Global Sourcing

If you weren't paying attention, something really interesting was published over on Procurement Leaders.  An unprecedented amount of claims on business interruption policies have caused Munich Re to demand visibility into their customer's supply chains before paying claims.

From the post:

We hate to waste time. We really hate to waste time doing something we don't like doing. Who really likes to do supplier research? I haven't met anyone yet and I have been doing this for about 10 years.

Companies spend millions of dollars every year trying to predict the future.  How many sales will we make?  How much material will we use?  How will the global economic climate impact our business?  If you are in the supply chain industry you have asked yourself these questions and they have kept you up at night.  Are the suppliers I am using the right suppliers?  Have I minimized the risk to my supply chain as much as I possibly could?  We drag in all the data we can and try and model a crystal ball out of the numbers.

Being on the cutting edge of direct materials sourcing for the last decade has taught me one very important thing. Nothing hurts results more than people setting expectations based on false pretenses.

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?

ED: MFG.com is deeply saddened by the human tragedy in Japan and recommends supporting the Japanese Red Cross directly.  They are on the ground in the affected areas and can provide direct assistance to the Japanese people.

Donate here.

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How do you plan for a once in a thousand year event?

Checks and balances are critical to the sourcing and procurement side of a business. When I first started in this business I sat in the office of a buyer and explained the value of adding competition into his sourcing process. After a few minutes of explanation I noticed the buyer wasn't listening to me anymore. I stopped talking and waited for his glazed expression to refocus. Finally, he focused on me again.

For anyone paying attention to commodity markets you probably already know prices are up. For anyone paying attention to this blog you definitely know that I believe companies are responding to increased commodity pricing incorrectly.

Sourcing is incredibly important when considering the need to keep costs in line. Introducing a competitive environment to your company spend and understanding the supply market for everything your company needs to operate is valuable and necessary.

Sometimes the simplest messages are the best.