Some businesses view instrument calibration as a best practice, others view it as a compliance issue driven by industry standards, contractual agreements, or certification requirements. In all cases, there’s a decision to be made when it comes to instrument calibration. Does it make more sense to do it yourself or outsource it? I’ve discussed the pros and cons with manufacturing executives around the world, and while there’s a case to be made for both sides, I see six strong arguments for outsourcing equipment calibration services.
1. Faster turn around
While an internal calibration lab can sometimes move faster than an outsource team, I find that outsourcing consistently gets faster results, especially when you do a true apples-to-apples comparison. For example, one of our large aerospace/defense customers had an in-house calibration lab that had a two-week service-level agreement (SLA) with their internal customers for all calibration services. The internal calibration lab appeared to meet their SLA consistently. But on deeper investigation, it was discovered that only the simpler tools, such as torque wrenches, were being calibrated within the two-week window. More sophisticated instruments that measured RF and microwave systems were actually taking four to six weeks for lab calibration. By outsourcing, the customer was able to reduce their SLA to just one week for all instrument calibration services, even for the most complex instruments.
2. Lower OPEX
In the example above, when a complex instrument required four to six weeks for calibration, the internal calibration lab was forced to use spares and rentals to meet the two-week window specified in their SLA. Spares and rentals cost them millions of dollars per year. By outsourcing, they not only reduced their turn-around time by 50 percent, but also reduced their annual operating expenses by about 20 percent by completely eliminating the cost of rentals, storage space for spares, and the man-hours required to procure, manage, and maintain the excess inventory. I’ve seen the same scenario play out for other customers as well. In my experience, an OPEX savings of 10 to 25 percent is common when customers shift from in-house to outsourced instrument calibration services and compare all costs, not just specific calibration costs.
Some companies excel at in-house calibration, but for most, it’s a departure from their core business. Dedicated outsource vendors, on the other hand, provide calibration services as a core competency, and make a substantial capital investment to deliver those services. Whereas budget limitations might force an internal calibration lab to use older, slower hardware at the edge of its lifecycle, a reputable calibration vendor will have the latest hardware and software and dedicated teams that know how to use it. This calibration-as-a-service business model removes CAPEX impacts as well as lifecycle concerns for manufacturers, and provides access to state-of-the-art calibration capabilities at all times.
4. Future-proofed test
Competitive manufacturers should be free to chase new opportunities without worrying about lab calibration capabilities or having to spend capital to upgrade a calibration lab as the business evolves. For example, many wireless manufacturers are now making the leap from 4G to 5G wireless, which means a lot of next-generation test equipment is being introduced into design and manufacturing environments. Older calibration hardware and software isn’t designed for the higher frequency ranges of 5G, but in an outsourcing model, that’s not the manufacturer’s problem. The calibration vendor is on the hook to stay ahead of 5G test requirements. It’s a CAPEX benefit for manufacturers since they don’t have to purchase and learn new calibration equipment. More importantly, it’s a competitive advantage since they can invest their energy and resources in being first to market rather than trying to be calibration experts.
5. Improved audit compliance
Since most manufacturers now have global supply chains, it’s common for test equipment to be calibrated in one location but used in another. This sometimes makes it difficult to find records and documentation for ISO audits and other record-keeping functions. A reputable outsource partner will maintain records in a centralized database as part of the SLA between the outsource calibration lab and the customer. The records are available 24/7 regardless of where the instrument calibration services are performed, so compliance can always be proven and audits are less of a headache.
6. Scalable resourcing
With natural attrition of an aging workforce, it can be hard to keep qualified calibration engineers on staff. And in many companies, engineers who retire are not replaced. Even if a new job requisition is opened, it’s nearly impossible to replace the specialized skills needed in a calibration lab. By comparison, outsource vendors have a pool of dedicated resources who are trained on the latest calibration equipment. Manufacturers have access to a scalable resource pool without having to staff up or down based on business conditions.
I’ve had many conversations with calibration lab managers and manufacturing executives over the years, and I know that outsourcing is not for everyone. If your product line is stable and not evolving, if your SLAs are truly being met, or if CAPEX is not an issue, then an internal calibration lab is probably fine. But if emerging technologies or new business opportunities are creating a need for capital investments to upgrade your internal calibration lab, you should do a financial audit to determine the true cost of outsourcing versus keeping it in house. Make sure you take into account not only hardware, floor space, and SLAs but also the ongoing expertise required to write automated calibration procedures to get the turnaround you need. If you do decide to outsource, it pays to do your homework on the quality of the calibrations you’ll be receiving. Not all calibration partners are created equal. Choose one that knows its stuff, and good luck.
Eric Taylor is Vice Present & General Manager of Managed Services Division – West. Read his bio at https://community.keysight.com/people/et3333.