OUTSOURCING: QUALITY ABOVE ALL ELSE

Attention Contract Manufacturers: OEMs plan to outsource more projects/purchases in the next 12 months and – surprise! – it’s not “price” or “quick delivery” that they’re looking for.

As American manufacturing continues to rebound from the Great Recession, new data suggests that suppliers of custom manufacturing should also see an increase in their businesses. In a recent Design-2-Part (D2P; Prospect, CT) survey, U.S. OEMs indicated by a margin of over two-to-one that they expect to have more outsourcing projects/purchases in the next year than they had in the past twelve months. In addition, they selected “quality” as their most import factor in measuring outsourcing partners.

The results revealed a significant 39 percent response of OEMs having more outsourcing projects in the coming year than the 17 percent who anticipated fewer projects. Continuing a positive trend, the 39 percent reply was an 8 percent increase from the previous poll. The responders also indicated a positive trend for their business in general, as 51 percent said that business has grown over the last year compared to only 17 percent who said that business has shrunk.

The survey also asked the OEM engineers and buyers that outsource what was their company’s most important factor for measuring manufacturing outsourcing vendors. “Quality” was voted number one with 48 percent, followed by “product cost” with 37 percent, “delivery” with 11 percent and “technical support” at 4 percent.

Responders were asked questions about where geographically they outsource. First they were asked, “Where do you currently outsource the majority of your projects?” The most popular answer at 48 percent was “local vendors – up to 100 miles,” followed by “regional vendors – up to 250 miles” and “national vendors” both at 18 percent, and “overseas/international vendors” at 17 percent.

Those who answered “local vendors” were asked “what is the primary reason for using local vendors?” Over half at 54 percent answered “hands-on access/vendor visits.”  “Delivery time” was second at 24 percent, followed by “support local economy” at 14 percent, and “cost” at 8 percent.

Responders who answered “overseas/international” where asked, “What is the biggest Supply Chain risk as viewed by your company?” Fifty-six percent answered “delivery time,” followed by “vendor stability” at 31 percent, “shipping costs” with 12 percent, and “natural disaster” at 2 percent.

At the end of the survey, the engineers and buyers were given the opportunity to answer an open-ended question. When asked, “What are the advantages for your company to outsource domestically,” there were four common themes: quality, communication, delivery time, and U.S. pride. Several OEMs also cited the capabilities of domestic suppliers to produce “smaller production runs” as an advantage.

An engineer from SAJE Technology (Hoffman Estates, IL) seemed to sum up what many others felt when he said, “Being able to shake hands and be face-to-face with those responsible for the manufacturing of our products, plus direct supervision of production and quality. And, using ‘Made in the USA’ against our biggest competitors who manufacture overseas . . . and we still do it for less.”

The annual Design-2-Part survey was sent in June to over 10,000 manufacturing engineers and purchasing personnel who attended one of twelve D2P Shows that took place in a major manufacturing hub across the United States in the last year. The responders came from a fairly even cross section across all major manufacturing industries.

Design-2-Part Shows are America’s largest and longest running design and contract manufacturing tradeshows. The shows provide design engineers, manufacturing engineers, manufacturing managers, and purchasers their best opportunity of the year to meet local and national job shops and contract manufacturers for the purpose of sourcing custom parts, components, design, prototypes and assemblies.

Job shops and contract manufacturing companies exhibit design-through-manufacturing services covering more than 300 product categories for the metals, plastics, rubber, and electronics industries.

www.D2P.com