3 Hidden Costs of the Global Supply Chain

Bob enters the production meeting breathless, clutching a spreadsheet with one row highlighted in bright orange. By purchasing Part X from an overseas vendor instead of a local precision machine shop, he explains urgently, the company could save 30% in manufacturing costs.

Bob’s eyes close as he imagines himself hoisted onto his coworkers’ shoulders. He can almost hear his team chanting his name as they carry him to the corner bar for a well-deserved beer.

Maybe you’ve worked with Bob. Maybe you’ve been Bob.

Like Bob, many buyers, swayed by the low purchase costs of parts sourced from overseas vendors, fail to anticipate the high landed costs of those same parts down the road. 

Why Choose a Domestic Precision Machine Shop 

With fuel prices remaining high, shipping costs are a widely bemoaned direct cost of working with overseas suppliers. Ditto for duties and tariffs on goods transported across borders. But there are three other costs of global outsourcing that are less immediately apparent.

1. Cost of rejected parts

You planned production of 100 units, but only 80 met your customer’s specs. You now have to swallow the cost of a 20% fallout. 

What went wrong?

Perhaps a language barrier led to a misunderstanding during the precision machining process. A time zone difference might also be to blame. With leads on both teams working completely different hours, the fluid communication that makes a partnership successful is nearly impossible to achieve. 

It’s also possible that the global supplier ran out of premium material and substituted counterfeit material for the last 20% of your order. 

Whatever the reason your customer has rejected the parts, the resulting cost can eat into–or even exceed–any savings you may have netted by outsourcing.

When you choose a domestic manufacturing partner like Wal-Tek, you’ll never wonder about the quality of the materials we’re using or the status of the processes we’re implementing because we keep our customers fully informed and practice impeccable document control

We love it when our customers contact us with even the smallest question or stop by our facility to see their parts in production!

2. Cost of uncertainty

Your customer wants an update on their job, but you’re in the dark about the status of some outsourced parts. Are they still in production overseas or being held up by red tape at a domestic port? 

After the global vendor has fulfilled their role in your project’s workflow, they may have shipped the parts and moved on to their next job without clearly notifying you or following up to make sure the shipment arrived.

Our customers often say that Wal-Tek’s customer service reputation was a leading factor in their choice to partner with us. We know that precision machining success depends on excellent communication between our team and our customers. That’s why we take these steps from the moment you accept our quote for sheet metal fabrication or CNC machining services:

  • Update you at every project stage 
  • Assess your order’s progress at weekly production meetings
  • Notify you weeks in advance if we foresee a delay
  • Invite you to call us or come by our shop at any time
  • Provide frequent shipping updates and follow up to confirm receipt

With our Open Door policy, we have shown our commitment to transparency. We don’t like uncertainty, and we would never pass it on to our valued customers. 

If you have a question, just ask!

3. Cost of carrying inventory

To avoid getting burned by supply chain breakdowns, you’ve ordered 1,000 parts when you only needed 100. You want to be confident you have the inventory you need when the next order comes through.

Unfortunately, in trying to prevent one pitfall of global outsourcing, you’ve stumbled into another. Your budget has been stretched to its breaking point to cover this large order, and now you’re also paying tax on the additional inventory you’re holding. 

When you work with a US precision machining partner, there’s no need to order beyond your means so that you won’t be caught unprepared in the future. Because we’re a full-service manufacturing partner, not a third-party supplier, Wal-Tek has the in-house talent and flexibility to supply you with parts as you need them. 

We also know that your needs can change, and we’ll help you troubleshoot if you suddenly lack warehouse space for an order. Better yet, join our Rapid Inventory Program (RIP) and let us manage your inventory for you!

Wal-Tek is the “team you can trust” for quality and transparency. Get started today by requesting a quote

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