Supplier Benchmark
Benchmark suppliers and reap the benefits.
Even when already buying in Asia and especially China, benchmarking one's position is needed to make sure you still get the best deal.
Asquance leverages its market intelligence, purchasing and engineering resources to create unique cost saving opportunities for clients.
A simple example.
- Brenda is COO of a young, fast growing US company. She buys a small custom designed electronic device for USD 2.00. It is a key component of the company's main product. Brenda buys 50 000 units per month. The device was designed and tooled by a Chinese factory for Brenda. The bill of materials is stable and the product has been in mass production for several months already. Brenda wishes to know if she buys at the right price and retains Asquance for Benchmark.
- Asquance investigates potential factories in and outside of the competence scope of Brenda's existing supplier. It organises NDAs, samples and spec reviews through mails, calls and on site visits. Since Brenda's company operates in a highly regulated field Asquance ensures that specs will be strictly followed.
- Having investigated 6 factories, Asquance then retains 3, all within 20% of each other's price. The best price is USD 0.90. Tooling investment of USD 5000 is needed to start production of the device's ABS plastic shell in either factory. Other components can be configured off the shelf and do not require investment. Asquance presents the full Benchmark results to Brenda.
- At this point Brenda can use the findings to renegotiate with her current supplier, or decide to open a second source with the option of gradually switching her purchasing.
- Brenda's sales volumes are growing and so she decides to open a second source and invest in the new tool. She also estimates that second sourcing will help to keep her suppliers pricing in check in the future.
- The production ramp up is:
- month 1: 0
- month 2: 5K
- month 3: 15K
- month 4: 25K
- month 5: 35K
- month 6: 50K
- Thanks to Asquance, Brenda monthly earns an extra :
- month 1: $ -5K (tooling investment)
- month 2: $ 5.5K
- month 3: $ 16.5K
- month 4: $ 27.5K
- month 5: $ 38.5K
- month 6: $ 55K
Brenda's savings
- USD 138 000 over the first 6 months only.
Key success factors:
- Asquance is locally rooted in Asia, across industrial segments
- Asquance resources could be drawn ad hoc for the project team
- High trust, transparency: Brenda was in control of the project at all times
This exercise is best done regularly, every 6 months or once a year. It can be time consuming but is well worth it.
