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Depending on how a company earns its revenue, it can be categorized as one of the following four types:

 

• Product-producing companies. These companies get their revenue from the sale of one or more products. 

 

• Workpiece-producing companies. These companies are also called job shops or contract shops. They get their revenue from the sale of workpieces to product-producing companies.

 

• Tooling-producing companies. They get their revenue from the sale of tooling—cutting tools, fixtures, dies, molds, gages and more—to product- and workpiece-producing companies.

 

• Prototype-producing companies. They get their revenue from the sale of prototypes to product-producing companies.

Most companies that use CNC machines fall into product- and workpiece-producing companies. In the following paragraphs, I will focus on these two categories.

 

Product-producing companies engineer all aspects of the manufacturing processes they perform, so a great deal of work must done well before a new product is produced. Every production step/operation must be well-documented so employees know what to do. Also, profitability must be determined long before the first component workpiece is machined.

 

On the other hand, workpiece-producing companies machine the same workpieces as product-producing companies, but often for an equal or lower cost. One of the most important reasons a product-producing company will farm out work is to save money. This means the workpiece-producing company must be able to produce workpieces using a fraction of the resources available to the product-producing company that has contracted it. It also must be able to produce the workpiece on a tighter schedule. With limited time to plan and engineer the jobs, ingenuity is more important to a workpiece-producing company. A unique method of production must often be found to bridge the gap.

 

Product-producing companies need their CNC machines to be in cycle at a pace that matches their production volumes. To run at capacity, the machines must always be busy. For this reason, product-producing companies emphasize machine utilization over personnel utilization.

 

By comparison, workpiece-producing companies need to use available personnel to ship jobs on a timely basis. These companies emphasize personnel utilization over machine utilization. While it is important to keep machines running for as much time as possible, workpiece-producing companies often need to compromise in this regard. It is common for one person to take responsibility for getting a job out. This person will perform all tasks needed to set up the machine, complete the production run and possibly even create the program for it. In these instances, machines often sit idle, waiting for someone to run them.

 

Unless they intend to outsource, product-producing companies need to have equipment for all manufacturing processes required for the workpieces in their product lines. It is not unusual for a new product to require additional equipment. Even simple products can require a diverse group of machine tools, including conventional and CNC machines as well as machines for processes that are not related to metal removal (such as plating, heat treating, cleaning and painting). The more CNC diversity, the more difficult it will be to make wise decisions that impact all of the machines. So, product-producing companies need to be Jacks-of-all-trades, able to deal with any process that occurs in the manufacture of their products. They may not fully master all aspects of a given process, but they should be proficient enough to produce workpieces at a rate that matches their production schedules.

 

Conversely, workpiece-producing companies tend to specialize in their machine tools.