Demand Driven Sourcing - Don't Be Scared

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Your sourcing process, in regards to discrete manufactured components, is probably racked with inefficiency and there is a really good chance you don't know it. 

Why not?

You are probably following a traditional methodology that has 7 or 8 steps and was developed by a consulting company that charges by the hour, which should be a tip off that something may be wrong. It doesn't need to take that long. It shouldn't take that long. The traditional process is wildly inefficient in an evolutionary economy where open capacity can be tapped more easily than in the past. The inefficiency of the traditional sourcing methodology de facto makes your supply chain inefficient and therefore, your company inefficient.

Demand drives efficiency. However, you have to let the market work.

You have a particular requirement or family of requirements? Where do you lose time? Supplier discovery. You do all of your supplier qualification on the front end. Take a deep breath, because for the traditionalists among you, the next sentence could really be painful. It is completely unnecessary. No, really, it is. The right suppliers will find you when you need them. I know you don't think this is possible, but it is.

Now, this won't take place in a vacuum, but it will happen if you take the time to structure a clean RFP and tell the supplier world about it in a controlled, secure environment. Let the right suppliers that have the right capacity, capabilities and desire to do your work come to you. The open marketplace does the supplier discovery work for you instead of spending a huge amount of time and energy digging up suppliers that may or may not get back to you. This is especially annoying and inefficient if you are your own dedicated expediter. It is excruciating if you are a project engineer that doesn't want sourcing responsibility to begin with.  How much are you being paid to make phone calls to remind suppliers that you may want to give them money? This makes no sense.

The right suppliers will respond. 500,000 + sourcing events and $100 billion + in components sourced over the last decade tells us they will. If you properly prepare the RFP, it should run largely autonomously in the marketplace saving the sourcing professional or engineer an enormous amount of time, increasing their efficiency. After the quote data comes back, you narrow it down to the primary and secondary supplier (maybe add a 3rd as a backup). Then go through your detailed due diligence with an increased probability of success, a substantially reduced sourcing time-line, and a similar risk probability as the long tail sourcing process that drains resources and is fraught with inefficiency.  Doesn't that sound like a more efficient process?  A leaner sourcing process makes for a leaner organization.

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