Sourcing: how to choose an industrial supplier?

In the manufacturing industry sector, the concept of sourcing refers to the search for suppliers in order to meet the company's cost, quality and deadline objectives. Given the rapid evolution of production needs, finding the right seller at the right time is a real strategic challenge. However, this process is often more difficult than expected. What resources do companies have to better control their supply chain?

The strategic sourcing approach

A key step in the purchasing process, the search for suppliers tends to meet the expectations of the organization in terms of Costs, Quality, Deadlines, but also performance. In addition to this traditional vision, there is now the challenge of co-development and innovation. The strategic sourcing encompasses all of these realities and becomes a sustainable competitive lever.

The sourcing process generally takes place in four steps.

Creating a panel

To constitute their panel, buyers must organize a Active market monitoring. Thanks to the information collected in this way, the teams identify industrial manufacturers and distributors likely to meet the needs arising from the various functions of the company. To do this, Purchasing Managers make a “request for information” (RFI — Request for Information) from potential partners. This allows them to pre-qualify them according to their potential for suitability with the organization.

However, finding reliable information is not always easy. To do this, buyers can consult specialized sites, contact experts, or turn to their counterparts. La Mobility Work platform gathers more than 10,000 maintenance experts, from all walks of life, around the first community CMMS. This allows users to share tips and opinions with their network.

Once identified, the panel should be rationalized. In other words, it is a sorting phase according to their selling profile, the type of products sought, delivery conditions, payment methods... To better understand this long and complex process, it may be recommended to draw up a map of the company's purchases. The Kraljic matrix offers a graphic representation of the different purchasing families according to their level of criticality and the complexity of the target market.

RFQ consultation

During an RFQ (Request For Quotation) consultation, buyers send requests for quotes to their entire panel, before studying and comparing them. Since the estimate has legal value, this approach may be the subject of specific procedures. Indeed, some companies apply strict policies for their tenders. For certain categories of strategic purchases (exceeding a threshold, public contracts, etc.), buyers will, for example, have to put in competition with several sellers by requesting a quote.

Partner identification

At the end of a sometimes time-consuming selection process, Purchasing comes back to the manufacturer on the selected offer. Final negotiation phase before signing the supply contract. At this stage, depending on his margin of negotiation, the buyer reviews the prices displayed, the legal conditions, the delivery and return methods one last time... These exchanges are all the more important as they constitute the first foundations of a partnership in the making.

SRM and partnership

A multi-sourcing approach is not recommended for complex and technical production purchases. In this respect, organizations are increasingly tending to favor partnership relationships with their suppliers. Transparency, reliability and emulation are the key words of these new forms of partnerships.

The two parties are also required to exchange and share information that may have an impact on the QCD (Quality, Costs, Deadlines). Depending on the strategic impact of the purchase, the sponsor may have every interest in maintaining privileged relationships with its equipment or consumables manufacturers. In fact, it is not uncommon for them, in a process of continuous improvement, to want to capture the feedback of their customers.

New online tools are now facilitating these interactions. Designed as a real exchange platform, Mobility Work Hub Put in contact industrial suppliers and maintenance professionals. Thanks to a shared interface, suppliers have access to statistical feedback on the use of their products extracted from our CMMS application.

How to approach sourcing?

Arising from the global strategy, your sourcing strategy reflects the goals and priorities of your business. Other factors are therefore added to the Quality-Cost-Delay triptych:

• Portfolio and purchasing cycles. Clearly define your goals and internal needs and ensure that these align with business goals. For each product type, define the number and profile of suppliers required.
• The challenge of the target product. Your approach may differ depending on the importance and complexity of the equipment or consumable to be sourced. For example, the resources - financial and human - allocated will not be the same, other control processes will have to be observed.
• Competitive environment. List the companies you have already used, then perform a “cost-benefit” analysis by comparing them to potential partners. Draw up an accurate picture of the market by integrating competitive dynamics, legal constraints, current procurement practices, etc.
• Targeted geographic areas. Global sourcing (or global procurement) responds to several motivations. Extending the geographical origin of its sources of supply makes it possible first of all to ensure the supply of factories located abroad, or to obtain products that do not exist at the national level. Other buyers are turning abroad in search of better pricing conditions. While the prices displayed by some foreign sellers are attractive, you should not make them your only selection criterion. The political, social, economic, or environmental context can have a significant impact on how local activities take place.
• Innovation needs. Co-development is an interesting perspective, especially for start-ups and SMEs. Industrial suppliers and sponsors share the costs and benefits of innovation, in a joint process of continuous improvement.

By considering all of these points, you will be in a position to develop a sourcing strategy adapted to your organization.

How do you choose the right industrial supplier?

Your strategy is the backbone of your sourcing activities. However, choosing the right supplier is often the subject of a case-by-case approach. To make sure you make the right decision, here are some criteria for get to know your interlocutors better.

• The adequacy of supply and demand. Carefully study the details of the products offered, and make sure that they correspond to your internal needs. By sharing their official catalog on Mobility Work Hub, our suppliers can attach technical documentation to it for the attention of their users. Maintenance teams thus have the possibility to consult them directly from their new generation CMMS.
• Delivery conditions, management of delays and return options. Beyond the financial interest, this tells you about the flexibility of your interlocutor. How does it handle small and large volumes? Can it ensure urgent deliveries? If you are considering a long-term relationship, be sure that your partner will be able to adapt to your changing needs.
• Business expertise. Quality risk is often increased when looking for new sources of supply. There are two ways to reassure prospectors. Certifications (ISO standards, for example) form the first level of trust. Community applications like Mobility Work allow you to exchange tips and best practices with your counterparts.
• Customer follow-up. Faced with the growing importance of SRM, buyers are looking for new ways to communicate with their service providers. After-sales service and technical assistance are therefore becoming increasingly important in the decision-making process. New solutions inspired by Industry 4.0 such as Mobility Work Hub facilitate exchanges between supply chain actors.

Of course, this list is not exhaustive; other more or less rational elements will motivate your decision. Some companies, for example, will accept higher costs if it allows them to collaborate with a prestigious or particularly innovative brand. Others prefer security, familiar areas or relationships. Still others proximity.

Whatever their preferences, Mobility Work offers its users a platform dedicated to the relationship between industry players. With Mobility Work Hub, manufacturers and service providers have a next-generation marketing tool. By sharing their official catalog with Mobility Work CMMS users, they in return benefit from statistical data on the use of their products. Maintenance professionals, for their part, have access to new supplier profiles and their technical documentation.

Discover Mobility Work Hub for free now!