Finding the right precision machining company to manufacture your finished products can be a daunting task. Therefore, when evaluating manufacturers for precision online cnc machining services china, screw machining, tooling, or any additional type of manufacturing, it is imperative to give weight to multiple criterion. With that in mind, there are a few dos and don’ts to live by, or at least to make an honest effort to consider when making a final decision.
Do Not Focus on Pricing
Many companies give precedence to price, which is reasonable to a point. Price centricity is focused on the existing budget and how much cash you can outlay towards the transaction. The problem is that this method is based on one condition of sale, and not the grand scheme of the project. For example, by relying on price alone, many manufacturers have resorted to off shoring their production to countries in Asia, like China or Taiwan. The short answer why companies do so is because of the very low direct labor costs that keep total expenses down. Many companies find out later that moving overseas is far more costly than the original ticket price. Fellows Inc. is one great example of losing big by offshoring. The company shifted production to China through a joint venture with Shinri. There was a change of hands at Shinri that equated to a major shift in managerial philosophy, and Shinri attempted to take over complete control of Fellows’s Chinese operation. Shinri demanded price increases and full equitable control, which was a contractual violation of the joint venture terms, not to mention illegal. After Fellowes approached the Chinese government for help in resolving the matter, little help was offered. In short, Fellowes accrued $100 million dollars in sunk costs.
With international shipping costs and the lag in delivery time from China, companies must often order parts 6 months in advance of final assembly in the United States. Parts from Asia are ‘sometimes’ plagued with quality issues or product engineering issues because of the communication disconnect with controlling entities in the United States. When you receive a product that does not meet quality standards, you have lost 6 months of lead time and the initial cash investment. If you practice a JIT or demand pull system, or just want control of your product, then keeping to domestic suppliers is highly suggested. When you think about the price, think beyond the invoice; think about potential losses and the opportunity cost of not having the parts produced locally or at the quality standards that you need. Moreover, think about the under cutters that will try to gain your business.
Under cutters are generally new companies that are trying to make a name in the industry. They often resort to entrance based pricing strategy to both spark long term relationships with new customers and take clients away from other suppliers. Often times these companies respond to quote requests with dollar values that are too good to be true, sometimes even below their own costs which is just bad for business. This results in corner cutting during the manufacturing process, less than desirable customer service, and low quality machined parts. Not that a new company cannot offer you great service or a low price, but you should evaluate their standing in the industry and the quality measures that they have in place. The premise here is similar to looking at a firm’s credit history when deciding to do business with a supplier. We can research a company’s standing by evaluating their industry associations and quality process controls. I’ll start off by looking at a few reputable manufacturing associations and the benefits of being a member.