Made in USA: “All or Virtually All”

Many small manufacturers in the U.S. struggle to determine if the product that they assemble, manufacture or produce truly qualifies for the label “Made in USA” or “American-Made”.

The world is shrinking fast. Competition is fierce. The Internet has escalated the global economy. Manufacturers are eager to comply with the standards as long as it is consistent and well defined. Yet, some companies are too eager to capitalize on the “Made in America” logo. Having a “Made in America” standard helps weed out companies that are simply throwing a sticker on a product that is imported from another country.

Doing a Google search for “Complying with Made in USA produces 854,000 results. The #1 ranking is a link to the Federal Trade Commission website titled: Complying with the Made in USA Standard. The page offers a link to a pdf that dates back to 1998. Traditionally, the Commission has required that a product advertised as Made in USA be “all or virtually all” made in the U.S.

What Does “All or Virtually All” Mean?

“All or virtually all” means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or at least negligible — foreign content.

Manufacturers may think that they are truly “Made in USA” with all parts being purchased from domestic suppliers. When in fact, certain parts or raw material could have very well been imported from a foreign country unbeknownst to the manufacturer. Even if you purchase raw material, parts, and components from a domestic distributor, those products may have originated in another country.

Even when a manufacturer has the best intentions and would eagerly purchase domestic goods, they are simply not always available. Specific countries, geographical regions, climates, etc lend to certain products being produced in those areas. You may have a product that you assemble in the U.S. with raw components purchased from various countries. In many cases, it is just not cost-effective to produce certain products in the U.S. Basic economics says that supply and demand control a market. Price is typically a key ingredient. If a product cannot be produced at a price that a customer is willing to pay, then it is going to be extremely challenging to create a viable let alone a sustainable company. Well at this point you are thinking, thank you Captain Obvious.

The responsibility falls on the manufacturer to have a clear understanding of where all parts and components originated from. Ignorance is not a reliable excuse or defense. Some companies have found themselves in trouble by making a false claim even when they had the best intentions.

For example, Maglite, a California lighting manufacturer made national news by losing a lawsuit over false Made in USA claims. Maglite is an amazing American entrepreneur success story. It boiled down to a microchip and a rubber seal that originated overseas that cost the owner thousands of dollars in legal defense and still lost the case.

Positive Work Environment

Never bet against a company dedicated to creating a Positive Work Environment. A deep commitment to innovation combined with maintaining a healthy entrepreneurial spirit are driving forces that can enable a small business to achieve great heights. Having fun while at work makes an enthusiastic workplace and a dynamic team.

A Positive Work Environment Increases Productivity 

According to the Harvard Business Review, a Positive Work Environment is more productive. In the article, “Proof That Positive Work Cultures Are More Productive“, the authors share that work stress significantly reduces the health and productivity of employees. Absenteeism, disengagement, and lack of loyalty all dramatically increase costs and hurt the bottom line. 

Deliberate actions allow a company to create a dynamic culture, which includes ambition, competitiveness, creativity, flexibility, enthusiasm, and initiative. Combining these efforts with the ability to take risks and bear responsibility is a winning formula. Many large companies founded by visionary leaders begin as a start-up enterprise and eventually evolve into an industry powerhouse.

Positive Work Environment

 Southwest Airlines Positively Outrageous 

Ever fly on Southwest Airlines and have a stewardess serenade the audience while giving out the flight instructions? Southwest Airlines has produced 40 straight years of profits in an industry that continuously suffers massive financial losses and has been littered with bankruptcies over the years.

Southwest lives by a daily mantra to never accept status quo tracing back to its founder, Herb Kelleher. He pointed out that it is extremely difficult for a competitor to imitate a company’s success. According to an article in Forbes, Kelleher states,“They can buy all the physical things. The things you can’t buy are dedication, devotion, loyalty—the feeling that you are participating in a crusade”.

Whistle While You Work  

Taking a tour of Falconer Electronics displays hard working Americans dedicated to producing high-quality commercial outlet stripsprinted circuit boards, and wire harnesses. You will hear machines running, trucks rumbling, computers cranking and other sounds of great products being produced.

More importantly, you will hear lots of laughter. Our team has a wicked sense of humor. You can always hear someone laughing over something hysterical. Either a goofy event that occurred over the weekend with a friend or family member. A crazy pet story brings a good laugh as well around here. Work hard and laughing harder is our mantra!

Our office is located near Wegmans Food Markets which provides an excellent role model for small businesses. Fortune ranked Wegmans as the #2 Best Companies to Work For in 2017. This year marks the 20th straight year landing on the Fortune 100 Best Companies to Work For list. Wegmans institutes a thriving Positive Work Environment that combines fun with professionalism to deliver outstanding customer service. This winning formula proves hugely successful and profitable with Wegmans celebrating 100 years in business. 
 
Thank you for reading our post on a Positive Work Environment.
 
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Supplies Components

Who Supplies Components When Outsourcing Production? – Part 7

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Supply or not supply? That is the question for today.

When outsourcing to a custom manufacturer, a common question occurs, “Who Supplies Components When Outsourcing Production?” Do you supply your own parts and materials or is it more cost-effective for the custom manufacturer to purchase materials? We will address this topic from the perspective of a Wire Harness Manufacturer

This is our continued series on Outsourcing Wire Harness Manufacturing. Below includes links to previous topics on this discussion: 

Outsource Your Wire Harness Assembly Process – Part 1

Selecting a Wire Harness Manufacturer – Part 2

How to Find a New Wire Harness Manufacturer – Part 3 

Interviewing a Wire Harness Manufacturer – Part 4

Discreet Questions to Determine Character Compatibility and Financial Viability – Part 5

Touring a Wire Harness Manufacturer – Part 6

What if I want to supply my own products such as wire, connectors and other components to save money? 

Supplying your own products to a custom manufacturer offers several positives and negatives. It works best to communicate clearly with the manufacturer on the pros and cons of either option. 

The question is do you really save money?  One-size fits all does not apply here. There are many variables to consider which option makes the most sense (or more importantly – make the most CENTS). 

Pros and Cons 

Let’s take a look at the Pros and Cons of supplying your own parts and components: 

Positives 

Several benefits fall in your favor by taking the initiative to order and supply your own parts when outsourcing: 

  1. You control the ordering process and supply chain. 
  2. Ordering your own parts allows you to have full disclosure of pricing on the cost of goods. 
  3. First-hand knowledge of availability or stock-outs on your product. 
  4. Better control over delivery times. 
  5. Negotiate your own discounts with the vendor. 

Negatives 

Ordering or supplying your own parts may be welcomed by the manufacturer. On the other hand, this approach could be disruptive to the manufacturer. Here are a few negatives to consider: 

  1. The time you spend ordering parts. 
  2. The time you spend coordinating deliveries. 
  3. Lost opportunity of volume discounts available to the manufacturer due to their purchasing power.
  4. Product knowledge and expertise that the manufacturer possesses.
  5. The variety of shipments arriving at manufacturer at different times throws off their production schedule for your product. 
  6. The receiving department at the manufacturer must be informed of delivery. This communication is crucial for the manufacturer in order to properly schedule production of your products. 
  7. The manufacturer must implement a means to monetize the receipt of your goods that you order. It is in neither parties interest to not account for labor, handling, and the overhead expense of receiving and storing goods. 

Supplies Components

An important question to ask yourself: Is your time better spent focusing on other areas of the business? Did you partner with a company that you trust enough to delegate the purchases to the custom manufacturer? 

You partnered or hired the custom manufacturer due to their proficiency, expertise, and ability to deliver a quality product on time. Is it worth your time, hassle and energy to locate new vendors and product in areas that are either new to you or where you are lacking purchasing power and strong vendor relationships?

For more info on electronics manufacturing, please connect on FacebookTwitterGoogle+, and LinkedIn.

Touring a Wire Harness Manufacturer – Part 6

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Part 6! We almost feel like the Harry Potter Series (my daughter would be proud of that analogy). Each week we have been addressing the due diligence and selection process when deciding to outsource wire harness manufacturing. Today we will explore taking a tour of a custom manufacturer. In particular, Touring a Wire Harness Manufacturer.

Below includes previous topics on this discussion: 

Outsource Your Wire Harness Assembly Process – Part 1

Selecting a Wire Harness Manufacturer – Part 2

How to Find a New Wire Harness Manufacturer – Part 3 

Interviewing a Wire Harness Manufacturer – Part 4

Discreet Questions to Determine Character Compatibility and Financial Viability – Part 5

It is Now Time to Plan a Visit and Take a Tour

So you continue plunging through the due diligence process to select a custom manufacturer. 

You have performed dozens of Google searches to narrow down the field.

You have evaluated plenty of websites and social media pages until they all start to blend together.

Hopefully, several companies are standing out from the crowd. 

Emails have been exchanged and phone calls have been made to break the ice.

There may be one or two that really seem like head and shoulders above the rest.

You are feeling good. 

It is now time to plan a visit and tour each facility. 

A physical visit to top candidates in person is vital with your decision. You might even want to consider a surprise visit (“Hey, I was in the neighborhood” – even if 500 miles away). 

Here is an excellent article from the Harvard Business Review regarding plant tours (Even though this was written 20 years ago): https://hbr.org/1997/05/why-and-how-to-take-a-plant-tour

Eyes Wide Open and the Attitude of a Harsh Critic

It is extremely important to go into the tour with eyes wide open and the attitude of a harsh critic.

(Actually, this was just a great excuse to get Judge Judy into one of our blogs).

What to Look for When Touring a Wire Harness Manufacturer

Below is a list to consider when Touring a Wire Harness Manufacturer: 

  1. Do you find the building and property presentable or unkempt? (Unmowed grass, disheveled parking lot, garbage, broken windows, etc…) 
  2. Office presentable or unkempt? (Top of the line everything or dated to the 1960’s) 
  3. Are you warmly greeted?
  4. Management, staff, and employees pleasant and welcoming?
  5. Do employees look happy and hustling?
  6. Are tools and equipment organized and well maintained?
  7. Are the warehouse and inventory efficiently organized?
  8. Is the Shipping dock clear of clutter?
  9. Are you impressed or underwhelmed with the team and operation? 
  10. Are there any red flags that make you uneasy?
  11. Do employees have cell phones out?
  12. Check kitchen area – is it clean or organized and dirty? 
  13. Are restrooms clean?
  14. Are there any key employees that do not come out to meet you? 
  15. Evaluating the quantity and quality of staff, does the company seem to be top heavy? 
  16. What are the years of service of the management team?
  17. Be prepared with tough questions regarding your product and process to determine if they are indeed experts in their field.
  18. Is the management team short and brief with you? Is this a good sign that they are focused and busy or are they rude and distracted? 
  19. On the other hand, if they meet with you for a long period are they too lackadaisical or not busy? 
  20. Do they seem eager to earn your business or desperate? 

Outsourcing your product production to a custom manufacturer is similar to finding quality daycare for your child. You need to find a company that you Trust, Trust, Trust! 

There is a saying that if something is not a “HELL YAH” then it is simply a “No”. 

Check back next week for Part 7 of our series on Outsourcing. 

For more info on electronics manufacturing, please connect on FacebookTwitterGoogle+, and LinkedIn.

Discreet Questions to Determine Financial Viability When Outsourcing – Part 5

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Outsourcing manufacturing operations can deliver tremendous benefits to your business. Unfortunately, there are many risks attached as well. Today we continue discussions by addressing Discreet Questions to Determine Character Compatibility and Financial Viability. Asking tough questions will help narrow down your selection process. 

This post is Part 5 of our series on Outsourcing Custom Manufacturing Operations. In particular, Outsourcing Wire Harness Manufacturing Processes.

Previous topics have included: 

Outsource Your Wire Harness Assembly Process – Part 1

Selecting a Wire Harness Manufacturer – Part 2

How to Find a New Wire Harness Manufacturer – Part 3

Interviewing a Wire Harness Manufacturer – Part 4 

Discreet Questions Can Save You Down the Road 

So you have entered the interview process to select a new custom manufacturer to partner with. Now you are digging deeper in the due diligence process to see who is exactly the best fit. 

Financial stability is certainly one of your absolute top concerns. If you are both small businesses, discovering actual financial figures or intimate information may be difficult to obtain. Even though this is crucial, especially if the project or product represents a significant portion of your sales. 

So what steps or strategies can you take to discover the financial viability of this new prospect?

Below are a number of discreet questions that you could ask that would potentially reveal any red flags for you. 

Discreet Questions

Prior Outsourcing Experience – That Ended Poorly 

This blog is being written from a poor previous experience with outsourcing services to a fulfillment center. There were many warning signs. Actually, what is above warning signs? Shots fired across the bow? 

We would pay the company tens of thousands of dollars each month which was paid on our credit card. On two separate occasions, the company ran our credit card twice, on the same day. The first time seemed like a simple mistake. “Oops, our credit card processor must have processed the card twice. So sorry. We will issue a refund.” Which they eventually did, many days later. 

The second time, same excuse but now had our team gravely concerned. To make matters worse, it was discovered that the property and liability insurance had not been paid. Needless to say, the relationship ended very poorly. We moved out at a huge expense. The fulfillment center went out of business so after. Even though we thankfully dodged a major disaster, this was a painful and expensive lesson. 

Important Questions to Ask Yourself 

Here are a few questions to ask yourself through this process: 

  • Does the company represent itself well? 
  • Do you have similar goals and a common business philosophy?
  • Is this a team of people with integrity that you can trust impeccably? 
  • Is this a partner that is committed to your profitability and success or are you another opportunity for the owner to support a lavish lifestyle? 
Discreet Questions to Determine Character Compatibility and Financial Viability 

Here are a number of discreet questions to consider to help determine the financial viability of the company as well as the character level of ownership:

  1. Strike up a conversation on hobbies. Do they have expensive hobbies: Golf at Pebble Beach, mountain climbing the Himalayas, scuba diving off the Thailand, flying a helicopter, Yacht, own a collection of Ferrari’s, etc… you get the point. 
  2. Find out the type of car they drive. “My spouse is looking for a new car. What type of car do you drive or recommend?”
  3. If you live near the prospect, casually ask what neighborhood they live in. Sorry to get overly “stalkerish”, find out their neighborhood and drive by or if you are not nearby look up on Google. This will let you know their lifestyle.
  4. Ask for bank references 
  5. ……business references 
  6. ……character references
  7. ……customer references
  8. Google the owner to discover any past felonies, convictions or other bad news. 
  9. Check their Facebook page – see what they do in their personal time. 
  10. Check other social media – Twitter, Snapchat, Instagram, and Pinterest.
  11. Look for Videos on YouTube.
  12. Check mutual connections on LinkedIn. 
  13. Seek out mutual professional connections and casually start asking around for any character concerns.  
  14. Take a physical tour of the company and facility – look for any warning signs.
  15. Meet with company supervisors.
  16. Casually speak with as many employees as possible to get a gauge on the owner/management and conditions of the company.
  17. Look for matching or mismatched priorities – expensive office furniture, overstaffed, excessive non-business essentials (foosball table, games, kegs, etc).
  18. Get a gauge on morale at the company.
  19. Does the owner wear an expensive wardrobe or jewelry?
  20. Last, ask the owner for an opportunity to have a mutual meeting with their accountant to view audited financials. Even offer to have the meeting at your expense. 

Going the extra mile with your due diligence process will save you a tremendous amount of grief and frustration down the road. 

For more info on electronics manufacturing, please connect on FacebookTwitterGoogle+, and LinkedIn.