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A mid-sized precision machining supplier enjoyed great reputation as a quality supplier to some of the large industrial equipment and automotive companies in the US. Lately they were feeling constant pressure from their customers to reduce prices and as a result they were loosing business to lower cost suppliers from Spain and Eastern Europe.
In order to maintain their customer share they had to find alternate supply approaches to be cost effective and were exploring teaming with very high-quality Asian suppliers. While doing this they had concerns about |
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avoiding potential competition from the Asian supplier at their US customers |
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maintain the highest quality so it does not require lot of rework |
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bringing their partner up the learning curve on engineering and design processes. |
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We used a handful of parts currently made in-house for a competitive RFQ bidding among the suppliers from India and China to determine the most competitive options. These RFPs were sent to about 10 pre-screened suppliers who had the right profile to suite our client need. Once the right suppliers were selected we had them make sample parts and slowly ramped production overseas. In the meantime the OEM client was kept informed with PPAP submission for source change.
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They have achieve 25-40% cost reduction in about 9 months of work |
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Portion of the savings are passed on to their clients, in hope to retain business without re-bids |
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As their confidence builds, client is also interested in exploring engineering services like CAD work, CNC programming, and some value-engineering work using their Asian partner. |
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