Challenges
Over the course of the sourcing project, two key systemic challenges were identified:
The existing sourcing strategy lacked supplier segmentation by product type, leading to both customized engineered fittings and high-volume, commodity-style fittings being procured from the same suppliers, leading to cost inefficiencies and quality issues
Supplier-owned intellectual property (IP) for customized, highly engineered components limited the client’s ability to qualify and onboard alternative sources of supply
Approach
During the execution of the process, key considerations emerged that shaped the team’s strategy and recommendation:
During the Supplier Research step, the team prioritized manufacturers over distributors to maximize cost savings and enhance Tier 1 supplier visibility
During the Supplier Selection step, the team segmented hydraulic fittings into two categories: standard parts aligned with industry norms and custom parts designed for specific customer applications.
This approach more accurately reflected the external market, as evidenced by supplier capabilities and competitiveness.
Results
The Claudia Strategic Sourcing process resulted in supplier segmentation based on core competencies thereby improving cost efficiency and quality performance. The outcome included a Transparent Pricing Model to eliminate ambiguity in future pricing discussions. The team was also able to secure shared Intellectual Property (IP) ownership for future product development thereby reducing supplier dependency and enabling market competitiveness on future quotations. The defined strategy and business award resulted in 28% annualized cost savings.
