ADDING UP TOTAL COST

摘要

For a true tally of how sourcing affects a businesses bottom line, cost estimating should encompass more than piece price and shipping fees. Since lighting fixture manufacturer Hubbardton Forge, Castleton, Vt., started using castings in its outdoor products seven years ago, it has been sourcing them from China. Now, the U.S.-based manufacturer is recalculating its costs and vetting local sources for the die castings. "When we first started using aluminum castings, we sourced to China mostly driven by the component price," said Steven Wiegers, supply chain manager for Hubbardton Forge. "We have looked over the past years at some domestic sources, but we've become more serious about it in the last six months." Wiegers said the die castings are meeting quality standards, but the low volumes put his company in a precarious position. "We are more of a made-to-order company," he said. "Lead time is big. Our product is 100 days on the water right now. We are trying to reduce our lead time from 10-12 weeks to three to four weeks." After seven years of sourcing to the supplier offering the lowest component price, Hubbardton Forge is re-examining total cost and taking into account more variables than piece price, freight costs and set-up fees, such as the cost of sitting on inventory to account for long lead times. The company's initial calculations were surprising.