Challenges
The largest challenges for this category were related to geopolitical risk and concern over potential tariffs impacting business. This led to an entire Global center-of-excellence (China) for Cardan Shafts to be largely excluded from any sourcing activity. Client stakeholders also requested to further de-risk supply from China resulting in a near-exit for a large global shaft supplier.
Approach
While working through the Site Visit step the team took great care to assess each supplier’s capability to produce the parts within the defined requirements. The team conducted due diligence focusing on manufacturing process controls, traceability, plant cleanliness and supplier quality controls to ensure suppliers were truly able to manufacture the parts they quoted. During the Supplier Selection step, the team further segmented this category into part families to account for design types (drawings vs. product cards), cross types (wings vs. rounds), fixed or variable (telescopic) lengths, and connection types (internal vs. external) to align the parts with the supply base capabilities. Lastly, during Supplier Selection, the team focused on introducing alternate suppliers to supply lower complexity and lower volume parts to help integrate these suppliers into the global supply base and work with them on expanding their capabilities, while awarding higher complexity and higher volume parts to established competitive global suppliers.
Results
$11.1M annualized savings
42% supplier rationalization
Improved payment terms from ~45 to 75 days
Transparent Pricing Models were agreed to with all selected suppliers
