Productivity gains drive outsourcing

The total market for production service in Sweden is SEK 17-22 billion, some 20% of which is outsourced. In Sweden the automotive industry accounts for the largest proportion of outsourced production service, with around 40% being placed with external partners. The tendency to keep production service in house or outsource it depends partly on the traditions in each industry, as well as on the complexity of production.

“The automotive industry is characterised by cost pressure and a striving to raise productivity, and outsourcing of production service is common internationally. Automotive production service partly consists of less complex services, which also eases the decision to outsource these operations,” says Bertil Johansson, Coor’s head of Business Development for the Production & Process business area.

In the USA and UK, outsourcing of production service is more widespread than in Sweden. In the Nordic region as a whole, service outsourcing started gathering momentum in the late 1980s, with examples from such diverse sectors as automotive, nuclear power, steel, and pulp and paper.

“The reason for outsourcing production service varies depending on the company’s situation. If capacity utilisation is low at a production plant, service is generally outsourced to reduce costs. If on the other hand capacity utilisation is high, companies want to raise productivity by reducing flow disruptions and to avoid capacity investments as far as possible. Another reason for outsourcing is if a company needs to secure access to skills,” says Berndt Johansson, a business developer within Production & Process at Coor.

Qualifying as a supplier

At present Coor primarily delivers production service to clients in the automotive and nuclear power industries.

“You have to qualify as a supplier by showing you have the general methodical know-how, along with the resources necessary to develop a production service operation, as well as having knowledge of the client’s process and the special demands it entails. Coor has built up a fount of knowledge in maintenance engineering and has the resources to manage, analyse and develop a production service operation that can be applied to all industries. Based on our clients’ requirements we produce cost-effective maintenance, higher plant utilisation, a good overview and flexibility, as well as solid strategic development,” Bertil Johansson explains.

Facts

Coor’s Production & Process services include:

Corrective and preventive maintenance, improvements and modification of:

• Production plants
• Production-related media systems
• Production tools and assistive devices
• Measuring devices

Material management systems:

• Technical design, production and installation of:
• Machinery, wear parts and spares
• Production-related media systems
• Material management systems
• Machinery and automation solutions

Waste management, cleaning, shop floor cleaning and sanitation:

• Provision and management of materials, stores and media
• Production-related administration, management and analysis
• Production support