Completely different kind of business but I have a friend who runs a small business doing industrial print work (stickers, metal plates with serial numbers/qr codes, etc.). Pretty niche but very interesting. He uses premium materials and machines and rapid response times to customers is one of his key selling points. Next day deliveries and those kinds of things via premium delivery services. Business is going well for him and I've talked a lot to him about how he runs things.
His machines are expensive (hundreds of thousands of euros) and his key challenge is keeping those busy and having redundant capacity when they break down or need servicing. Meaning that he has a lot of idling machines. He's mostly floorspace constrained and he just doubled his floor space so he can get more machines and improve utilization.
So, I asked him if he was going to get more people as well. And to my surprise his answer was, not really. The machines do most of the work. Setting them up is not his biggest challenge. Availability of the machines is. That's why he's doubling floor space. He was estimating that he would be able to operate the new machines with the same staff. Most of what they do is preparing print jobs, supplying materials, packaging up finished stuff, etc. Having more space simply means he can respond faster.
He also went through the process to become iso certified. Meaning he has quality control and processes. Basically any machine downtime costs him money. So, he has at least two of each. And he's good at small batch sizes. He has a lot of repeat customers that order small batches regularly. For example, cutting out metal plates means he has to put in a big metal sheet. Regardless of whether it's 3 or 300 metal plates that are being ordered. He's going to sacrifice at least one of those sheets. But he can do some clever things with combining orders from different customers in one print job (he's a software guy) which works around this. And he has supplies of pre-cut plates for his repeat customers that are ready for printing when they order 2 more plates. They pay for quality and speed. A lot of his competitors are slower.
There's a fixed overhead per job (set up time, packaging, customer support, etc.). But he's good at that stuff and gives a lot of quality support to his customers. Big batches mean he utilizes the machines for longer and that they generate more revenue. His staff can use the time to prepare the next job and take care of customers. A lot of the small stuff ends up being bundled up.
I imagine electronics manufacturing contracting is a bit similar to this.
His machines are expensive (hundreds of thousands of euros) and his key challenge is keeping those busy and having redundant capacity when they break down or need servicing. Meaning that he has a lot of idling machines. He's mostly floorspace constrained and he just doubled his floor space so he can get more machines and improve utilization.
So, I asked him if he was going to get more people as well. And to my surprise his answer was, not really. The machines do most of the work. Setting them up is not his biggest challenge. Availability of the machines is. That's why he's doubling floor space. He was estimating that he would be able to operate the new machines with the same staff. Most of what they do is preparing print jobs, supplying materials, packaging up finished stuff, etc. Having more space simply means he can respond faster.
He also went through the process to become iso certified. Meaning he has quality control and processes. Basically any machine downtime costs him money. So, he has at least two of each. And he's good at small batch sizes. He has a lot of repeat customers that order small batches regularly. For example, cutting out metal plates means he has to put in a big metal sheet. Regardless of whether it's 3 or 300 metal plates that are being ordered. He's going to sacrifice at least one of those sheets. But he can do some clever things with combining orders from different customers in one print job (he's a software guy) which works around this. And he has supplies of pre-cut plates for his repeat customers that are ready for printing when they order 2 more plates. They pay for quality and speed. A lot of his competitors are slower.
There's a fixed overhead per job (set up time, packaging, customer support, etc.). But he's good at that stuff and gives a lot of quality support to his customers. Big batches mean he utilizes the machines for longer and that they generate more revenue. His staff can use the time to prepare the next job and take care of customers. A lot of the small stuff ends up being bundled up.
I imagine electronics manufacturing contracting is a bit similar to this.