Custom part sourcing (mechanics, PCB) is a major stake, for both economical and quality reasons. We have met many sourcers in different countries, and it appears that the practices as well as the problems encountered, are very similar.
In the first chapter, we will present a summary of practices, operational processes implemented by the sourcing team we met. In the second chapter, we will give an overview of the problems and issues they are faced with,and the solutions or improvement plans they have on hand.
Chapter 1: The RFQ process for custom parts
1. Preparation of the RFQ
The preparation of the RFQ starts with getting the necessary technical specifications. They are usually provided by e-mail, by the sales department or by the R&D department. They consist in a set of mechanical specification, 2D or 3D files (in DXF or STP format), and possibly additionnal mechnanical drawings in PDF.
RFQ often include multiple parts. A “mini BOM” in an Excel file will, in the best case, summarize this part list, give the key informations such as manufacturing technology (plastic injection, stamping), in order to allow the sourcer to dispatch the RFQ to the approriate supplier more easily. Pictures of the different parts are sometimes added to identify the parts quickly and make the sourcer and supplier work more confortable.
The complementary data of the project (application, final customer if applicable), RFQ hypothesis (annual estimated quantity, duration of the contract, start date of production) as well as expected schedule, qualification process are given separately.
Classification and verification of information
The sourcer first task is to classify and organize all these documents. This classification consists in storing them in the appropriate directory, located in a folders tree generally tufted and requiring a significant number of clicks to access the correct directory. Some will rename the files to structure them to ensure better traceability. At the same time as the sourcer carries out this collection of documents, he will generally ensure that he has all the necessary data to send the RFQ to the suppliers
Most sourcer have standard RFQ forms, which differs for each purchasing families or commodities. The RFQ form contains of course all the parts to quote, but also all the data the sourcer expects the supplier to provide for anaysis purpose For custom parts, the best pratices for the sourcer are to get the cost breakdown from the supplier to allow a detailed analysis of the quotation relevance (Should Cost analysis approach)It’s quite common to see RFQ with cost breakdown template, sometimes sophisticated ones, that the supplier is expected to fill. For exampleAussi trouve-t-on assez souvent des formulaires de décomposition de coûts, parfois très élaborées, que le fournisseur va devoir remplir. Par exemple : le coût des matières premières (la quotepart), le détail des moyens de production mis en œuvre (presses d’injection), nombre d’empreintes dans un moule, durée du cycle de fabrication.For example: the raw material cost , the list of manufacturing equipment (injection machine, painting), the number of cavity in the mold or the injection cycle time.
The cost breakdown templates shall be prepared for every part. Those additionnal excel files they will then be stored in the RFQ directory increasing the data manipulation.
2. Sending RFQ to suppliers and follow-ups
Sending RFQ to suppliers is completed, no wonder, by email.
All the documents prepared, shall be sent by email to every supplier. Problems often occurs at this step because of the size of the files.. It may be necessary to split the sending to the supplier in several emails, increasing the data manipulation for the sourcer, but also for the supplier.
As suppliers do not always meet the deadlines, it is mandatory to monitor the supplier feedback and to remind them when they are getting late.
3. Receiving supplier quotes
When receiving the supplier quote, the sourcer shall:
- Save the quotes (and the attachments) in RFQ the directory, for obvious reasons of traceability.
- Make sure that the supplier has correctly filledthe RFQ template and cost breakdown form (Provid mandatory data, also respect the expected data format)
Regarding the emails sent by the suppliers, they are almost never organized due to lack of time (it is a common situation for sourcer to have an inbox filled with thousands of emails). This situation is a major problem for companies, indeed, all these emails that keep in every sourcer inbox are important data, especially when a complain or problem raise up. In addition, they are accessible only by the sourcer himself, the problem becomes critical if the sourcer leaves the company.
4. Quote consolidation and analysis
The common practice is to combine the different suppliers’ quote data in an single spreadsheet, in order to make the analysis more easy. In this file, you can find, for example: unit prices, tooling cost, but also important comments on the supplier’s quote, regarding the manufacturing process.
In plastic injection, we will talk about the number of cavity in the mold, as well as the tooling mold lifetime (which isevaluated in a number of shot).
Copy/paste all the data of every supplier quote into a single spreadsheet, is not only a time consuming, but also a potential source of typing mistake. Therefore it requires special care from the source a, because the errors can have serious consequences. This comparison table will be the reference document
for the step of analysis and supplier selection.
5. Supplier Selection
Quite frequently, the choice is not the sole responsibility of the sourcer.
Meetings are organized to bring together the key persons involved in the project: R&D, Sales. Logistics and Quality services will also frequently be part of the decision. They will mainly give their opinion on the supplier from an operational point of view. In global the choice use to be done in a Total Cost of Ownership perspective.
The process outlined above is the standard sourcing process, as it is supposed to run in the company. In the real life it’s unfortunately not straightforward. During or after the RFQ process, there are most of the time technical changes, which require to run again all the steps of the RFQ process.
- Engineering Changes: They consist in technical specifications changes. Whether they come from the R&D department or from the customer, they will require the supplier to updating the quotes accordingly.
- Additional parts: Parts may be added during the process, as they were probably not ready or available when the RFQ has been launched.
In both cases, all stages of the process need to be reviewed for each of revision: specification preparation, RFQ, quotations, analysis. This requires from the sourcer to be precise and well organized in all the data manipulation to avoid mistake at his side or at the supplier side