4 Ways Small Manufacturers Save OEMs Money

Small American Manufacturers have successfully positioned themselves as highly effective and efficient partners for OEMs who had traditionally utilized larger/foreign manufacturers. Here’s how:Small Manufacturing  |  Ehren-Haus

You can always count on those faced with adversity to come out on the other side even stronger.  This rings true, especially for small American manufacturers.

// We’ve already talked about why American manufacturing, in general, makes good financial sense…but in case you want to beat that dead horse a little, check out my post When to Manufacture Overseas. //

So you’re sold on American manufacturing,  now what? With the economy bouncing back and overseas manufacturing becoming less and less appealing, the selection of domestic manufacturers is growing at a high rate.

Should you go large or small? Tier 1 or tier 4? There are certainly pros and cons in both directions, but if you’re willing to do your homework like some of the most profitable OEMs have, you can save BIG money with a smaller manufacturer.  Here’s 4 reasons why:

1. Lower overhead

Smaller facilities and staff mean smaller overhead costs.  Plain and simple. If you don’t have to pay benefits packages on 10,000 workers or the power bill for 6,000,000 sq/ft of warehouse space…you are probably able to keep prices a little lower.

P.S. It’s not just the large manufacturers who are ISO certified/compliant, FDA registered, LEAN certified, and familiar with the standard MIL specs…small companies understand those are important to stay competitive.

2. Valuable Customer Focus

Be one of dozens rather than thousands when it comes to customer service. These smaller companies have invaluable communication throughout their entire organization. If you’re in need of an update, your dedicated program manager probably had coffee with the guy that’s running the CNC on your project and already knows the status before you call. That sort of thing just can’t happen when you’re in a queue of 500 faceless jobs that make their way down the pipeline every day. In a small company, the team is talking about your project at daily review meetings, they know your name, they remember that you like the packing slip to be folded that special way, and they care about the quality of what they send you. The personal connection alone can save countless dollars because they feel personally accountable to you.

3. Integrated Resources

In many cases (like Ehren-Haus) to stay competitive, the traditional job shop has transformed into a multidisciplinary design/engineering/production facility where every level of product development and production is under one roof.  While you may only take advantage of the manufacturing facilities at first, as soon as you need to retrofit a legacy product or change the dimensions of a drawing, you aren’t having to outsource and manage 3 other vendors.  A team that is already familiar with your product, your application, and your preferences can save you time and money.

4. Flexibility

The value of flexibility is immeasurable when you are dealing with constant changes, investors, deadlines, and unexpected emergencies. If your product was being handled by a large manufacturer, last minute adjustments, unique shipping preferences, proprietary packaging requirements, etc. are just not an option. When you’re working with a small manufacturer, everything from design to production, packaging, and even payment can be discussed with a simple phone call.

Now, I do want to mention that small manufacturers are not one-size-fits all.  For certain materials, processes, quantities and timelines…a large manufacturer may be your only option within your budget.  That being said, I would almost always start small and work your way up.

Ehren-Haus has been fortunate enough to not only survive, but flourish through times of economic uncertainty, mainly because of our dedication to quality, communication and flexibility. Almost every product we support is highly custom and unique.  A one-size-fits-all approach doesn’t work for our clients. We know our clients by name, we understand their products. That’s just how we do business.

Hopefully, the next time you’re in search of a manufacturer, you won’t default to the big guys because they have all the flashy advertising.  Do some searching, ask around for referrals, or even better, call me! If we can’t help you, we can help find someone who can.

 

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