Is the cost of your machined components increasing?

If you outsource CNC machining, you are probably seeing prices rise, and for some materials and component types, you might be seeing some very significant price rises. For buyers that are focussed on getting best value for money, an environment where prices are rocketing can make your job very hard indeed. 

Query the price rise

First things first: query the price rise. There are many factors that are influencing the price of CNC machined components at the moment, and you’ll be able to guess at many. Checking in with the supplier to understand what is going on from their perspective will give you the bigger picture and make it possible to determine whether the price rise you’ve been quoted is justifiable. 

The top reasons for price rises in the industry at the moment are:

• Rising cost of raw materials, e.g. aluminium, stainless steel, brass, and engineering plastics such as acetal (Delrin). This won’t just affect the cost of the component, but your supplier’s tooling and consumables costs too. I wrote about material prices spiking back in November, and while things aren’t quite as dramatic as they were last autumn when the fluctuations were causing pricing changes every day (or even every hour), the industry is still feeling the effects of a steady rise in costs.  
• Rising cost of energy Like heating bills going up at home, the cost of energy is rising for industry too. Cutting hard metals such as stainless steel is always going to be an energy-intensive process, but even when working with billets or bar lengths of softer materials such as aluminium and plastic, a CNC machine will gobble up the kWhs.  
• Suppliers trying it on ... a​​​​​nd sometimes there is a less honest reason. When times are tough, it may be tempting for some devious (or struggling) suppliers to ‘add on a bit extra’ to your quote, just to see what they can get away with. At Penta, the integrity of our estimators is one of the reasons why customers know that they can trust us. We take care with orders placed with us, we are consistent in our pricing approach, and we communicate effectively with our customers to understand how we can help procurement teams meet targets and get best value for money. 

Manage the price rise

We’ve established why many prices are rising, and identified that it’s likely that some rises are unavoidable. With material and energy costs soaring, suppliers are being forced to pass on some of the price rises to their customers. However, this situation doesn’t necessarily leave you at the mercy of spiralling prices and missed cost reduction targets: it is possible to manage price rises proactively and effectively.

One of the simplest ways to get a cheaper unit price is to plan ahead. For example, if you can let your CNC machined components supplier know your annual requirement of a particular component, you can then arrange a schedule where you will call off a set number of components at set dates throughout the year. 

This foresight gives your supplier the opportunity to plan ahead too, and look for all cost efficiencies possible. It means that you can lock in a price for a set period, rather than seeing a gradual (or steep!) rise on each order that you place. An additional benefit is that with delivery dates scheduled in advance, you have no lead times to factor in: the components are simply delivered on the date agreed. 

Another important factor is to ensure that you keep lines of communication open with your supplier. If there is a price that you need to meet, it is always worth letting a supplier know when you request a quote. If the figure is unobtainable, they’ll certainly let you know! But if you are working with estimators who have machining design expertise, they may have ideas on how to adjust the component design to make it easier or faster to machine, and therefore, more cost effective, without compromising on the functionality. 

At Penta, all our estimators are time-served machinists. This gives you access to considerable manufacturing expertise, and a team that is dedicated to helping you to get best value for money for your CNC machined components.