need to find somebody to help you build it (or the first few) think about the process, offer you advice, and maybe join you as a supplier as you grow your sales. Many job shops would like to become contract manufacturers too – because it offers some stability to offset the hunting and gathering. If a job-shop is lucky, they have a “portfolio” of people like you at various stages of projects and they are hoping that some will come through with longer term contracts – or next phases. They rely on repeat business and word-of-mouth to line up a continuing stream of work. Because they don’t have their own products or multi-year contracts, job shops cultivate relationships instead.
What You Want
I’m going to go out on a limb and guess what you want for your product or the project that you’re working on…
You probably have a few (maybe a lot) of other people depending on you – or at least judging you – on how things go. Some of these may be your bosses. Worse even you may have hard-earned customers of your very own ready to buy your product – the most intimidating bosses of all! This is stressful. You don’t want to mess it up. You need partners that get where you are at and help you deliver. You don’t need drama, delays, cost over-runs or excuses! You want somebody to help you win.
When it comes to the actual work you need done, you may not be so sure what you want. The design may be a work-in-progress. The specifications may change and there are probably other people with their own ideas on how your work and their work will fit together in the long run. Maybe it’s a little fluid… maybe you’re open to revising certain details. But you have a 3D model, some prints and a draft specification – maybe you’ve done prototypes in-house or in a different material (3d printed?) – there’s plenty to talk about. You need somebody to take this all in and deliver a part or small run that lets your revise further.
Or it could be that you have been working with other shops before but your old ones-and-twos supplier has been jerking you around and your boss said “See if you can find somebody else to make these.” … and here you are. You know exactly what you want but for some reason it wasn’t working at another job-shop. Did it get too expensive? Did they miss key requirements? Crazy lead times and minimum volumes? Late delivery? Try to find out what the problem is before you switch. Maybe you can fix it and not have to go through all the trouble of finding a new partner…
What a Job Shop Wants
Job shops are in a crappy situation: they have huge pressure on price from competitors who are often “perfect substitutes” and can do the same work to the same quality level. At the same time, they have high-mix work and require more highly-trained employees with flexible skills and a sense of adventure. Structurally, most job shops are getting pulled from both ends. Cash-flow management and scheduling a high-variability work-flow is no joke! A job shop lives and dies by the stream of incoming RFQ’s (“request for quotes”) and how many can be converted to PO’s (“purchase orders”) – and then negotiating payment terms that keep them solvent. They want a profitable smooth experience that lets them pay their crew, their rent and have a little left over to make it all worthwhile. They also want to perpetuate a good reputation and expand their network of clients and potential sources of referrals.
What job-shops want is a situation where there is a “win” in it for them. Don’t ask for the impossible and don’t expect to be able to tell them their business. They don’t want (can’t afford) to be jerked around and they need a clear understanding of what is expected of them and when – and how much they will be paid for their work. In return, they know they must deliver to specifications and on time or they may piss you off and you won’t come back and will talk shit about them to your friends. They know this – it has happened before. You are not their first rodeo.
Match-Making
The key is finding a win-win situation. Unfortunately the standard competitive bid process does not make each side feel like they are searching for a best fit – it’s more of a sword fight. The best way to avoid this is to get as much information out there before you even request a quote or a bid on the work. It’s more work, but if the outcome is important, it is a good investment. For anything but the simplest work, it is best to do these things:
- Make sure each of the key people in the discussion has a sense of who the others are. Ideally they have met in person – or at least on the phone. Email is a crappy way to get to know somebody. It is so much easier to agree with somebody as a person than as an anonymous commercial adversary. As always, people are what matters.
- Make sure you are worth their time. If you have one dinky part and hope to spend $100 on it, don’t bother a big machine shop. If you waste their time they will be annoyed – it’s even a little like stealing because they could use that time to actually make money. Remember – for a job-shop, time is money. Make sure there is a commercial situation that works for both you and the people you are asking something from!
- If you are doing something even remotely involved, ask for a meeting – or at least a call after emailing pictures – or a screen-share. Seeing is really important. Being there is too. This will make it easier to avoid misunderstandings. Do this before asking for a quote.
- Check your ego! You are hiring them because they do something you don’t do – this is really valuable. Its like having a free consultation with an expert. Also, if you make them feel listened-to, they will like you and want to help you.
- Ask for what you really want. If you need it to be cheap, say so. If it has to be done by next week, be up front about that too.
- Get a few different job-shops in your shopping process. If they each ask different questions you’ll learn a lot and are probably just benefiting from their diverse experiences. If they all head straight for one detail, you probably have some work to do refining things.
After even a quick meeting, you should have a decent idea which of your prospects will do a good job for you and which would actually like to do the work. It is not unreasonable to actually ask a job-shop if they are genuinely interested in the work before you ask for a quote. If not, ask them who they would go to for the job. Nobody knows an industry like the people in it!
Learning by Shopping
During the process, ask for suggestions! If you have a difficult element to the work, make this known. Explain why is is really important to have this detail. Ask about tolerances and what is realistic. Ask about materials. Can things be made easier? A fabricator gets paid for the work they do – and would almost always prefer to make a job simpler and more likely to come out right than more complicated and more expensive. They have to consider the risk of failure to meet your requirements – and you will pay dearly to mitigate this risk. So always make sure your tolerances are realistic and never over-specify just to be safe. If a fabricator says that something won’t work or is overly complicated – stop and listen – they’re giving you a chance to learn how to actually make it work and then save money having them do it the easy way!
If you require something difficult to execute that doesn’t help your product work better – you are almost guaranteed to make the work more expensive than it needs to be. This kind of thing will also make the actual people who make your stuff angry. Actual craftspeople and technicians can smell a “clueless engineer” a mile away. They will be insulted by it. This will be bad for the job-shop, bad for the project and bad for you! Instead of building a good win-win relationship through the work – even if you end up getting what you want – you’ll have lost credibility and they won’t be so happy to see you next time.
So by now you have invested significant time in the shopping process and are ready to select somebody to actually build the stuff. You are on good terms with a few solid prospects who are actually interested in the work. Maybe this took a few hours – probably it took a few days. The amount of time you invest here will pay off in a big way as you get your project built. You have to scale the amount of effort to match the scale of the job. If it’s a huge piece of tooling worth hundreds of thousands of dollars, then this step could take a few weeks – totally worth it! If it’s a hand-full of metal brackets, maybe take a few hours. The key here is that next time, you will have the relationships in place and will start to know who would be good to call – then maybe it takes half the time. It’s like compound interest – the effort up front will keep paying off over and over making things easier and smoother and more predictable.
It is totally a good idea to develop and share relationships in your company with vendors who can do job-shop work. If you hire a new engineer, share your list of “friendly job-shops” around the office. Keep a copy of the list on the wall or in a shared server folder or document. Being able to come into a discussion with a potential vendor as “Linda’s new purchasing guy” or “the engineer who took over Jim’s old job” is way better than being a random name on a RFQ.
Commercial Agreements
If you are a small business, you may be your own purchasing department and so the relationships will be yours. You’ll send out the bid package or the RFQ and drawings – or just make the phone call. These should be expected and directed (ideally) to a specific person at the job-shop who will be responsible for dealing with you. Include all the information you think they will need and be very clear if details are left unspecified or if there are areas that are open for revisions. Be clear about your schedule requirements. You would be wise to pad your timing so that even if things run a little late, you won’t be totally screwed.
Even if you discussed something verbally, you should include duplicate information in your RFQ – things get handed around and misunderstanding / miscommunication is the biggest liability at this point. Specify if you are open to quotes or proposals that offer a variety of options. Are material substitutes ok? Especially for composites-related work, there are so many variables that you may need to leave some room for specifications to evolve. Make sure your job-shop contact knows this and understands that you want to make this a win-win situation. Also let them know when you need their quote/proposal – better to say “by next Thursday” than “ASAP”. Then follow up with a quick note next Tuesday to make sure they have the info they need!
If you are part of a larger operation, you may have a system of purchasing and outsourcing to work through. These systems and the specific personnel involved can be a huge benefit or a catastrophic liability depending on how they value and maintain the relationships with suppliers. If at all possible, it is best to get ahead of things by bringing in purchasing-specific parts of your organization as early as possible. They probably have plenty of existing relationships and can keep you from running afoul of company rules as you are out shopping your project and building relationships. I’m no expert at this but my advice is to ask for advice – explain the complexity of the situation and then keep people informed of your progress. Don’t go rogue and negotiate outside the system!
The specifics of a bid or quote for a unit of work vary widely by industry and job-shop. Some contracts come with pages and pages of specifications and payment terms – other times you text “Got ur quote. Awesome – go for it!” to your contact at the job shop. Generally you should issue a real purchase order and expect to pay some up-front “deposit” and then progress payments for large jobs – or a balance at delivery or with terms. Payment terms for jobs shops are a part of the competitive process, so specifying 30 day terms (pay 30 days after receiving work) will in theory cost you more than COD (payment at the time of delivery). It’s all part of the pricing “algorithm” job-shops use – in effect they are dabbling in banking on the side – lending you money to sweeten the deal. If you can pay at delivery, say so and then do it – they will like you better for it. You may need to run this by your accounting or payables department before making promises like this – not all companies want to cut checks on the spot to pay the guy waiting by the loading dock.
Selecting a Job-Shop and Starting Work
If all has gone to plan you’ll get a few solid proposals. The prices should be similar. If the price range is more than 20% or so, you may have misunderstandings or somebody trying to sell you low just to get a foot in the door. Sometimes this is ok, but you should be able to conceptually link price with factors you know about – like a new shop trying to get work, or a sense of overhead or capacity coming into play. Depending on your purchasing policy and the feelings of your team, you can choose from a few good options. It won’t be a dice roll, but a selection among viable and well-vetted options.
If all the prices come back higher than you can afford, it is reasonable to assume that you made a mistake in your specification or in your expectations. Call up one of the shops and ask them if there is anything you can change to make the work cheaper. Don’t ask them for the same work at a lower price. Ask them to use their knowledge to propose a way for you to make it easier to deliver something that will work for you. Never blame them for being expensive – you don’t know their situation – but if you are accommodating and understand what you don’t know – they may be able to work out a win-win situation for you.
Once you’ve awarded the work, it is good to follow up – in person ideally – to discuss the details and make any final changes and revisions. You’ll want to get the changes documented in writing – good for both parties – and great for future reference. Keep this up throughout the duration of the project.
It will be your responsibility to get complete drawings to your job-shop on (or before) the agreed on dates. If you don’t get them ALL the information they need in time – it will be YOUR responsibility for a late delivery. I know, designing and engineering is hard too – it takes time and sometimes there are changes. Sure, but if you need to delay, be sure you negotiate either more money to rush or an extended delivery schedule. This is a very common problem – don’t be that customer who delivers drawings late and then expects the job-shop to make up the time on their dime!
Problems
If after the project is well along, you stop hearing back from the job-shop about status updates or your calls don’t get answered – you may have to push to reset the communication. Unfortunately most people (all people really) don’t like to give bad news. If you get the feeling that you aren’t hearing the whole story, try to communicate that you won’t be upset if things have gone wrong, you’d just like to know if you can help. Don’t be mad. Don’t make threats. If they made a mistake, they are definitely more upset about it than you are. Always keep in mind that they are just like you – trying to do a good job at a tough game – cut them slack personally but hold them to account commercially. There’s never a reason to make things personal – nothing will poison a relationship faster.
If your project gets behind – and some will – your behavior will have a huge impact on whether is stays a little behind or becomes a seriously late major disaster-level screw-up. Schedule problems are not a result of personal wickedness and desire to mess you up – in fact, I have never even seen a situation like that. Mostly they are a result of incomplete information meeting with unpredictable variability over many areas – and bad luck. It is reasonable for any of these things to happen:
- People make technical mistakes – even experts. All. the. time.
- Supply chain problems (more than ever!) – late material, ordering miscommunications, trucks delayed, etc.
- Scheduling problems – bottlenecks, delays, workforce problems compound in an unbelievable variety of ways.
- Mistakes in communication – drawings that don’t match, questions that don’t get asked early enough, communication that doesn’t happen.
- Accidents – people get sick or hurt, machines break, etc.
Thinking about this, it is hard to believe anything ever happens on time – or at all! It is important to expect that things will come up. Most will be handled by the job-shop you employ and you’ll never know – but some will reach a threshold where they slip over into your world as a customer. Your job is to find suppliers who are adept at mitigating as much of this as possible, and up-front about sharing their problems when they become your problems. Most things only get really bad when people are afraid to share small problems when they are manageable – so they grow up to be big problems.
Conclusions
The long and short of my advice on working with job-shops is this: To collaborate sucessfully with jobs shops, you have to play their game – relationships. Let them know you are looking for a partner and that you aren’t going to try to pull some crap on them that puts them at a disadvantage. Treat them with respect and ask for their opinion. If things go wrong, behave gracefully and don’t try to put blame on individuals for team mistakes. Deliver information and money on time. If you screw up, own it and focus on fixing it. You’ll get good results for a fair price and you’ll have made some friends you can trust next time!