When is it Smart to Source Locally vs. Globally?
By Chris Wysong, Vice President of Plasma-Tec, Inc., Wayland, Michigan
Specialists in machining, turning, grinding, and coating high-wear metal components
When deciding what to source where, a buyer must consider three major factors: speed, quantity, and precision. From the outset, overseas suppliers may seem like the economical choice but often they prove costly in time, resources, and reputation.
The SPEED factor… “Who can get it to me ASAP-RIGHT NOW?” A six-month turnaround time from an overseas supplier puts new product introduction out at least that much longer. In comparison, a U.S. job shop provides an OEM with the ability to rapidly rollout a new product with the added benefit of keeping inventory levels lower. Plus, they can provide for a 3 or 4-week order fulfillment for a customengineered piece of equipment.
Pump plungers: precision machined, thermal-spray coated with nickelchrome- boron, awaiting finish grind. Plasma-Tec www.plasma-tec.com
The QUANTITY factor relates to how many widgets are needed. Offshore sources only payoff if large volumes are required; however, most U.S. OEMs want to keep part inventories low. When placing POs with overseas suppliers, OEMs must hold a larger inventory of those components to offset the long lead times and the quality issues. Today’s end users want a solution engineered for their specific application. When an OEM needs to wait 3 to 6 months for a PO to be delivered,they cannot meet their customer’s needs in a timely fashion. U.S. job shops are uniquely designed to support U.S. OEMs because they focus on small quantity to single-piece flows.
The PRECISION factor… World-class OEMS are seeking tight tolerances, high quality, and showroom aesthetics to meet their brand’s requirements and customer expectations. Who has the best quality? Can I afford to have even one of these pieces come in incorrectly? The U.S. manufacturing landscape has moved decidedly in favor of companies that are meticulous about quality. This is in sharp contrast to overseas sources who are more concerned about manufacturing on the cheap. When a PO has to be placed for 30% more pieces of a component because… “Well, we know we’ll have about that in scrap when they get here.” A buyer must consider if it is worth the risk and additional expense of continuing to purchase from this supplier.
As you make your outsourcing decisions, consider these questions: How fast do I need them? How many do I need? What level of precision is required? The answers will drive you to the most effective strategic choice in a supplier.