If you can't describe what you are doing as a process, you don't know what you're doing
~ W. Edwards Deming
The most important element in the strategic sourcing process is to choose suppliers that are a good fit for your requirements. While this may sound like an obvious statement, customers rarely have the time or the information to adequately assemble a qualified pool of suppliers to competitively bid their contracts. We find companies routinely requesting quotes or buying parts from suppliers that are inappropriate for the material type, volume of business or technology required to make the product. ThreeCore has assembled a large pool of audited suppliers and has developed a proven process for creating a competitive market for its customers.
The second most important element is using the right negotiation technique to achieve the lowest total acquisition cost. There are times when a reverse auction is appropriate and times when face-to-face negotiation will achieve a better result. ThreeCore has had a wide range of experience setting up fair and consistent competitive bidding events. Below is a standard process that can be modified as needed to suit your specific sourcing needs.
Preparation (2 to 4 weeks)
- Meet with customer team to define the scope and process methodology for completing these programs in the timeframe required.
- Review annual product volumes.
- Collect and review documentation.
- Review current supply base - including in-house capabilities.
- Review current item pricing.
- Develop and agree on target price data.
- Develop comprehensive supplier requirements.
- Provide a detailed sourcing and procurement plan with timelines.
Sourcing (4 to 8 weeks)
- Develop target supplier list.
- Contact Suppliers (incumbent and new)
- Audit Suppliers if Necessary
- Provide suppliers with bid packages.
- Provide and manage supplier Q&A.
- Collect hardcopy quotes from designated suppliers.
- Review quotes and audit information.
- Decide on whether to collect bid using an on-line bidding system.
- Train Suppliers on electronic bidding system (if needed).
- Manage and host on-line electronic bid collection (if needed).
- Collected detailed final bids from final supplier candidates.
- Arrange on-site audits for the client’s quality personnel with final supplier candidates.
- Customer awards business to their chosen suppliers.
Implementation (4 to 8 weeks)
- Develop detailed implementation plan.
- Review current PO's/Inventory/Delivery.
- Develop supplier phase-in program.
- Meet with selected suppliers to review implementation plans.
- Provide sample as required.
- Communicate first article approval process to the suppliers.
- Monitor supplier progress.
- Resolve open issues.
- Support first article acceptance.
- Customer approves supplier for production deliveries.