Friday, December 23, 2005

Concept of Sourcing

What is that,often, sours your experience of Sourcing products. More often than not , it is concept of sourcing and the way you approach it that goes wrong.

Though all of us have been here long enough, there is still a need to differentiate between Buying and Sourcing.

When you buy, you get what the supplier thinks you need. When you source you should get what the supplier knows you need.

1) Check whether the source know his stuff. It is not what he manufactures now that matters, how he does it that matters.

2) Always start outsourcing with few components. Choose components which are losing market because of higher input costs.

3) Make sure that Components you select are worth sourcing. They should justify the efforts that you and your source take, either by value or volume.

4) Let him know everything that you desire and you will what you want

5) Make sure that the Source understands the Quality Requirements of the product.

6) Get samples made. If the sample involves fixed charges pay him for that as it indicates that you are serious about it.

7) Let the Source take his time the first time. He will do a good job. Keep the lines of discussion open, they help in furthering clarity.

8) Understand that per diem Freight and Insurance costs increase when the consignments are smaller , they wipe out a lot out of what you save. It is often the volumes in small and light engineering products that help.

9) Appreciate the fact that the if the Source is from another country and he will often face situations you never face. But if you have taken your time finding and evaluating your source, you will be more comfortable. With proper evaluation you will find a source who tries to take as much effort to understand you , as you do to understand him.

So next time you feel that a component needs to be sourced you know what not to do.


At 12:59 PM, Anonymous Matthew W. Grant said...

Interesting semantic distinction between the words "buying" and "sourcing." Everyone I know uses them interchangeably, but I liked your differentiation which makes one stop and think about how interactions with vendors usually take place.

I disagree that Buyers should pay for samples. I believe that vendors should absorb samples as marketing cost of acquiring business.


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