The problems related to the sourcing process described above can separated in 3 groups

Sourcers problems

The major problems mentioned are :

  • The number of technical modifications that will occur for one RFQ. Indeed, for each of them, the sourcer shall go thru every step of the process and ensure necessary tracking for each version.
  • The typing mistake risk in the construction of the quote summary require the sourcer to proceed numerous check which make this activity time consuming

The process analysis shows that 60% of the workload consist in low added value task (data manipulation, checking’s and file organization)

Problem for the management

While working with R&D or/and sales department on the quote summary provided by the sourcer, it’s a common situation for the sourcing team to be faced with the question:” The price is too high! Is it the right price?”. And the answer is often:” I need to check”

The uncertainty comes from the mistake risk while data manipulation all along the process. It can also come from an insufficient number of supplier quotes. Having only two price available, makes it difficult to figure out which price is correct, but if having three price will definitively make it more easy to guess the good price level. But, considering the current time consuming process and also the always shorter leadtime to provide the answer, the sourcer may not have other choice than to reduce the supplier number down to two. Even, sometime, having at least a price within the expected leadtime is a challenge.

Other frequent comments from the internal clients, R&D, sales department toward sourcing team is that price feedback are often late, too high, requiring to make price evaluation which are often too optimistic, making the later margin products too low.  This situation will make, in addition, the sourcing team feel frustrated.

The price breakdown

The approach which consists in asking the suppliers to fill cost breakdown templates is quite popular. Nevertheless, we can raise the question of its real efficiency. Indeed, when cost breakdown are collected from the supplier in excel files, it’s difficult to control the consistency of the provided data. Furthermore, the data consolidation from the different supplier quotes is tedious, as a consequence not always done. This will of course strongly limit the benefits.

Technical discussion with suppliers

In the process of the custom part RFQ process, there are is an additional activity often not clearly identified but consisting in a high added value: technical discussion for the suppliers

Based on the technical specifications provided, the supplier will often discuss with the sourcer the possibility to adjust the specifications to it’s manufacturing equipment, even suggest technical modifications to make the manufacturing process more simple and thus optimizing the cost. The sourcer plays here a key role in the cost improvement. But those discussions require the sourcer to have enough time, he may be compelled to reduce the number of suppliers if he does not have enough time.

As a conclusion, all improvement orientations go through a common stage which is to reduce the volume of non-added value tasks, which mostly consist is eliminate the numerous data manipulation to allow a focus on analysis and cost optimization activities.