Build a More Resilient Domestic Supply Chain With Vendor-Managed Inventory
In recent years, we’ve witnessed a clear trend in our shop: More customers are looking to domestic suppliers like Area Tool & Manufacturing for higher volumes of parts.
In conversations with buyers, they tell us that recent global supply disruptions have exposed the hidden costs of relying so extensively on international manufacturing. Instead, the smartest manufacturers are now using domestic suppliers as more substantial strategic partners, creating greater resiliency and responsiveness in their supply chain.
As a proud American manufacturer, we always want to help our customers thrive with viable domestic solutions. Learn why we’ve begun offering customizable partnership models, such as vendor-managed inventory (VMI), to offer low-cost, flexible parts to our customers.
The True Cost of International Sourcing
The appeal of international manufacturing has long been its apparent lower prices. Yet, we have always maintained that the price you see in your quote tells only a small part of the story. Consider the hidden factors in international buying:
Shipping expenses
Greater potential for shipping delays
Import/export taxes and duties
Communication barriers, in part due to time zone differences
Complex, stressful logistics management
Limited short-notice flexibility from distant overseas partners
Even the objective numbers on the list are not always accounted for—buyers are sometimes isolated from the final internal accounting of taxes on parts. When all extra costs, added time, and unnecessary headaches are added up, the choice between an international supplier and a domestic partner is rarely as straightforward.
Of course, this list is only the beginning. The massive disruptions that accompanied Covid have been a major motivation for ongoing reshoring efforts. Many buyers found out, only too late, that they had little resilience in their supply chain and lacked a strong network of domestic shops they knew they could rely on. Instead, they were left to scramble and test last-minute partners.
Covid may be a once-in-a-generation disruption, but even minor, commonplace disruptions can wreak havoc—do you know if your international partner will be around in a few years? At Area Tool, we’re here for the long run.
Bridging the Gap: Vendor-Managed Inventory and Beyond
To help customers optimize their supply chain, we’ve begun offering programs like vendor-managed inventory (VMI). Each partnership is customized to your specific needs and requirements, but in essence, we will agree to a manufacturing contract for high-volume or repeat parts. This arrangement presents several key benefits:
Reduced Part Costs: By allowing us to process larger batches and optimize our scheduling, you benefit from lower per-piece pricing that helps close the gap with international sourcing.
Fast Delivery and Backup Supply: If your business has a sudden spike in demand months down the line, we will already have extra parts manufactured and waiting to be delivered.
Supply Chain Resilience: The past several years have seen countless unexpected bumps in the road for the manufacturing industry, and it’s impossible to guess what lies ahead. You’re better prepared for the future when you have a trusted domestic supplier for your precision machining needs.
We have optimized our shop to ensure we’re able to meet your domestic supply needs. We’ve invested in new manufacturing equipment like 5-axis machining, which has increased our capacity and expanded our capabilities. We’re always ready to tackle prototyping projects, but we’re also competitively pricing larger production runs.
Ready to Optimize Your Supply Chain?
As manufacturing continues to evolve, the companies best prepared for success will build resilient supply chains both domestically and internationally. Whether you need CNC turning, wire EDM services, or any of our other capabilities, Area Tool is ready to tackle your next project.
Request a quote today and let’s discuss how our precision machine shop can set you up for success with a vendor-managed inventory plan!
