. . . in the Development of a Sourcing Strategy

The first step is to define the key issues that need to be addressed – every organization is unique in this regard. For example, is the issue dealing with low cost import competition or is it how a firm with a global footprint manages its sourcing process?

With the above caveat, we find that understanding the customer requirements for the products – how much of the business is commodity in nature vs. specialty, service needs, quality needs, etc.- is important to understanding and developing a sourcing strategy.

A second step is to understand the competitive position of the manufacturer, including:

• Marketing (brand position, product design, product development, reputation for quality, relationships with key customers).
• Total cost (equipment, raw material costs, labor costs, productivity and overhead, etc) vs. a landed cost from other regions.
• Knowing the competition. Is it USA based manufacturers, offshore manufacturers, or direct sourcing by your customers?
• Supply chain management. Learning the service requirements of key customers, inventory management systems, manufacturing lead times, and the inventory investment required.
• Management experience and organization. Analyzing the current sourcing management function and the organization required to support a global sourcing effort.
• Other factors include political risk and the protection of new product ideas and patents.

In looking at the availability of sourcing options, the company will typically develop a matrix of requirements based on:

• Its market requirements
• The need to be cost competitive
• Services
• Many other factors as outlined above

Finally, a company may choose a simple sourcing arrangement or may wish to consider a joint venture or the ownership of the manufacturing assets.

In some instances, a client is looking for a second opinion or data to help them develop or confirm a sourcing strategy. In such cases, we work closely with the existing management to develop the sourcing strategy and assist in its implementation.

For companies with manufacturing operations, The Context Group takes a comprehensive overview of the entire system including:

• Supply Chain Strategy
• Cycle Time Reduction
• Sourcing
• Competitive Benchmarking
• Cost Modeling
• Industrial Engineering
• Employee Empowerment
• Incentives/Pay Plans
• Work Teams
• Total Quality Management
• Material Utilization
• Waste Control