Quality Shop Series: Buying versus Making Hooks

The “Make-Or-Buy” decision is the act of choosing between manufacturing a product in-house or purchasing it from an external supplier.  In a make-or-buy decision, the two most important factors to consider are cost and availability of production capacity.

A shop may decide to purchase the product rather than produce it, if it is cheaper to buy or if it does not have sufficient production capacity to produce it in-house. With the incredible rise in global outsourcing over the past decades, the make-or-buy decision is one that managers and shop owners must consider in order to keep operational costs as low as possible.

The following is an example of a cost analysis for the make vs. buy decision analyzing industrial hooks, assuming the shop has sufficient production capacity.  Specifically hook part number C-4076, which is a “C” style standard hook 4”long 0.076 wire. 

Assumptions

Employee pay rate (straight hourly rate):  $8.00 per hour

Cutting wire to size:  500 pieces per hour average (one wire length cut per 7 seconds from Mighty Hooks time study)

Forming hook (2 ends per hook):  250 pieces per hour average (one hook per 14 seconds from Mighty Hooks time study)

Wire cost:  0.076 diameter x 8.5” long hard drawn spring steel wire to produce 4” long standard “C” style hook = $0.011 each (base upon prevailing market pricing for wire).

Savings from buying hooks from CoaterOne vs. making them in-house:

$118.00 - $56.43 = $61.57 ( 52% savings)

The above cost analysis for buying vs, making hooks in-house (assuming the shop has sufficient production capacity) reveals it is more cost effective to purchase the C-407 “C” style standard hooks from Intech Services CoaterONE e-marketplace rather than to produce them in-house.  To purchase these hooks or view all our hooks and products please visit intechservices.com or contact Mary Hartsoe, at mary@intechservices.commary@intechservices.com or at (302) 366-8530 for more information.  

Mighty Hook

Mighty Hook manufactures the largest and most diverse line of hooks and racking systmes enableing them to meet the specific needs of each customer.  Mighty Hook provides engineered solutions to increase productivity at anaffordable cost.