Extremely cheap labor and production costs are incredibly enticing when considering outsourcing elements of your metal manufacturing supply chain. Who doesn’t want to save money?
But, unless your product is intended for an overseas consumer base, those are the only benefits you'll receive. The numerous hidden costs that can creep up on your business far outweigh those potential savings.
In fact, once the total cost of ownership (TCO) is calculated, you might not see any savings at all. If you want to know your TCO, here's a helpful estimator.
So where should you turn?
A local supplier.
Why Use a Local Metal Manufacturing Company?
Local metal manufacturing suppliers can be a big boost to your production efforts and ultimately save your business more money than if it used an overseas vendor.
Local suppliers help you:
- Be proactive
- Improve inventory management
- Reduce production risk
- Improve public image
Here’s how each of these benefits can impact your company:
1. A local supply chain helps you be proactive rather than reactive.
Market trends can rise slowly and become the new standard for production -- or they can appear in a flash and disappear just as quickly. Quickly shifting with consumer demand (or even leading a new trend) is how companies stay relevant and profitable.
It's simply impossible to do this when your manufacturer is overseas.
You can't immediately take advantage of innovative new designs or processes when they have to go through 10 different communication channels in multiple languages before reaching the point of production. You can't deliver this new product to your customers in a timely manner when it takes upward of 5-10 weeks to ship to your warehouse after the actual time to manufacture, assemble, and distribute.
When your supplier is local, you can have your flash of insight, make it actionable, and have it in the works within days. Shipping times are minimal. Lead times are drastically reduced. Your product will hit the shelf long before your competitors can scramble to catch up.
2. You can take advantage of JIT and inventory management.
Inventory management is an area where extra expenditures can sneak up on you, such as:
- Storage costs
- Higher risk of damage or loss
- Slow turnover
When you're sourcing locally, your manufacturer can work with you to create an optimized, high-turnover inventory management plan that will help you cut costs.
You can also take advantage of JIT principles with your materials, manufacturing, and distribution. This means producing items on-demand, which helps you react quickly to changes in consumer needs.
3. You completely avoid the hidden costs and risks of offshoring.
The global supply chain has a few key pitfalls that directly impact your production:
- Long shipping times
- High transportation costs
- Ridiculous lead times
However, there are also an incredible number of hidden costs in offshoring that most companies don't notice until they're already stuck.
A local supply chain means having a stable vendor, quality assurance, and a highly innovative team manufacturing your product. The problems you can run into with American manufacturing are familiar and easily dealt with through laws, contracts, and other legal and social consequences.
A local supply chain keeps you relevant, flexible, and secure.
4. It's great PR for your company.
Americans love their local businesses.
Not only are they sometimes willing to pay more for American-made goods, but they're also more likely to spread the word about locally sourced products.
You'll see political benefits as well. There's a lot of anger in American communities regarding local businesses getting pushed out by big, internationally owned-corporations.
Keeping your supply chain local means you're helping support the local economy, and receiving the economic benefits in turn.
In general, it's very easy to use your local sourcing as a selling point.
Keeping Your Supply Chain on the Same Shore
If you're currently offshoring your manufacturing, you might be surprised how much your business can benefit from manufacturing in the USA.
(Editor’s note: This blog was originally posted in July 2016 and was recently updated.)