2016-09-21 LDSF Brad blogcat_reliance_foundry blogcat_steel_foundry blogcat_steel_casting updated
Outsourcing production can result in significant savings
Look around your city at all the metal castings – all the bollards, tree grates, and manhole covers you see started as nothing more than a design. Somehow those designs had to be connected with the expertise and physical equipment necessary to make them real.
Companies that require metal castings have three choices:
- Manufacture the needed parts themselves
- Purchase stock parts from a supplier
- Custom design their own parts and outsource the manufacturing
In years gone by, North American companies outsourced their casting projects to local – or at least regional – manufacturers. Things have changed considerably since then. The internet revolution enabled companies to communicate quickly and accurately with factories anywhere in the world. Companies now have the unprecedented option to outsource their casting requirements internationally.
This fact, combined with the basic economic drives to reduce cost and improve efficiency, have caused large shifts in where and how castings are produced. Companies now have a wide range of North American and international foundry options to outsource casting manufacture.
With all that choice, it is easy to get lost. Here are some important considerations when choosing an international provider for outsourcing your castings.
Beware of Hidden Costs
Deciding to outsource your metal casting production internationally has unique considerations for costs that may not be immediately apparent. Not every cost will appear on your bid:
- Currency Valuation
Some countries keep their currency artificially low to make their exports more attractive. Ensure that you have taken exchange and other currency factors into account, including the historical currency fluctuations of the country in question.
- Cost of Staff Travel
Travel costs add up quickly. Make sure to consider them in advance:
- additional travel insurance
- travel VISA requirements
Will a warehouse be required? The importer will need to bear any warehousing costs.
Is labeling required for the country of origin? Are there unique duties or levies applied to the parts in question? Are the castings you are looking for subject to anti-dumping actions? Do you have a customs broker in place to manage your documentation and customs processing?
Custom broker’s fees, merchandise-processing fees, port processing fees, etc. These may not appear on your bid, or may appear as an estimate, but they can be quite high. Remember that freight and handling costs have more to them than simply the cost to transport the items.
Air Freight Charges
Overseas ocean freight can be time-consuming (logistics to port, mustering, consolidation for bulk shipping, ocean travel time, customs clearance, etc.), so there will be occasions where expensive air freight may be required to expedite orders.
Coordinating the freight and warehouse logistics of overseas production can be a headache
Email has indeed made communication faster, easier and more efficient. However, when discussing metal casting manufacturing with potential outsource partners overseas, there may be language differences, differences in drawing interpretation, or differences in production processes. These differences can often lead to miscommunication, resulting in errors or delays in the final metal casting product.
Where possible, have a language and culture expert on staff or contract to assist with communication. Even when a language expert isn’t accessible, you can remove opportunities for miscommunication by clearly spelling out your production criteria.
Ask about the production method
Will the parts be made on an automated machine that provides consistency or will they be made by humans, with the associated variables? Either method may be acceptable to you, but you should be entirely aware of what methods are being employed.
Ask about quality assurance
What QA (quality assurance) inspection levels are included in your pricing, and are these being conducted by third parties? Many quotes do not include specific inspection details, and inspections are often not followed on a consistent basis, unless specifically requested and monitored. Make sure you ask for and receive these details prior to engaging production. (See “Metallurgical Integrity” below).
Ask about security
Who will own and maintain the tooling used to produce your parts? It is advisable to maintain possession of your tooling and design unless your parts are generic. Also, ask: “How will the privacy and security of my designs be maintained and monitored in the future?”
Asian countries are 12–14 hours ahead of North America, so there will likely be a need for middle-of-the night, or early morning conference calls if you are outsourcing your castings work there. You need to be committed ahead of time to being available during off-hours.
Metallurgical Integrity: Questions to Ask
You will need to intimately know what level of physical and metallurgical integrity is important for the products you are trying to outsource. Once you know what level of metallurgical integrity is required, you need to be certain that the foundry you are outsourcing to can deliver.
Always ask the following questions:
Will the foundry use raw material, ingot or scrap?
Does the foundry have a spectrometer (for metal analysis)?
How much confidence can be placed on certification from this foundry?
You need a way to keep the foundry accountable, however given the distance of outsourcing production it is unlikely that you will be able to personally attend the site. Ideally, the foundry will have a reliable, professional 3rd party inspection company required to ensure that the agreed quality assurance testing is being carried out consistently, and to provide occasional verification of inspection results.
It is also advisable to discuss the foundry’s quarantine system. There should be a clear procedure for instances when quality issues are uncovered. Find out if foundry’s QA staff have the authority to accept or reject materials beyond the authority of production management staff.
While tooling can often appear inexpensive, long-term durability of the tools should be considered. Premature tooling wear will alter the performance of the casting and change the outcome of the parts; questions on who will resolve and pay for the dimensional changes over time must be addressed.
Make a Detailed Bid Request
Take the time up front to prepare a thorough, detailed bid request. A well-organized, clear, and concise request makes all the difference between a project running smoothly and a disaster waiting to happen. Before submitting a bid request for metal castings, read more on how to streamline your casting project – the useful information provided there will help to guide you in your bid request preparation.
Despite all these additional costs and considerations, global outsourcing of your metal casting projects can still result in significant savings. You can decrease both the risk and workload required by working with a well-established foundry partner.
Reliance Foundry has established relationships with our international sister foundries. You can trust that quality control, production scheduling, transportation, inventory management, cost control, and technical requirements are all completed to the highest standards. Reliance Foundry eliminates the problems and headaches normally associated with offshore sourcing, while providing the cost savings essential to your success.
Request a quote here.
- Container ship: kees torn, CC BY 2.0, via Flickr
- Outsourcing: gahellon, CC BY 2.0, via Flickr