Staying Competitive Through Outsourcing

American manufacturers have always felt a bit insulated from foreign competition, but as the world continues to flatten through instant global communication and expanding supply chain infrastructures, our insulation is getting thinner. Today, if the threat of being replaced by a Chinese competitor isn’t on your worry list, it may be a good idea to add it. Much of the manufacturing growth in China is currently being internalized due to a tremendous domestic demand, but as this vast market matures a huge manufacturing capacity will be seeking new outlets. The quality of equipment in China’s industrial centers is evolving rapidly and may soon rival our own at a significantly reduced cost.

However, the future is not all doom and gloom. American manufacturers most likely will not need to match such devastating price levels—just get below their customer’s “indifference point”. While an indifference point will vary from customer to customer, it can be defined as the premium a customer is willing to pay for the privilege of buying from someone they know and trust. Of course, the gap between an offshore price and what a customer will pay to avoid change will depend on many factors, including how good you are!

So how can you build a safety factor into your bill of materials? After all, you have been working diligently to reduce costs for years and soon you may need to reduce them another 20 to 30% to stay in the game. The answer is to seek off-shore suppliers for outsourcing a select portion of your assembly components that can make a meaningful difference.

While sounding simple, such a strategy is fraught with risk. The biggest problem is that foreign suppliers will claim they can do anything. Often, the sample is perfect but the first commercial shipment is anything but. Managing quality problems with offshore suppliers where English is a second language is frustrating, and potentially a costly endeavor.

That’s where we come in. Global Precision Components is an American company with strong global partners. Our mission is to help manufacturers stay competitive. Our services include seeking out qualified manufacturers, negotiating meaningful savings, and then delivering the components to your dock. We inspect and certify the quality before shipping to minimize the risk, while maximizing the savings for our customers. We operate on a small margin so that we can become long term partners with the companies we serve.

Please check us out at www.gpcomponents.com. Our FAQ section answers many operational questions and provides an idea of the type of savings you can expect. Of course, for other questions, just give us a call or email. We look forward to working together.

Henry A. Rissier
President