Contract fabricator Sevaan Group has devised a new business model and delivery system to bring back to Australia work which is being channelled overseas because of cost reduction.
The company has set itself up to manage orders for clients in three month segments to effectively give them product on demand.
The quarterly-based contract management will open potential for its contract clients to cost effectively manufacture in niche size batches – or even large batches – domestically rather than continue outsourcing to Asia.
According to the company, the new business model and delivery system is giving its clients much better cost control, while eliminating the lengthy process of logistics and shipping that comes with them outsourcing fabrication to Asian markets, and subsequently stocking high volume inventory within their own premises.
Sevaan Group CEO, Tony Panrucker said that what his company is doing is in fact segmenting the delivery of orders sensibly over fixed timeframes to eliminate a lot of old-style running costs that have been costing Australian manufacturers a lot of money.
"Far too many of Australia’s larger manufacturers have been fixated purely on price when farming out fabrication work to various Asian countries without properly understanding where the true cost come from," Panrucker said.
"In reality, by introducing the risk of distance and the risk of time and coupling this with potential to compromise on the quality standards normally expected by an advanced industrial country like Australia makes the whole fabrication outsourcing abroad venture a very costly mistake if the wrong overseas supplier is used.
"What we do differently is explore the nature of your fabrication contracts, identify a pro rata price over a 12-month period and then establish a course of action whereby Sevaan Group not only supplies the outsourced engineering and/or fabrication, we also manage the stocks and inventory in three month segments for you.
"What this achieves is a system where we know when to reduce or increase inventory at the right point during every three-month segment according to the frequency of orders from our client.”
"What the client obtains is a product made to exact Australian Standards as is required, an outcome that is delivered on time and definitely on budget and stocks which are kept at an optimum level so it costs neither party any extra expense.
Panrucker said that in the modern engineering and fabrication world, obtaining product/price is no longer the sole issue.
“The true value in a contract fabrication/engineering arrangement between two parties is to deliver not just the product but also the inventory and scheduling management as part of a whole package to ensure that profits are maximised for the client and that everything runs on time."