2 Key Reasons Your OEM Contract Manufacturer Should Conduct Cost Audits
July 13, 2016
Many factors get in the way of cost-efficient metal parts manufacturing. If you’re working with a partner that doesn’t conduct cost-saving audits, you may be losing money.
Of course, having the right metal manufacturing processes in place to begin with is essential. Optimizing processes enables your partner to save time and materials that would otherwise cost you extra.
However, you also have the opportunity to improve your budget by redesigning your parts and assemblies to be more manufacturable. That’s where cost-saving audits come into play. An audit is usually conducted at your OEM contract manufacturer’s site. Experts look at the design of your metal parts and find better options.
Perhaps your text engraving is unnecessary, or you don’t need to machine holes as deep as you originally planned. Over-designing is common, yet expensive. Your OEM contract manufacturer has expertise, so you should rely on its knowledge base to help you minimize costs.
An OEM fabrication partner that conducts cost-saving audits shows that it is proactive and hands-on. It is invested in your success. A partner that offers routine audits is a long-term thinker, while one that doesn’t is only interested in the short term. The latter is a problem when you’re focused on business growth.
Are you concerned you may be paying more for your metal manufacturing solutions due to inefficiency? You should partner with a partner that conducts routine audits for the following two reasons:
1. Ability to Anticipate Material Changes
Although steel prices have been low, they recently increased by about 50%. If your partner was counting on low prices to keep your metal fabrication, industrial welding and machining costs down, it’s more vulnerable to material price changes.
The right metal manufacturer has the foresight to plan for market changes. Even when material prices are low, it uses lean manufacturing to reduce waste and manage materials.
Your partner can stock less material and reduce your costs down by using more of the same materials across customers. So if it’s appropriate, during an audit your fabrication partner should advise you to use more standard, easily accessible materials. You may not need a specialty material for your end product to function at a high caliber.
2. You Can Apply Cost Savings To Other Areas Of Your Business
Saving money certainly sounds appealing, but think about how it actually impacts your business model. You can apply savings to important areas of your business and gain a competitive edge over other OEMs in your market. You may consider using your additional funds in the following areas:
- Research and development
- Shareholder returns
- Capital expenditures
- Facility improvements
- Strategic innovations
Your OEM contract manufacturer often sees opportunities for improvement that aren’t visible to you. Having eyes on your metal manufacturing from multiple angles helps you identify problems and solutions. If you’re not working with a progressive partner, you may already be missing out on new technologies.
Whether you have issues with packaging metal parts, handling parts at your plant or logistical planning, the right partner suggests ways to improve through cost-saving audits. At the same time, your metal manufacturer must be adaptable, matching your needs to provide support as you reach for challenging goals.