Revolutionizing CNC Manufacturing Through Vertical Integration

U.S.-based CNC manufacturer C.R. Onsrud vertically integrated its CNC plant to streamline manufacturing and expand its product line.

It’s no secret that manufacturing technologies and processes are evolving faster than ever before. Fueled by the relentless pursuit for a competitive advantage, cabinetry shops, aerospace companies, RV manufacturers, boat builders and more are all looking for an edge over their competition. For some, this edge has come in the form of implementing CNC machinery to help automate their manufacturing process.

Manufacturing Today recently spoke with North American CNC manufacturer C.R. Onsrud to get the inside scoop as to how it has grown to become the leading American manufacturer of CNC routers and CNC machining centers for thousands of companies across the globe, and done so while maintaining its reputation for quality and service.

“People come to us when they want to integrate CNC machinery into their manufacturing to automate the cutting, routing or milling of woods, plastics, metals, foams, composites or other manufacturing materials,” Director of Sales Jeff Onsrud explains. “Companies either come to us who have never had CNC machine or are looking to upgrade from an alternative brand.

“Maybe they are having trouble with their machine breaking down a lot, so they need something more robust,” he adds. “Or they could need better accuracy with a machine that produces parts better. Their machine could be fine, but the support they get with it is terrible. Over the last 50-plus years we have worked to position our company, product and manufacturing processes to provide a faster, better product and a much better support experience. With our deep bench of engineering staff, we can highly tailor a machine to the needs of the customer, always meeting or exceeding customers’ expectations. Smart vertically integrated manufacturing is what has allowed us to do this and provide the best CNC solutions to our customers.” CROnsrudInfo

In simple terms, vertically integrated manufacturing is having control over the majority of an operation’s manufacturing process by bringing the supply chain in-house. Traditionally, CNC manufacturers have outsourced the majority of their components to external suppliers based overseas. This has allowed them to get products for cheap, and not have to invest large amounts of money into their own manufacturing facilities. Although this business model has worked for many companies, there are a few downfalls. Adapting your product to accommodate for new technologies or design breakthroughs can take months if not years. Additionally, quality control can be difficult to manage and depending on your suppliers, deadlines and shipments can often be delayed. With products that don’t vary much in their design, this model works well. C.R. Onsrud tends to make machinery for so many materials and applications that constant improvements and alterations of the end product call for a more versatile manufacturing process.

The In-House Focus
C.R. Onsrud’s ongoing pursuit of providing customers with the best CNC solution led it to adopt a smart, vertically integrated manufacturing model, Onsrud says.

“Around 10 years ago, C.R. Onsrud was outsourcing about 60 percent of the components of our CNC machinery line,” he explains. “At the time, this gave us the ability as a smaller company to produce machinery that competed with the big guys. We designed the machine, but things such as sheet metal, machine frames and various components were mostly dealt with through an external supply chain. We were essentially an assembly shop, much like many of the U.S. manufacturers of CNC machinery you hear of today.”

The external supply chain model worked for C.R. Onsrud at the time, but its sales team was seeing two things occur. First, customers where expressing a need for customized machinery to give their manufacturing processes a unique competitive advantage. Secondly, customers needed machinery with fast delivery, because they weren’t as competitive if they waited four to five months for their new CNC machine to arrive.

“They had orders they needed to process tomorrow by the time they were ready to buy their CNC machine,” Onsrud notes. “These two customer needs of customization and fast shipments were diametrically opposite of an external supply chain – presenting a problem.”

Making a Pivot
Implementing a vertically integrated manufacturing model allowed C.R. Onsrud to meet both key needs of its customers: fast delivery and customized machinery solutions. It required a large investment to become vertically integrated, but as a multigenerational, family-owned business, C.R. Onsrud was happy to take a long-term view of what was best, instead of only what was most profitable in the near term. Transforming into a smart vertically integrated manufacturing facility was a pivotal point within the company’s history, and it has since positioned C.R. Onsrud as an industry leader within the CNC routing and CNC mill industry.

“Within the American-made CNC machinery industry, vertically integrated manufacturing is not common because many companies are simply producing standard models and can do so while outsourcing frames and sheet metal to overseas suppliers in Taiwan and China,” Onsrud explains. “This can lead to variations in quality and vastly increased lead times, and it leaves zero room for adaptability for the customers’ needs. It also pressures sales staff into shoe-horning customers into what they already have in-stock, instead of a machine solution that best fits the customers’ needs. For Onsrud, this outsourcing model wasn’t reliable or adaptable enough to meet the needs of the hundreds of different applications customers were asking of us.”

Smart Vertically Integrated Manufacturing
Onsrud notes vertical integration has been key to the company’s growth and allowed C.R. Onsrud to increase its CNC machinery sales in more markets than if it had not adopted this model. However, the company also realizes its partners play an important role, which is why C.R. Onsrud emphasizes the word “smart” within its definition of vertically integrated manufacturing.

“To think you can build everything the best within a highly technical product is silly – there are components out there that other companies simply already have a great solution for,” Onsrud says. “The key to smart vertical integration is analyzing what makes sense to bring in-house and what does not. In our case, although we manufacture our machinery in-house from fabrication to finished machine, we decided to use the No. 1 seller of machine controls in the world to run our machines because they are simply the best at what they do. What we call smart vertical integration means the awareness of what needs to be in-house and what is best for your customer and product if you outsource.”

C.R. Onsrud continues onward by watching the trend of fast-paced technological advancement and asking how it can provide customers with machinery that keeps up with this trend. “When a customer wants to manufacture faster or higher quality than their competitor, they need machinery that’s faster and higher quality,” Onsrud says. “Our vertically integrated manufacturing facility here in North Carolina allows us to provide this to our customers. It also is why our machines continually outperform and outlast our competition. In the end it all has to do with understanding your customers and building your company and product to best support them, and that’s what we’ve done here at C.R. Onsrud.”