CASE STUDY: It’s Hard To Stay In Business If You Don’t Have Any Product To Sell

In the Summer of 2021, we were contacted by a company in the electrical systems business about fabricating some of their products. Since their company’s founding in the mid-2000s, they had sourced their entire product line to China. But COVID had now brought international shipping to a halt, and being solely reliant on Chinese manufacturers had dealt a devastating blow to their business.

Customers were needing their products but this company had literally nothing to sell. They could not even get repair parts to help previous customers. After months waiting on parts to show up, they decided to investigate having their products made in America. As they told us, “It’s hard to stay in business if you don’t have any product to sell.”

Truth be told, even before the crisis caused by the COVID shutdown, they had been facing significant issues with overseas manufacturing. Because of the extra time needed for shipping across the ocean, forecasting was difficult and inventory levels had to be kept artificially elevated to make sure they always had product in stock. They also had experienced issues with inconsistent quality and shipping damage.

The company put together a list of potential suppliers and set-up times for their team to visit each facility. When they came to us, we spent a lot of time with their team reviewing the goals for their product line, then we toured our facility showing them our processes and quality standards. They had visited several other fabrication companies but, in the end, felt that we had the systems in place to ensure the product quality and on-time delivery they needed.

We began producing parts for them in the fall of 2021 and it has developed into a great working relationship. The company no longer has to hold a large inventory of products and, with our reasonable lead times, they have been able to decrease their inventory and increase their cash flow. They also don’t have to order extra parts anymore to make up for fallout due to quality issues. Of course, our pricing is higher than they were paying to have the items produced in China, but they are happy to pay a little more to have a much better sourcing experience and actually have products to sell.

Many U.S. manufacturers have a global supply chain and that can certainly appear to have advantages in terms of pricing. However, many of them are learning the hard way that the overall cost to the company of having items produced overseas can be much higher than the initial savings.

If you are interested in learning more about the benefits of reshoring, please visit the Reshoring Initiative and be sure to try the TCO Estimator!

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CASE STUDY: Quality and Consistency Reduce Inventory, Lower Costs and Eliminate Hassle

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 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 inventory a lot of extra units just to make sure that they could deliver the units to their customer when they were needed.

The company did end up ordering this product from us at a higher (but competitive) price and when they received our initial delivery, 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.

We accomplished the high level of consistency they were looking for by building poka-yokes into many of the fabricated components and incorporating the use of several fixtures into the welding process. As we moved into full production on these units, we found other ways to improve the process and the product which allowed us to offer significant savings to our customer.

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.

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