Manufactured parts can be one of the most profitable categories but also one of the most challenging. The first step is to create a core list of key parts which represent the majority of your spend and will challenge the suppliers core capabilities. Be careful to avoid only negotiating on the ‘meat’ and leaving the complex parts with the incumbent, as this will only end up with cost increases in the future. The remaining should be handled through a representative basket which can be examined more closely with the top suppliers from the Event. Your Request for Participation needs to include all the differing requirements and ensure supplier quotes can be accurately compared by explaining how you want their bids. The specification needs to include detailed up-to-date drawings which accurately define the product. Any one-off costs will also have to be considered for tooling and inserts for example and these should most likely handled via amortization or in a separate Lot.
Delivery prices should be DDP if you want to accurately compare quotes from around the world. Also do not to forget to include any standards which the suppliers will require from your customers. Remember to think about whether you might need to run this event in the future, think about supplier agility and all the information that you might need to move quickly. This can cover the basics such as engineering drawings but can also go much further to cover process details, types of machine that will be used through to BOM’s (Bill of Materials) and assembly instructions. Lastly since these types of components have a very high material content, suggest an index linking mechanism. This will help take some risk out of the equation for suppliers and will lend itself to a better pricing.
Cast your net far and wide. Many tenders of this nature will normally look at the local and national supplier base as well as the international. Supplier questionnaires and NDA’s might be very applicable here due to the need to start rationalizing the suppliers found and also keeping your designs confidential.
If you have created a very detailed RFQ, you will have a handle on the complexities of implementation. This process needs to be very carefully thought out to ensure a smooth transition if you change supplier. Auditing of your potential choices is the best way forward to get the relationship onto the right footing and gain a true understanding of their capabilities. Make sure you obtain a cost breakdown of the final quotes, including tooling, delivery and raw material costs. This will help with the ongoing management and help mitigate unfair increases from the suppliers during the course of the contract. You might also look to put into the contract possible gain share arrangements to take into account value engineering opportunities and this will help focus on suppliers who can pro-actively assist during the product life cycle and to find a better partner.
Market Dojo offers a wide range of capabilities that help procurement professionals get the most out of their sourcing activities with easy to use and intuitive solutions. You can get started on your Manufactured Parts tender straight away with our ‘Pay as you Go’ plans that start at as little as £500. Designed by procurement specialists, our solutions aim to help you centralise your information and negotiate the best value for your goods and services. Whether you looking to run a simple eSourcing event or combine advanced weighted proposals with integrated procurement solutions we can help with our range of offerings and support.
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The company and people are intuitive, young and enthusiastic in nature. Specsavers will be looking to use Market Dojo as a ‘business as usual’ tool and regard it as an integral part of their negotiation toolkit.