In 2012 a company contacted us about fabricating some aluminum racks. Their current supplier was causing them a lot of issues. Deliveries were always late, parts had to be reworked during assembly, and product installation was a hassle.
On the surface, the project looked like a good fit for us. The fabricated racks were complex but well-designed and manufacturable, the production volumes were good, and it required processes that were core to our business.
The potential customer stressed two requirements: the product needed to be consistent (high quality every time); and we would need to be competitive on price with their current supplier. Since we have always maintained industry-leading quality metrics, and we work hard to be competitive in the market, we were not concerned.
Then they told us that the units were being manufactured in Mexico. We were up-front and told them that our pricing would most certainly be higher than their current Mexican supplier but, if they chose to work with us, we were confident that we could eliminate the costly, ongoing quality issues. We both agreed to continue the conversation.
The more we talked with the customer about their goals for these units, the more they kept talking about the need for consistency. The reason for this is that the way these fabricated racks are used by the final customers requires complete interchangeability. The racks are set up in stores in various configurations and occasionally changed out for new ones. When they are changed out, the new rack needs to fit exactly into the same spot as the one that was removed and fasten together without issue. The racks that were coming out of Mexico were not consistent at all. Rack width and height varied, and mounting brackets would never line up. A change out would take days, and the customer needed it done in hours.
The other major issue for our prospective customer was the lack of on-time delivery. Because of this, they were forced to place larger orders and maintain a large inventory of extra units just to make sure that they could deliver the units to their customer when they were needed.
After reviewing the project further, we were also able to make several design improvement suggestions to help lower the costs of the unit. We streamlined the design and were able to make several changes to the manufacturability of the units. From the original design of the unit to the new streamlined design, we were able to lower the cost of the unit over 10%!
Even with our improvements, the pricing was still higher than they were able to purchase them for out of Mexico. However, the headaches from the Mexican parts far outweighed the pricing difference, and the company ordered the first shipment of units. A few weeks later, the customer received our initial delivery, and they were thrilled. Not only did we deliver on time, but their assembly staff was amazed how easily everything fit together, saving them a lot of time and hassle.
For twelve years now we have been the primary supplier of this product, fabricating thousands of high-quality, interchangeable racks and delivering them on-time. Our customer is now able to maintain their production schedule without excess inventory, assembly is efficient and routine, and final installation is easy and quick as required. The best part is, as the volumes have increased, and we have improved our processes, we have even been able to lower our price several times over the years on these units!
