Challenges
Over the course of the sourcing project, several systemic challenges with the current state were identified:
Due to the wide variety of product offerings, applications, and customer-specific customization options, excessive part proliferation has resulted in the manufacturer having to manage over 15,000 unique SKUs
Part numbers were historically awarded based on shot-term supplier capacity rather than strategic alignment with the suppliers’ core competencies
Suboptimal forecasting and supply planning resulted in a highly localized supply chain that sacrificed cost competitiveness
Approach
During the execution of the process, key considerations that drove the teams’ strategy and recommended business award included:
During the Site Visit step, the team gained a detailed understanding of each supplier’s raw material supply chain, capacity, assembly, and internal testing capabilities thereby gaining confidence that the supplier could meet the technical and quality requirements.
During the Negotiations step, the team incorporated a requirement for selected suppliers to have in-region final assembly and distribution capabilities.
Results
The Claudia Strategic Sourcing process resulted in the selection of competitive suppliers that could offer competitive pricing through a combination of global manufacturing and in-region final assembly and distribution. Additionally, the team worked with the client’s engineering organization to reduce part proliferation through modular design principles and part re-use. The team’s strategy and business award results in 23% annualized cost savings.
