Showing posts with label Cost Reduction. Show all posts
Showing posts with label Cost Reduction. Show all posts

Wednesday, December 10, 2025

Case Study: How We Cut Production Costs by 25% (Without Squeezing the Factory)

 "Can you ask them to lower the price?"

This is the most common request I get from clients. Usually, the buyer wants me to call the factory and argue, threaten to leave, or demand a discount.

But in China, if you force a factory to lower their price below a healthy margin, they won't say "no." They will just find a way to make it cheaper—usually by swapping materials or skipping QC steps. You win the negotiation, but you lose the product quality.

Last week, I helped a client reduce their unit cost by 25%, and the factory manager was actually happy about it.

How? By fixing the drawing, not the price tag.

The "Over-Engineering" Trap

My client (let's call him Mark) was sourcing a custom aluminum enclosure for an electronics project. The factory quoted $18.50 per unit. Mark needed it to be $14.00.

I looked at Mark’s technical drawings. I noticed that for the internal mounting brackets—parts that would never be seen by the end user—he had specified a surface finish of Ra 1.6 (very smooth) and a dimensional tolerance of ±0.05mm.

I called Mark: "Do these internal brackets need to be this pretty and precise?" Mark paused. "No, actually. They just hold the PCB in place. Nobody sees them."

The "Technical Translation"

I immediately called the factory's chief engineer. We didn't talk about money; we talked about machining time.

I asked: "If we change the internal surface finish to standard 'as-machined' and relax the tolerance to ±0.2mm, how much time does that save you?"

The engineer laughed. "That saves us 15 minutes of polishing and allows us to run the CNC machine faster. Why didn't you say so earlier?"

The Result:

  • New Price: $13.80 per unit (below Mark's target).

  • Factory Margin: Protected (they spend less time making it).

  • Product Quality: Functionally identical.

Why You Need More Than a Translator

Many buyers treat Sourcing Agents as simple translators. You send English; I speak Chinese; the factory answers.

But in industrial sourcing, context is cash.

If I didn't have the technical background to read that drawing and question the tolerances, Mark would have either:

  1. Overpaid for quality he didn't need.

  2. Forced the factory to cut prices, leading them to use cheaper aluminum alloy to survive.

Are You Over-Specifying Your Product?

The easiest way to save money isn't to yell at your supplier. It's to optimize your design for manufacturing (DFM).

Before you place your next order, let me take a look at your quote and drawings. I often find "invisible costs" hiding in the specs—unnecessary packaging, overly tight tolerances, or expensive materials where cheaper ones would work.

I don't just find factories. I find efficiency.