In today’s competitive manufacturing landscape, predictability and efficiency are everything. At Leech Industries, a long-term agreement (LTA) can help our customers achieve both. These contracts create stability for all parties involved and ensure that materials, scheduling, and pricing are aligned for the future.
LTAs aren’t right for every project, but when they are, the benefits are clear.
Why Enter a Long-Term Agreement?
An LTA allows us to plan well in advance, reducing costs and shortening lead times for our customers. By forecasting demand, we can purchase hard-to-source materials ahead of time, often at bulk prices that ultimately save our customers money. For example, aerospace-grade alloys, helicoils, or specialized inserts may only be available in specific sizes or quantities. An LTA gives us the flexibility to secure these materials early and use them efficiently, avoiding waste while passing savings on to the customer.
Beyond materials, LTAs make production more predictable. When your parts are already scheduled, you avoid long lead times that can occur if you submit RFQs during busy periods in our tool and die shop. Instead, your order has its place in our workflow, ensuring a smoother process from start to finish.
Efficiency and Flexibility in Scheduling
Scheduling becomes more streamlined under a long-term agreement. If a part requires complex processes like 5-axis machining, we can allocate machine time more strategically. Knowing that a job requires 10 hours on a particular machine, for example, allows us to build it into our schedule with flexibility, rather than scrambling when this request comes through during a week we’re extremely busy.
It also makes life easier for customers who experience unexpected changes in production needs. For instance, if you’ve previously ordered 20 components but soon realize you need another three, filling that request can be difficult and costly without an LTA. With an agreement in place, however, we often have the next production run queued up, making adjustments far more feasible.
Best Cost Control and Forecasting
When quoting a project under an LTA, we approach it differently than a one-time order. Long-term agreements let us plan for materials, labor, and processes in advance, which typically leads to lower overall pricing. The cost benefits can be especially significant when the part requires specialty services like injection molding, where setup and tooling are major factors.
Customers also gain peace of mind knowing their future needs are accounted for. With just-in-time scheduling, we can time production so parts are ready when you need them, without sitting on a shelf unnecessarily. This approach strengthens supply chain security and helps our customers plan their budgets with confidence.
When an LTA May Not Be the Right Fit
While LTAs deliver big advantages, they aren’t always practical. For example:
- Low quantities: Small runs of 3 to 5 pieces don’t justify the setup required for an agreement.
- Unpredictable demand: For example, we discussed the possibility of an LTA with a customer of ours who sources replacement energy components needed after natural disasters. However, given the unpredictable nature of these disasters, it didn’t make sense for us to pursue an LTA.
- Ongoing iterations: Parts that are still in the design or development phase may undergo engineering changes, making an LTA premature.
Custom Agreements for Customer Success
At Leech Industries, we don’t treat long-term agreements as one-size-fits-all. Every contract is tailored to the customer’s needs. No matter the complexity and nuance of your scope of work, we are happy to partner with you to structure an agreement that makes the most sense and ensures success.
Ultimately, an LTA is about building a partnership just as much as it’s about securing better pricing. By working closely with our customers, the Leech team gains insights into their unique challenges and aligns our capabilities to meet their long-term goals.
At Leech, we embrace complexity. From intricate aerospace precision machining to full-service component manufacturing services, we deliver with confidence.
Want to learn more? Contact our team to see if an LTA is the right fit for your projects.
