Global Sourcing

The manufacturing world is continuing to shrink with world commerce and trade and electronic supply chain capabilities a reality. It is necesary that manufacturing firms continually evaluate alternatives to manufacturing domestically. The answer to remaining competitive in many cases is to source components or products from firms that have the capability to produce quality product in reliable time frames, regardless of world-wide location.

Advantages of Sourcing Globally

It makes financial sense to outsource a component or product if there are quality, price and delivery advantages. Basically action to outsource can extend the profitable life of a product. Many sourcing endeavors result in fifty percent (50%) or more reduction in cost of the product with quality increases and predictable deliveries.

Using a proven process, Helle Consulting can help you convert a marginal product line into a positive bottom-line contributor while avoiding any disruptions in Customer Service.

• The process will guarantee feasibility prior to total commitment on the part of the manufacturer.
• No product will be out-sourced until quality is proven to be equal or improved.
• Predictable delivery schedules are tested and proven prior to final conversion.
• Savings are accomplished through the reduction of total cost:
  - Material
  - Labor
  - Overhead
  - Capital Expenditures

Developments in Asia

The significant role of manufacturing countries like Japan, Taiwan and Korea is well known and understood in the U.S. It is less commonly known that these countries have been moving much of their production capacity to China to capitalize on labor savings, while maintaining quality and service.

Within China, nearly all of the growth has been from the development of joint-venture companies. Unlike the traditional state-owned enterprises, these new ventures have been granted significant freedoms by the Chinese government in order to spur the economic growth of the country. As an example, in the Guangdong Province of China alone, over 30,000 joint venture companies were founded from 1990 - 2000. Such companies are the most attractive to the U.S. companies searching for high-quality, high service suppliers.

In the future, other Asian countries may become significant suppliers. We will continue to monitor that development in order to provide our customers with the best information.

Considerations for Sourcing from Asia

• Defining which items should be sourced
• Understanding implications of internal cost systems
• Finding high quality sources
• Establishing a relationship with cultural differences
• Understanding risks in maximizing financial gain
• Recognizing internal resistance - both active and passive
• Defining a starting method, including transportation and duty requirements and sampling plans

How it Works

Helle Consulting will guide your company through the process in such a manner that your Management Team will learn how it is accomplished and understand the key elements.

First, the initial candidate component or products are thoroughly analyzed to determine current actual costs to establish a baseline.

Second, specifications are clarified to assure eventual product quality. Terms and conditions are also defined.

Third, the current and predicted future usage rates are determined to guarantee savings over some period of time.

Fourth, the search for a supplier begins. The value that Helle Consulting brings to the table at this point is the experience, skills and contacts that Helle Consulting has with manufacturers throughout the world. We will rapidly establish viable supplier candidates.

Our approach will bring your company through the entire cycle from initial consideration to the point that high quality, production manufactured product is regularly being received in your plant.

Major Phases

Strategic Phase

• Conduct top management introductory session, typically one-half day
• Define opportunities congruent with business objectives
• Assess organizational readiness - people, data and systems
• Initiate development of a detailed plan of action that indicates high priority product lines

Tactical Phase

• Conduct mid-management introductory session (up to one full day)
• Select functional team members
• Assess readiness
• Select initial items to be sourced and verify data accuracy and specification completeness.
• Determine status reporting method

Operational Phase

• Tooling and sample purchase orders together with budgets
• Generate detailed and complete acceptance standards

Helle Consulting will conduct all communication with suppliers through sample acceptance.

• Repeat as above for new commodity types as needed
• Determine production ordering routines

Stabilization Phase

• Establish on-going reporting methods
• Upon completion of operational phase, client to assume all ordering / communication.
• Celebrate

Summary of Process

1. By item

a. Determine current costs
b. Get quotes / select supplier
c. Verify savings vs. plan
d. Order tools and samples
e. Review supplier inspection results
f. Receive samples
g. Verify inspection results (client)
h. Acceptance / rejection
i. Order pilot lots as required
j. Review pilot lot acceptability
k. Review production orders by client
l. Turn over future ordering to client

Conclusion

Our approach to encouraging your interest in this Global Sourcing Program is to offer a demonstration of the savings achieved by Helle Consulting in other firms to provide you with a clearer understanding of the potential.

We would also provide you with information that will develop a high level of comfort with our approach to helping you increase profitability at minimal risk.

Contact us now by phone or e-mail for this free demonstration.