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.