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March 24, 2015

Strategic Sourcing & Engineering: Friend or Foe?

On the outside both Strategic Sourcing and Engineering have a common goal: Partner with the best supplier possible.  Now defining “best” will have different meanings for the different teams.

Same Goal, Different Meaning

Strategic Sourcing is focused upon factors such as:

  • Competitive Cost
  • Supply Chain Efficiencies
  • Supplier Management Processes
  • Financial Strength of Supplier
  • SQE (Quality)
  • Financial Terms
  • Future Cost Reductions
  • Inventory

Engineering is focused upon elements like:

  • Quality
  • Technical Specifications
  • Control Plans
  • Technical Capabilities
  • Audits, Processes
  • Efficiencies
  • Scalability
  • Repeatability
  • PPM

Both have the same goal:  Reduce Risk!  Sourcing will lean towards cost while Engineering will look to quality! Both are important to ensuring a Supply Chain operates seamlessly whether its length is 12 miles or 12,000.

So why is it that Sourcing and Engineering teams act cordially at best with one another?  Why the tension when both ‘seem’ to have the same end goal?


All About Evaluation

I think it comes down to how each team is evaluated.  Engineering's first stop to ensure a contract manufacturing partner literally has what it takes to become a supplier.  They have the technical capabilities to manufacture components, sub-assemblies, or finished products over and over delivering expected high quality standards.  Engineering conducts the initial audits and determines if the supplier is a "go" or "no go."

Now once a selected vendor becomes an official supplier and has an active role in the supply chain, the only real risk that engineering faces is a quality issue.  Should a quality issue arise the engineering team is not technically at fault.  They will push the issue downstream to the supplier.  And rightfully so.  Engineering has approved the PPAP and validated the processes so it is up to the Contract Manufacturer to execute.  In short, Engineering doesn’t get raked over the coals if a supplier fails.  Who does? Yup, Strategic Sourcing.

All the risk and evaluation lies with Sourcing: Quality issues, Shipping Delay, Inventory too high or too low, financial strength of the Contract Manufacturer, etc. Really ANY issue that arises once a vendor becomes a strategic supplier lands on the desk of Strategic Sourcing!

If you don’t believe me, just ask the Sourcing Team how many “Great Job” compliments they get vs. how many “why is our production line stopped?”, “why are the RMAs building?”, and “why is inventory so high?” complaints in their inbox.

When I get the opportunity to spend time with our customers and ask if their engineering team and strategic sourcing teams are friends or foes, quite often the answer is simply, “yes!”

FREE Guide: 7 Essential Questions to Ask When Choosing a  Strategic Manufacturing Partner

Filed Under: Engineering, Strategic Sourcing