COST REDUCTION

Engineers
Buyers
Planners
Managers

This systematic approach to total cost control has proven statistically unbeatable in principle and in practice. See the growing list of stunning examples and case studies.

FEATURES

• Team Center: One source liaison for all departments and sourcing issues.
• Strategic Sourcing Report: All projects managed on one report. Provides online visibility, accountability, and closure to all your sourcing issues and activities.
• COMPS Report: A spreadsheet comparison of all submitted quotes for individual projects.
• 80/20: A filtering process that provides an A-list of your most cost effective targets.

BENEFITS

• Price: Leverage the best price with full scale measure of all submitted quotes.
• Quality: Value innovation by comparing competitors.
• Delivery: Shorter cycle time with direct response. Use valuable time while a proactive search and report is provided for you.

ADVANTAGES

• Direct Response: Quotes and comments directly from the source. No markup.
• Full Scale: Thorough sourcing process provides a measure of position for every quote. And sources are not limited to affiliates
• Comprehensive: One resource for a wide range of technology purchases and investments.

SCOPE
The process is effective for virtually all outsourced commodities and services.

• Single items
• Commodity groups
• BOMs.
• Periodic purchases
• Capital investments
• Proto to production
  

Total cost improvement results are most dramatic among custom-made subassemblies like machine parts, printed circuit boards, cable assemblies, instruments, equipment, custom molding, etc.

Contact Dan for a needs assessment.

Broad Is the Means to Destruction…

The marketplace is a living machine. The data is alive and volatile. "Mean" is defined as average and of course the range is indeed very broad. Without even knowing price and availability data, there is a 68% chance of mediocrity in the forecast. Cheers, only 16% chance the outcome is predestined for the worst. This all translates into an 84% chance for improvement. And in most cases the recovery is substantial.

How can this be? Two causes:

1. Ignorance: Ignoring the signs for any number of reasons. Individuals and companies don’t have the time or resources needed to collect more data as it applies to their needs.
2. Mediocrity: The biggest single metric is here to stay. Even when the outcome is as simple as bid or not to bid. And the only way to identify and avoid mediocrity is fix number 1. Don't ignore the law of averages and large numbers.

Prophecy and probability predict it. Results prove it.

… narrow is the way to victory and few find it.

3 Elements of Reliable Data

Harnessing the power of comparative data comes down to three metrics.

• SPEED: Data is power. And power is the time rate of work. So the most powerful data brings value innovation in a timely fashion.
• REPEATABILITY: Performance is measured by success rate.
• INTEGRITY: That spirit of completeness that elevates excellence above mediocrity.
  

Remove just one element, say speed. Reliable data processed too slowly is not as powerful.
Fast reliable data sounds great. Just try that again on another custom widget.
Fast consistent data collection must be complete and not just sampled.

Big Myth: You Get What You Pay for

This myth does not apply to off-the-shelf generic parts. If standard parts arrive at the dock on time within date code and no catchy commitments, go for cheap when needed.

But custom-made subassemblies are a different legend. All qualified fabricators are given the same blueprints and schedule. After the rush dust has settled over a possible new contract, the bids start rolling in. And they are very wide ranging. People are phuni about muni. Price is like that when you put it in context of tooling and volume fabrication for discount breaks. Then you look at the quality and delivery issues. It all adds up to total cost.

When you look at these quotes, you naturally consider the more competitive bids for starters. After further due diligence, you realize why they are more competitive. They’ve been in the business longer. With that comes the benefits and advantages of security and experience. Such a company has streamlined their operations and optimized cost.

Hence collect enough market data to invest in on-time quality at the best price.

Diaphragm Case Study

Issue
Vibration control manufacturer not satisfied with delivery by a rubber diaphragm source. And the manufacturer is not interested in transferring demand to other approved rubber product suppliers.

Action
This project involved three custom-made rubber diaphragms used in massive shock absorbers to control vibration on laser light research tables. The original diaphragm was sole sourced. And that supplier would not support required JIT/KANBAN delivery.

Two diaphragms were a priority. Strategic sourcing among 41 rubber diaphragm manufacturers produced a 61% response rate and six quotes.

The third diaphragm was more unique. It was a convoluted top hat with polyester fiber reinforcement. After successful sourcing of the first two diaphragms, the team was more confident of the challenge. Strategic sourcing among 67 rubber diaphragm manufacturers produced a 63% response rate and three quotes.

Prototypes were tested, proven to be superior quality, and approved.

Results
$25,000 (91%) annual savings for one diaphragm from source A.
$12,000 (63%) annual savings for another diaphragm from source A.
$106,000 (71%) annual savings for the top hat diaphragm from source B.

Comment
This case demonstrates a common reality. When a quality source is located, that source may not be the best for a similar item. The very act of strategic sourcing the first two items produced over two dozen more via networking. This act later lead to source B.