Why the Cheapest Option Often Is Not the Best Option
In the extremely competitive landscape of manufacturing, the age-old adage “you get what you pay for” couldn’t ring truer. According to Warren Buffet…price is what you pay. Value is what you get. At Thierica we understand the relentless pressure to cut costs and the allure of cheaper alternatives. However, the consequences of sacrificing quality for price can be far-reaching and detrimental. We encourage you to look at the overall value of the products and services we provide.
In the relentless pursuit of cost reduction, it’s easy to be swayed by the allure of cheaper options, often presented by competitors who prioritize price over quality. Nowhere is this more evident than in the influx of manufacturing projects lost to competitors overseas, where labor and production costs can be significantly lower. Yet, as many businesses have come to realize, the initial savings offered by these cheaper alternatives often pale in comparison to the hidden costs that emerge down the line.
The allure of low prices can be deceiving. While it may seem like a cost-effective solution in the short term, opting for the cheapest option often results in subpar quality, increased defects, and higher maintenance costs. In an industry like ours where precision, quality, reliability, and durability are paramount, such compromises can have dire consequences, leading to product failures, dissatisfied customers, and tarnished reputations.
What is “Best Value Procurement”?
The concept of best value procurement is based on the idea that contracts should not be awarded based on the cheapest price but on the “best value” they provide. For procurement purposes, best value is defined as a “procurement process where price and other key factors are considered in the evaluation and selection process to minimize impacts and enhance the long-term performance and value”. A selection process that utilizes best value allows other factors, such as qualifications, quality, logistics and performance-based criteria, to be used in the evaluation and selection of a product or service. It is in your best interest to include other evaluation criteria than cost. It doesn’t make any sense to save money on a single line item only to experience much higher costs down the line due to factors such as poor quality, low reliability, poor customer service, or complex administration processes.
The Value of Better Quality
At Thierica, we refuse to compromise on quality. We understand that excellence is not merely an option but a necessity in today’s competitive market. Our commitment to delivering superior products and services has enabled us to build long-lasting relationships with our customers, who recognize the value of investing in quality over cutting corners.
While it’s true that quality often comes at a higher price, the long-term benefits far outweigh the initial cost. Quality products not only perform better but also last longer, reducing the need for frequent replacements and repairs. Moreover, they contribute to customer satisfaction, brand loyalty, and ultimately, business growth. Keep in mind that it costs less to buy a high quality item once than buying a low quality item two or more times.
Faster Response Times
If you’re geographically closer to your manufacturing plant, you will be able to have more control over the manufacturing processes — allowing you to make sure all of your products meet set specifications and standards. If a problem occurs, you will be able to pick up on it sooner and correct it faster, which will save money and valuable time in the long run. What’s more — you can be more certain that all of the materials used in your plant comply with quality and safety standards, which will help make sure your business has the best building blocks to manufacture your products.
Longer Supply Chains Have Greater Opportunity for Error
With every element of a supply chain, there is an opportunity for error. The longer your supply chain is, the greater that chance for error becomes. By shortening your product’s journey from the manufacturing plant to the hands of your customers, supply management becomes easier, and you reduce the chance of delays or your product being damaged, lost or stolen.
Reduced Logistical Costs
Although moving manufacturing abroad to cut production and labor expenses is common practice, the costs involved with shipping goods and materials overseas have risen dramatically. Opting to retain manufacturing operations in the U.S. presents a compelling opportunity to save substantially on both inbound and outbound shipping expenses. Unlike the costly endeavor of shipping across oceans, domestic shipping is much more economical. With a diverse array of transportation options and extended shipping windows, the logistical advantages are evident. Moreover, utilizing American delivery services eliminates the risk of miscommunication stemming from language barriers or currency disparities, thereby minimizing the potential for human error.
By leveraging domestic shipping providers, you will trim expenditures on shipment insurance, fuel, customs fees, and international taxes. This reduction in shipping costs translates into lower overall overheads, enabling you to maintain competitive pricing for your products.
Better Customer Service
Manufacturing is not the only aspect of your business that benefits by staying on U.S. soil — customer service is also essential to the success of any company, and it tends to be greatly influenced by the country in which your customer service representatives are located. Customer service centers that are located abroad often make customers feel disconnected from the people dealing with their service problems. Furthermore, language barriers can also present a problem, which can cause miscommunication between customers and representatives, leading to frustration on both sides.
In an era where cheap alternatives abound, it’s more important than ever for businesses to prioritize quality over price. Instead of chasing the lowest bidder, companies should focus on building partnerships with suppliers and manufacturers who share their commitment to excellence. By investing in quality, businesses can differentiate themselves in the market, command higher prices, and ultimately, secure their position as industry leaders.