In a tough, competitive manufacturing climate with razor thin profit margins, many OEM companies have turned to offshoring small parts manufacturing tasks in an effort to save money. On paper, it looks like a good strategy, but experience has often demonstrated otherwise.
There’s no doubt about it: most OEMs and service centers operate on the narrowest margins imaginable, and don’t have the luxury of spending a lot of money on anything. Under those conditions, the temptation can be very real to take advantage of cut-rate pricing offered by overseas suppliers in order to make ends meet. Unfortunately, as anyone who has ever received a shipment of parts that had to be retrofitted or scrapped will tell you, there is a big difference between inexpensive and cheap!
Like a lot of OEM manufacturers, you’ve probably considered outsourcing as an option to provide the manufactured goods your market demands at a price point that will enable you to stay competitive. It’s likely that you’ve had to make some hard decisions and some difficult compromises, and offshoring a portion of your manufacturing may seem like an ideal way to get things running smoothly again.