single sourcing prepared by david bach boise state university october 9, 2002

Single SourcingSingle Sourcing

Prepared By Prepared By David BachDavid BachBoise State UniversityBoise State UniversityOctober 9, 2002October 9, 2002

What is Single Sourcing?What is Single Sourcing?

Also referred to as Sole SourcingAlso referred to as Sole Sourcing

Definition: Using One Definition: Using One Supplier for a Single Supplier for a Single Component.Component.

Objectives of the TrainingObjectives of the Training

Learn About Single Source PracticesLearn About Single Source Practices

Where Can Single Sourcing Be Where Can Single Sourcing Be AppliedApplied

How To Set Up Single Source How To Set Up Single Source ProcessesProcesses

WelcomeWelcome

Introductions…Introductions…

HistoryHistory

Why was this developed?Why was this developed?

How did Single Source become How did Single Source become popular?popular?

Where does Single Source fit?Where does Single Source fit?

Why Single SourceWhy Single Source

Supplier ReductionSupplier Reduction

Develop Partnerships with SuppliersDevelop Partnerships with Suppliers

Lower CostsLower Costs

Increase Quality ImprovementsIncrease Quality Improvements

How Did This Become How Did This Become PopularPopular

Need to be able align strategy with Need to be able align strategy with supplierssuppliers

Improve CommunicationImprove Communication

Japan Purchasing Practices: World-Japan Purchasing Practices: World-Class Class

Where Does Single Source Where Does Single Source Fit?Fit?

Organizations with JIT processes.Organizations with JIT processes. Where opportunity for quality Where opportunity for quality

improvements exists.improvements exists. In industries where technology In industries where technology

changes rapidly.changes rapidly. In companies looking to gain In companies looking to gain

competitive advantage by reducing competitive advantage by reducing suppliers.suppliers.

Advantages to Single Advantages to Single SourceSource

Strategic PartnershipsStrategic Partnerships

Opportunity for lower costsOpportunity for lower costs

Improved communication Improved communication

Quality improvement PotentialQuality improvement Potential

DisadvantagesDisadvantages

Disruption in the Supply Chain…Disruption in the Supply Chain…• LaborLabor• TransportationTransportation• PricingPricing• QualityQuality

Needs to be continually monitoredNeeds to be continually monitored

Narrow FocusNarrow Focus

BrainstormBrainstorm

How can Single Sourcing be How can Single Sourcing be applied in your organization?applied in your organization?

Pros and Cons?Pros and Cons?

Getting Started Getting Started Slide 1 of 3Slide 1 of 3

Supplier EvaluationSupplier Evaluation• Current SuppliersCurrent Suppliers• Target Number of SuppliersTarget Number of Suppliers• FiltersFilters• Address individuallyAddress individually

Qualify the SupplierQualify the Supplier• CriteriaCriteria

Getting Started Getting Started Slide 2 of 3Slide 2 of 3

Enter the AgreementEnter the Agreement• ContractContract

Open Lines of CommunicationOpen Lines of Communication• Integrated SystemsIntegrated Systems

– EDIEDI

Getting Started Getting Started Slide 3 of 3Slide 3 of 3

Continue to Develop Continuous Continue to Develop Continuous Improvement ProcessesImprovement Processes• CommunicationCommunication

• QualityQuality

• CostCost

Companies That Practice…Companies That Practice…

Tyco ElectronicsTyco Electronics XeroxXerox ToyotaToyota Mercedes BenzMercedes Benz DellDell State University of New YorkState University of New York

Real World Example Real World Example Slide 1 Slide 1 of 3of 3

Emerson Electric CompanyEmerson Electric Company• Successful integration of single Successful integration of single

source agreements for “big buy” source agreements for “big buy” materialsmaterials

• Partnered with W.W. GraingerPartnered with W.W. Grainger– Approached EmersonApproached Emerson– Considered to have “best in class Considered to have “best in class

suppliers.”suppliers.”

Real World Example Real World Example Slide 2 Slide 2 of 3of 3

Plan roll out considered deliberatePlan roll out considered deliberate

Total integrated supply management Total integrated supply management at 27 sites.at 27 sites.

Potential to save millions of dollars a Potential to save millions of dollars a year.year.• Reduced InventoriesReduced Inventories• Streamlined operationsStreamlined operations

Real World Example Real World Example Slide 3 Slide 3 of 3of 3

Increase in QualityIncrease in Quality• Reduction from 2000 defective parts Reduction from 2000 defective parts

per million to 200 dppm, in just one per million to 200 dppm, in just one plant alone!plant alone!

Management views as a “powerful Management views as a “powerful competitive weapon.”competitive weapon.”

Exercise Exercise Slide 1 of 2Slide 1 of 2

TeamsTeams

Identify a component that could Identify a component that could potentially be a single source item in potentially be a single source item in order to:order to:• Increase Quality, decrease inventory and Increase Quality, decrease inventory and

cost.cost.

Develop the ProcessDevelop the Process

Exercise Exercise Slide 2 of 2Slide 2 of 2

What have we learned?What have we learned?

Does it seem helpful?Does it seem helpful?

Can you and/or your department Can you and/or your department implement this strategy? Why or implement this strategy? Why or Why Not?Why Not?

Conclusion Conclusion Slide 1 of 2Slide 1 of 2

Single Source is a strategic method Single Source is a strategic method to set up partnerships with to set up partnerships with suppliers in order to:suppliers in order to:

• Reduce InventoryReduce Inventory• Manage Lower Cost and PriceManage Lower Cost and Price• Increase QualityIncrease Quality

Conclusion Conclusion Slide 2 of 2Slide 2 of 2

Single Source can be applied in Single Source can be applied in many organizationsmany organizations

Setting up Single Source is a Setting up Single Source is a planned and managed process that planned and managed process that is ongoing, even after successful is ongoing, even after successful implementation.implementation.

Works Cited Works Cited Slide 1 of 1Slide 1 of 1

““Automotive Still Taking Risks with Single Automotive Still Taking Risks with Single Sourcing.” Sep 30, 2002. Sourcing.” Sep 30, 2002. www.manufacturing.com/news/ www.manufacturing.com/news/ kpm/kpm104.html.kpm/kpm104.html.

Avery, Susan. “Emerson’s MRO buying Avery, Susan. “Emerson’s MRO buying becomes a competitive weapon.” becomes a competitive weapon.” Purchasing, Purchasing, Oct 17, 1996 v121 n6 p38.Oct 17, 1996 v121 n6 p38.

Emerson Electric Company Web Site. Emerson Electric Company Web Site. www.gotoemerson.comwww.gotoemerson.com

Works Cited Works Cited Slide 2 of 2 Slide 2 of 2

Foster, S. Thomas. Foster, S. Thomas. Managing Quality: An Managing Quality: An Integrative Approach.Integrative Approach. Prentice Hall, 2001. Prentice Hall, 2001.

McNarmara, James. “Tyco buys electrical McNarmara, James. “Tyco buys electrical technology infrastructure co…” technology infrastructure co…” Electronic Electronic Buyers ‘News. Buyers ‘News. Nov 27, 2000. p14.Nov 27, 2000. p14.

Tuttle, Al. “Becoming A Single Source.” Tuttle, Al. “Becoming A Single Source.” Industrial Distribution.Industrial Distribution. Sep 2001. pp 47-49.Sep 2001. pp 47-49.