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Supplier Assessment

Viewing posts tagged Supplier Assessment

25 Jan 2020

Supply Chain Optimization: Global Expansion (Mexico)

By Arthur Elliott

Background

  • EWA was engaged to develop and implement a Mexican supply chain footprint strategy
    • (identify and qualify local suppliers, evaluate options for assembly operations, identify 3rd party logistics providers, negotiate tax incentives, hire local senior management and evaluate existing DCs)

Approach

Step 1: Define Project Objectives and Requirements
  • Align on opportunities, volume requirements, cost targets
Step 2: Deploy Formal Process & Develop Core Elements for Analysis
  • Identify Products to be outsourced – one product was 48% supplied from China to US
  • 80% of component spend can be supplied from Mexico
  • Labor & Logistics savings favored Product Assembly in Mexico – faster than In-House
Step 3: ID Potential Suppliers and Obtain Analytical Data
  • Identified component suppliers within Mexico
  • Interviews and factory visits to develop supplier “short list”
  • Suppliers provided detailed proposals with pricing, QC control plans, price breaks for increased volumes, samples for performance testing
  • Same process for identifying & qualifying Assembly and Packaging contractors
Step 4: Hands-On Implementation
  • Negotiations conducted with suppliers to finalize
    • Cost, payment terms, projected productivity improvements, forecasting lead times
    • Sharing of productivity/volume benefits, Inventory stocking requirements
  • Negotiations conducted with contractors to finalize cost and value-added services:
    • Provide incoming QA inspection and manage supplier returns
    • Monitor and expedite deliveries from suppliers
    • Assemble and Package product & shipment to customers or distribution centers

Results (Outsourced Product Line)

  • Cost Reduction
    • Reduced inventory vs China ($21MM cash) and shorter lead times, better cash flow
    • Cost reduced 5% ($6MM) vs sourcing from USA, with potential for additional reductions
    • Eliminated tariff impact
  • Other Benefits
    • Quick set-up
    • Low cost to implement
    • Good access to suppliers for USA-based QA and technical staff
    • Good quality outsourced assembly and packaging
    • Elimination of 2 DC’s from proximity to Western USA customers
    • Stable trade environment
25 Jan 2020

Supply Chain Optimization: Supply Chain Assessment

By Arthur Elliott

Background

  • Asia-Pacific manufacturing operations of a global chemical company was struggling to make on-time deliveries, carried excessive inventories, and had excessive freight and logistics expenses (primarily from expedited shipments)
  • EWA was engaged to identify operational problems and to develop/implement corrective actions to improve logistics & supply chain processes

Approach

Step 1: Onboarding & Alignment
  • Gain thorough understanding of client’s overall business, markets, manufacturing operations, current supply chain, and logistics network
Step 2: Model current state of client’s supply chain and logistics operations
  • Current logistics network
  • Process assessment
  • Determine customer requirements
  • Organization structure analysis
Step 3: Analysis to identify required changes and potential opportunities
  • Performance
  • Voice of Customer
  • Processes
  • Organization Design
Step 4: Develop recommendations and action plan
  • Short term actions
  • Medium term actions
Step 5: Hands-on implementation
  • Interim Supply Chain Manager
  • Develop RFP for logistics services
  • Implemented significant organizational changes
  • Support transition of new organization & process (bi-weekly project implementation meetings)

Results (Outsourced Product Line)

  • Savings achieved through rate negotiation & reduction in expedited shipments
    • Carriers were consolidated & outbound logistics processes were improved, with 15% reduction in freight costs
  • Improvements were made to forecasting & planning generated the expected results
    • Inventories were reduced by nearly half, generating US$MM cash
  • Customer service levels improved dramatically
    • On-time deliveries improved to > 90%
  • Organization stabilized & capabilities improved
25 Jan 2020

Risk Management: Investigation and Correction of Employee Trade Secrets Theft

By Arthur Elliott

Background

  • A manufacturer of specialty chemicals had lost 70% of company customer base due to TS theft
  • The previous Operations Director in China had removed electronic drawings and other IP over a 2-year period, set up a competing company and bribed the purchasing managers to move their purchases to his new company.
  • EWA was engaged to investigate the claim and develop counter-actions

Approach

Step 1: Risk Identification
  • Investigation and confirmation of the existence of the new company and the individual’s equity ownership
  • EWA obtained product samples and verified a trademark violation
Step 2: Risk Mitigation
  • Recruitment of local Chinese attorneys and the filing of a legal claim against both the company and the individual
  • The competitive office, workforce, sub-contractors and customer base visitors were investigated
  • EWA contacted the client’s original customer base to inform them of the various illegal actions and acts of corporate espionage
  • Legal proceedings cannot be disclosed due to confidentiality restrictions
Step 3: Long-Term Risk Prevention
  • Development of a comprehensive asset protection program

Results

  • 75% of the lost customer base returned to the client within 7 months
  • No new acts of corporate espionage or theft