Strategic sourcing processes allow manufacturers to choose the best vendors based on more factors than cost alone. By evaluating other characteristics such as quality management practices, efficient operations, design capabilities, and sustainability, purchasing managers are using strategic sourcing techniques to look at the “bigger picture” for long-term growth.
Strategic Sourcing vs. Traditional Purchasing
During the traditional purchasing process, purchasing managers often make supplier decisions based on the lowest cost per unit and discounts provided for high-volume orders. However, this often results in selecting multiple vendors to work on the similar projects — meaning more complex procedures for your internal team.
Conversely, strategic sourcing:
- Evaluates the best possible value through the total cost of business
- Agrees on quality standards for fewer inspections and waste reduction
- Invests in select suppliers for simplified ordering and invoicing arrangements
Why Does Strategic Sourcing Matter?
Statistics show most businesses spend over 60% of their revenue on purchasing goods and services, while implementing strategic sourcing practices can result in as much as 70% of potential procurement savings. In fact, strategic sourcing often comes with immediate returns for procurement managers by freeing up resources to expand the core business and allowing staff to spend more time doing what they were hired to do.
For example, as manufacturing technology continues to become more automated, engineers have more time to dedicate to creative thinking and design. The same goes for purchasing managers and strategic sourcing.
Strategic sourcing procedures offer three significant and immediate benefits:
- Financial Incentive - Streamlining procurement operations frees up resources, reduces costs, and increases the overall value of purchases.
- Decreased Risk - By evaluating more than cost, purchasing managers reduce operational risk by taking factors such as financial stability, sustainability, and innovative momentum into consideration.
- Goal Alignment - Gaining a partner in business operations helps to ensure that a company’s business goals align with those of their vendors. A robust, trustworthy relationship is paramount for success.
Strategic Sourcing Applications within Aerospace
Growth in the aerospace and defense market has increased the need for electronic manufacturing services and suppliers. Although military specifications were once regarded as the most rigorous compliance standard, these regulations have recently been upstaged by modern commercial quality standards. Since the acceptance of IPC6 Class III standards, most electronic manufacturing services (EMS) companies now maintain the required quality standards necessary for military-spec manufacturing.
As such, there is a growing acceptance of EMS outsourcing, and nearly all U.S.-based aerospace and defense contractors outsource at some level. Some aerospace and defense leaders who are currently outsourcing include:
- Lockheed Martin
- Northrop Grumman
- General Electric
- Rockwell Collins
- United Technologies
Sourcing & Consulting Services with Liberty Electronics
As your strategic business partner, Liberty Electronics takes pride in our commitment to quality with vendors that choose us for strategic sourcing. We are ISO 9001-certified and AS9100-certified, and our inspection process is rigorous. Our staff is dedicated to providing a competitively priced, world-class product that will exceed your expectations and your standards.
Maintaining the highest quality means ensuring our manufacturing personnel receive continuing education for on the job requirements and achieves the following certifications:
- IPC/WHMA-A-620 + Space Addendum
- IPC J-STD-001 + Space Addendum
- NADCAP AC7121
Liberty Electronics’ team works with top defense and commercial OEMs who want to expand their capabilities through teaming with an outsourcing partner — including Bombardier, General Electric, Northrop Grunman and Raytheon. Subscribe to our newsletter today to learn more about how Liberty Electronics can help drive efficiency in your aerospace supply chain with enhanced strategic sourcing processes.
Contact Liberty today with any questions that you may have.