A decentralized approach to sourcing has made it difficult for the organization to leverage purchased components spend into maximum cost savings. The current situation results in excess costs through duplication of efforts and a lack of standardization in the purchasing processes and practices being used. Currently supply chain management is focused on tactical execution versus a strategic view that looks to reduce cost and improve supply chain performance by continually evaluating opportunities to optimize sourcing leverage across the operating business units.
Form a cross functional team that will apply the principles of Process Design for Six Sigma DMADV. The Define Phase is project requirements definition, the Measure Phase is customer requirements definition, the Analyze Phase is conceptual process design, the Design Phase is detailed process design, and the final phase is Validate which is the verification, testing, and full implementation of the new process design.
The functional requirement was to provide a system that drives value based strategic sourcing of products and services by negotiatiing cost, managing delivery performance, and implementing common processes for efficient and cost effective execution of the global supply chain satisfying both internal and external customer requirements.
Solutions and Results:
The following processes were designed and the supporting IT solutions were outlined in detail.
- Supplier Communincation
- Strategic Sourcing
- Supplier Performance Measurement and Monitoring
- Supplier Qualification
- Supplier Strategic Improvement
- Product Specification Management
- Product Standardization Across Business Units
- Sourcing Leverage, Optimization, and Consolidation
- Long Term Forecasting of Purchased Components
- Supplier Financial Stability Analysis
- Long Term Component Cost Analysis
The savings impact is measured in hundreds of millions in dollars.