Escea expands international supply chain into China
We have been lucky enough to work with Escea for a number of years and have witnessed their company grow and develop over this time. Escea has become a well-established industry leader in the design, manufacture and export of leading-edge indoor and outdoor gas and wood fireplaces.
Fero supplies the electronic components and wiring looms that go into the fires, enabling them to function – we like to call it the stuff where the magic happens! Historically we have always kept Escea’s production within NZ, until recently when we took the joint decision to migrate some of this work to China. It’s a reflection of the growth in their business and of the relationship we have with our Chinese partners that we are able to switch sourcing. It’s also an indication of the quality of our relationship with this client that they allowed us to look at alternative supply, and help them to reduce their costs.
Unfortunately it’s not as simple as stopping production in NZ and then starting production in China. We have a detailed process that ensures material, quality, and form are exactly the same as we deliver from our local plant. Drawing approval, alternate material specification approval, and sample check and sign off are all required before we place orders on China. Once this process has been approved, then production can start. It may seem a long and lengthy process (and it is) but for Escea we were able to provide a cost down for them of up to 35% in some cases. We have maintained the quality, and maintained the lead time guarantees, whilst reducing the cost – a win win situation for this client.
As well as the cost savings that Escea have realised in offshore production, they also have the security to do short runs here in NZ if they have spikes in demand. This not only provides them with a security blanket it also enables us to free up some capacity in our manufacturing plant in NZ for other lines.
So with a cost saving of 35% why aren’t more companies doing this?
Well, China is not a place you can just walk into and expect quality and lead times straight away. You have to build relationships with factories and suppliers and be able to vouch for the quality. This is where Fero’s knowledge of the market and our strong ties with our suppliers is imperative to a company’s success. We are more than happy to let valued companies such as Escea piggy-back on our efforts in China because without the knowledge and trust that we have built up over the years they would never be able to reap these rewards.
Here’s what Steve, Procurement at Escea had to say about working with us:
“Fero has been a valued partner of ours for a number of years now and instrumental in creating a cost down of around 35%. I have no doubt that had we approached Chinese factories direct, we would have been unable to guarantee quality, on-time supply, or provide the volume of work that is required for a reputable Chinese manufacture to deal with us. Using Fero has reduced the risk of off-shore production for us, whilst still delivering all the benefits. And we can relax knowing that there’s always a fall-back of producing through them in Auckland, at a moment’s notice and shorter runs”