Sourcing professionals often talk about driving cost out of the equation. Sadly, sometimes sourcing professonals fail to look for opportunities to do so. Instead, they often push the costs over to the supplier and think that is good enough.

When trying to reduce cost, the starting point it is to ask what we are doing or requiring suppliers to do which contributes cost without also contributing value.

Shipping costs and modification costs are two areas where there is a lot of unnecessary cost. (There are others as well.) Suppliers often overnight reports to customers, when second day delivery or even an e-mailed report would be sufficient. If customers are making changes to specs on a regular basis because they don’t know what they need when the customers initially engage the suppliers, the customers are driving up the suppliers’ costs, and their own.

Filed by Coleen Davis at 5:54 pm under Sourcing