When looking into the cost of working with a new manufacturing partner, it’s easy to focus on your proposal’s total product cost. But just because one manufacturer’s price looks less expensive doesn’t mean it will be in the end. It’s necessary to break down all the considerations for the cost of your custom enclosures and components to ensure you know the true cost of your investment.
When ordering multi-component products, you can either have everything built and assembled under one roof, or multiple-sourced parts can be assembled at your facilities.
While the under-one-roof option might appear more costly, the individual components can quickly add up – and in some cases, cost more.
Imagine you’re looking to produce custom enclosures made of a cabinet, door, gasket, and locking latch. You can go about this in two ways.
Fully-Assembled Custom Enclosures vs. Multiple Components
Consider this example: Ordering a complete, ready-to-ship product or separate components requiring in-house finishing and assembly.
An end-to-end fabrication partner like Highland Machine can help deliver this from start to finish with just a few steps.
Scenario 1 – Highland Machine quotes $100 per assembled cabinet
- A purchase order is issued for 100 fully-assembled cabinets
- Highland Machine fabricates, powder coats, and assembles all components, including items not manufactured in-house (e.g., gasket, plexiglass window, keyed latch, etc.)
- Highland Machine ships the fully assembled cabinets to your company
- You receive all the components in the designated lead time and process the receiving record
- You receive and process the invoice
- You issue payment
By ordering through an end-to-end manufacturer, you save on freight costs, reduce lead times from shipping components between vendors, and your team only processes paperwork for one vendor.
Scenario 2 – Three separate vendors quote a total cost of $75 per cabinet
- A purchase order is issued to Vendor A for 100 cabinets
- A purchase order is issued to Vendor B for 100 doors
- A purchase order is issued to Vendor C for 100 gaskets and latches
- Vendor A fabricates the cabinets and ships to your facility
- You process a receiving record for Vendor A
- Vendor B fabricates the doors and ships to your facility
- You process a receiving record for Vendor B
- Vendor C fabricates the gaskets and latches and ships to your facility
- You process a receiving record for Vendor C
- The cabinets and doors require powder coating, so you issue a purchase order to Vendor D for powder coating
- You repackage and ship the doors and cabinets to vendor D
- You process a receiving record for Vendor D
- You receive and process the invoice from Vendor A
- You receive and process the invoice from Vendor B
- You receive and process the invoice from Vendor C
- You receive and process the invoice from Vendor D
- You issue payment to Vendor A
- You issue payment to Vendor B
- You issue payment to Vendor C
- You issue payment to Vendor D
- You assemble the powder-coated components
Is it still less expensive?
In scenario 2, you processed four purchase orders instead of one, received five freight bills versus one, and processed four receiving records, received four invoices, and processed four payments, not one.
Again, did you save anything based on the quoted price alone?
In addition to the extra freight costs and transit times, the multi-source option requires more effort from your team – additional paperwork, additional coordination of vendors, and assembly of the final product – each of which is a cost consideration. Now your $75 quote per cabinet can cost well above $100 per unit.
While cost is a large factor in any purchase, it’s also essential to consider the quality implications of using multiple vendors. The more vendors involved, the more room for error.
By working with one ISO 9001:2015 certified partner, you have one accountable source for your quality products.
The All-in-One Choice for Custom Enclosures
Though it might look most cost-effective at first glance to use multiple vendors, consider the implications. By using one trusted partner for your fabrication, powder coating, assembly, and inventory management, you can reduce costs and lead times while ensuring a high-quality product. If you’re looking for a partner that can do it all, look no further. We’d be happy to provide a free quote for your custom enclosures or components.