Challenges
Some of the key challenges in this category for this client included:
- A fragmented purchasing organization, with shared parts procured independently by different operating entities
- Limited long-term contracts and purchasing agreements
- Absence of a unified raw material indexing system across the supply base
- On-time delivery rates below 70%
- Concern over changing geopolitical business impacts (e.g., tariffs)
Approach
Throughout the 7-step process, Claudia worked with the client team to:
Conduct operating facility interviews to uncover current challenges and sourcing approach risks, including a “blanket” approach to dual-sourcing parts despite volume de-leveraging, dual tooling cost, etc.
Identify the correct country of origin during the creation of the Request for Proposal (RFP) step as several trading houses were utilized in the current supply base
Identify suppliers outside of China due to the client’s concern about potential tariff impacts and supply chain costs
Benchmark the supply base during the Site Visit step to understand what the market is capable of for on-time delivery
Results
The Claudia Strategic Sourcing process enabled the client to realize several benefits, including:
Establishment of Transparent Pricing Models to control future part cost (a.k.a., new part tax)
Implementation of standardized raw material indexation in coordination with the client’s Finance organization
Supplier contractual commitment to 99% on-time delivery with recovery provisions
Creation of a strategy for “smart dual-sourcing” based on part classification and criticality to client’s assembly operation
Over 12% annualized costs savings
Over 50% reduction in China supply, with an additional focus on US plants
