Global Sourcing Strategy Provides Cost Savings of $1.5M

Scope

A private equity backed, global provider of mission critical hardware and plumbing components approached TriVista for assistance in creating a global sourcing strategy to combat recent increases in supply costs of Chinese goods, due largely to imposed tariffs, increased labor expenses, and tighter environmental regulations.

The increased costs were passed on to customers and there was concern that this was creating a significant cost advantage for competitors with supply sources in other countries.

Approach

  • Developed a sourcing strategy framework by analyzing:
    • Risks associated with current and alternative country supply base
    • County-specific purchased part spend by supplier
    • Individual manufacturing processes
    • Overall spend by product category
  • Utilized the new strategy, industry knowledge and extensive market research to narrow down selection of best –fit countries
  • Validated suitable suppliers in each target country by executing strategic sourcing program
  • Facilitated negotiations and multiple RFQ rounds between client and validated suppliers to create a competitive environment in target countries
  • Assessed potential for multi-source awards to further reduce supply risk and total cost

Outcome

  • Produced a persistent sourcing tool based on the developed strategy that utilized relevant sourcing inputs and suggested focus areas for all future sourcing projects
  • TCO analysis performed using this tool produced sourcing strategies that provided annual cost savings of $1.5M and greatly reduced the risk of rising tariffs and other factor costs
  • New suppliers reduced the overall supply chain length, lead time, and inventory carrying cost