The cost of lead times.

by
on Wednesday, April 19, 2017 8:30:00 AM

We all love a great deal. And for some of us, it’s not only the satisfaction of saving money, but we live for the negotiation. But when does the art of negotiation pass the line of ROI? Too often negotiations will go on for weeks for a fraction of a percent in price; but what is that really costing you? At Kendall Howard, we run into this more often than you may think. As an American made manufacturer, we are constantly competing with the low prices that are stamped on many IT infrastructure products coming in from overseas. Just like us, many companies keep a close eye on that bottom line number, so the cheaper, overseas option looks so much more appealing. But in the end, what are you really spending? There are so many additional costs that do not get factored in, but today I want to talk about one of those costs that rarely gets any attention during these negotiations – lead times.

What do lead times cost? For example, we recently had a customer who was comparing prices between a Kendall Howard product and an offshore product. We worked with them to get our quote as low as possible, but after weeks of negotiating, the customer informed us that they were moving forward with the overseas product because they were slightly cheaper. Although disappointed, this is not an unfamiliar situation for us. We wished them the best and told them we were here to help should they need it. About a week later, we got a call from the customer, who just found out that they were facing a 5-6 week lead time on the product from overseas. And that was just not going to work for them because they needed the product within the next couple of weeks. This delay was going to push back their entire schedule and they could not absorb all of those extra costs. The customer was facing a major dilemma. After quickly analyzing their options, they realized waiting for the overseas product and pushing all of their deadlines back would result in a final total price that was much higher than what we were proposing. Fortunately, because most of our products are in stock, and typically ship same day, we were able to help. We were able to produce and ship the product they needed in less time, less money, and less frustration than the “cheaper” overseas option.

But what about situations where a product needs to be customized? Maybe you need an atypical size, or the project calls for something out-of-the-box. Kendall Howard has become the go-to for these types of projects. Because we manufacture everything here in the USA, we are able to shrink those custom lead times from months to weeks. Many other IT infrastructure manufacturers who import part or all of their product line cannot compete with our lead times on custom manufacturing. You see, they have to work with overseas engineers to design the concept, and then in most cases, use a factory overseas to manufacturer it. Not us! We have our engineers in-house and all of the fabrication machinery needed at our disposal. Kendall Howard is also favored over many local job shops because our precision machinery and automation processes allow us to produce high volume quantities in a fraction of the time.

OK, so what’s the point behind all this? Well, we are not discouraging price shopping or negotiating. In fact, we are encouraged to do so even in our own day-to-day operations. However, we challenge you to take a step back to see the bigger picture. Challenge yourself to look at more than just the unit price as a dollar figure to discover what things really cost.