Are You Paying Too Much For Inventory?

A client needed a low cost custom brass thermowell for their food preparation assembly but didn’t know any specifications. The client didn’t know about reduced lead requirements in food grade applications, luckily we did. We took their limited information, designed the thermowell and put it through our “The Guarantee” service.

The supplier we ended up with was a top notch professional out of Shanghai China who we think is our highest quality supplier. Their prices were 70% below the average quote received and 20% below the next lowest quote. We had them custom make the lead free brass to our specifications and we independently test the material regularly to verify it is always food safe. At $1.99 each with food grade silicone gaskets, we are confident that we have the lowest prices in the world. This price was verified against one of the top sourcing agents in Canada who could not touch our prices.

But that’s not the best part. In our research, we know that stainless steel was a better material for their application, but it is generally a more expensive material. So we kept working on that material on our own. We are proud to say the client is currently switching to a new supplier with a verified quality stainless steel thermowell for $1.35 each. Not only did we improve the material, we also reduced the cost considerably below an already low price.

To top it all off, this newest supplier has a much lower price on the thermometer that goes into this thermowell. The old supplier had a price of $2.55 and this new supplier has a price of $1.30.

In the end, based on the prices the other sourcing agents came back with. Using us instead ultimately saved them about $55,000 a year and they have a higher quality material to show for it.

A client came to us with a spring loaded “Bottle Filler” assembly made up of 5 different components. They could get it for 80¢ from one of their existing suppliers in Shanghai but needed the price to be in the 50-60¢ range to be able to expand their distribution and possibly corner the market. In our extensive research of all the suppliers in China that already make this type of assembly, 80¢ was already likely the lowest cost in the world for the quality.

However, the best price in the world isn’t good enough for us. We noticed that four of the five components in the assembly were manufactured using four distinctly different processes and materials. Factories tend to specialize in one or two manufacturing processes, that means they are probably just buying components from another supplier to add to their components into the assembly. We realized that a lot of the cost in the assembly are from middle men. Suppliers are notoriously bad at finding their own low cost suppliers.

We then went to work to find the best possible suppliers for each individual component. In the end, we got that 80¢ assembly down to 36¢ using all the clients existing suppliers.

Additionally, when the client is ready, we have a plan to get the price down to about 19¢ by cutting the original supplier out completely and using all new suppliers.

This is an example of how we guarantee the lowest prices in the world with our “The Partner” service. The client already had rock bottom prices and we were able to crush them.

When a client came to us asking for sheet aluminum cut into shapes for a marine related product, we knew we could do more and add more value than that. This client owns a local fabrication shop and had planned to take those parts, weld them together, powder coat and package them for retail.

This was a new client with next to no experience with China and thought since he owned the fabrication shop, he would have the lowest secondary operation costs anyway and that is why he just wanted the component shapes.

When we showed him the prices and fully finished samples from 5 different suppliers, he was singing a different tune. The fully assembled prices from China were less than half the price he was paying for just the raw material in the US. This allowed him to free up resources for other tasks, such as growing sales.

In our research of the product, we also identified two complimenting accessories for the product and found amazing prices on those that the client has indeed added to his product line.

Additionally, we were able to provide the clients sales team with a highly detailed contact list of thousands of retailers and distributors across the country who carry marine related products. This client essentially stumbled into the marine product market by chance and is now set to make big waves in it.

The client doesn’t always tell us what their current cost is so we can’t always calculate the savings we give them. But sometimes we know what our savings means to them.

One of our clients referred another company to us because they needed to get their cost down in order to hit a price target to be able to cut in distributors rather than just retailers and direct to the end user. In their industry and many others, being able to get your product in the big distributors is like the Holy Grail. It means much higher volumes that can take your business to the next level.

This client was already getting their product from China, a highly customized fabric insulated cooler. (We chose not to include a picture for proprietary reasons of the clients design and privacy) We don’t know what their original cost was but know their goal was to be able to get the cost down to $10.50 in order to be able to cut in distributors.

Through our “The Partner” process, we found an amazing cooler manufacturer in Xiamen China. To reduce cost, we went so far as to find a different disposable plastic bag supplier for the factory to use in the bulk packaging. We really leave no stone unturned to reduce cost. The client now pays $6.53 for one sku and $6.10 for the other while freight is about $1.50 each. We came in well below their target and the client is now picking up distributors and more international clients as a result.

$150,000 a year in savings

A client came to us with a one piece bracket design for a sheet metal wall mount for their product. They asked us to start our search in the US first so we focused on metal factories near the client’s warehouse. This strategy leverages the factories own delivery trucks for free shipping on an otherwise heavy and expensive material to ship. The range in prices quoted was from $5.45 to $13.70 with an average of $8.61.

We also put the bracket through our “The Guarantee” process simultaneously. We noticed that the design was a lot more expensive than it had to be so we redesigned it. We turned it into a much easier to manufacture bracket with two pieces instead of one using thinner gauge steel. It now uses a lot less material, stacks far better for easier shipping an holds a much higher load.

If the client had sourced this bracket themselves the way they wanted too, they would have paid about $7.20 per bracket. Thanks to our “The Partner” process, they are now paying $1.22 out of Shanghai China from one of our easiest suppliers to work with. This savings really adds up to real savings since they go through about 25,000 brackets a year and climbing.