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Product Sourcing Decision

What changes when a component comes from a different supplier?
The decision goes beyond price. It affects product requirements, configurations and the ability to deliver consistently.

What should we source, from whom and under which requirements?

  • Prepare

    • Understand product and component requirements

    • Evaluate make-or-buy alternatives

    • Assess supplier capability, quality and capacity

    • Compare cost, lead time and supply risk

    • Understand the impact on products and configurations

  • Make

    • What should we make internally and what should we buy?

    • Which supplier and component should we select?

    • Should the proposed sourcing change be approved?

    • Is the supplier qualified for the product?

    • Is the component ready to be approved for production?

  • Execute

    • Complete supplier qualification and PPAP

    • Release the approved supplier and component

    • Update product and sourcing information

    • Implement changes across affected products

    • Manage the phase-in and phase-out of suppliers and components

  • Measure

    • Did the sourcing decision deliver the expected purchase-cost reduction?

    • Were total implementation and transition costs within the business case?

    • Have quality, delivery and disruption costs improved?

    • Was inventory or working capital affected as expected?

    • Has supply risk been reduced without creating new costs elsewhere?

  • Related standard and lifecycle processes

    • ISO 9001: Control of externally provided processes, products and services; Operational planning and control; Requirements for products and services

    • ISO 10007: Change Control; Configuration Identification; Configuration Status Accounting

Example

Supplier and Component Change

Prepare: What products, configurations, parts, suppliers, plants, inventory and installed products are affected?

Make: Should the new supplier or component be approved, and when should the change take effect?

Execute: Qualify the supplier and component, complete PPAP and implement the change across sourcing, engineering and manufacturing.

Measure: Did the change deliver the expected cost, quality, delivery and supply-risk improvement?

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