Single Sourcing Prepared By David Bach Boise State University October 9, 2002

What is Single Sourcing? b Also referred to as Sole Sourcing Definition: Using One Supplier for a Single Component.

Objectives of the Training b Learn About Single Source Practices b Where Can Single Sourcing Be Applied b How To Set Up Single Source Processes

Welcome b Introductions…

History b Why was this developed? b How did Single Source become popular? b Where does Single Source fit?

Why Single Source b Supplier Reduction b Develop Partnerships with Suppliers b Lower Costs b Increase Quality Improvements

How Did This Become Popular b Need to be able align strategy with suppliers b Improve Communication b Japan Purchasing Practices: World-Class

Where Does Single Source Fit? b Organizations with JIT processes. b Where opportunity for quality improvements exists. b In industries where technology changes rapidly. b In companies looking to gain competitive advantage by reducing suppliers.

Advantages to Single Source b Strategic Partnerships b Opportunity for lower costs b Improved communication b Quality improvement Potential

Disadvantages b Disruption in the Supply Chain… LaborLabor TransportationTransportation PricingPricing QualityQuality b Needs to be continually monitored b Narrow Focus

Brainstorm b How can Single Sourcing be applied in your organization? b Pros and Cons?

Getting Started Slide 1 of 3 b Supplier Evaluation Current SuppliersCurrent Suppliers Target Number of SuppliersTarget Number of Suppliers FiltersFilters Address individuallyAddress individually b Qualify the Supplier CriteriaCriteria

Getting Started Slide 2 of 3 b Enter the Agreement ContractContract b Open Lines of Communication Integrated SystemsIntegrated Systems –EDI

Getting Started Slide 3 of 3 b Continue to Develop Continuous Improvement Processes CommunicationCommunication QualityQuality CostCost

Companies That Practice… b Tyco Electronics b Xerox b Toyota b Mercedes Benz b Dell b State University of New York

Real World Example Slide 1 of 3 b Emerson Electric Company Successful integration of single source agreements for “big buy” materialsSuccessful integration of single source agreements for “big buy” materials Partnered with W.W. GraingerPartnered with W.W. Grainger –Approached Emerson –Considered to have “best in class suppliers.”

Real World Example Slide 2 of 3 b Plan roll out considered deliberate b Total integrated supply management at 27 sites. b Potential to save millions of dollars a year. Reduced InventoriesReduced Inventories Streamlined operationsStreamlined operations

Real World Example Slide 3 of 3 b Increase in Quality Reduction from 2000 defective parts per million to 200 dppm, in just one plant alone!Reduction from 2000 defective parts per million to 200 dppm, in just one plant alone! b Management views as a “powerful competitive weapon.”

Exercise Slide 1 of 2 b Teams b Identify a component that could potentially be a single source item in order to: Increase Quality, decrease inventory and cost.Increase Quality, decrease inventory and cost. b Develop the Process

Exercise Slide 2 of 2 b What have we learned? b Does it seem helpful? b Can you and/or your department implement this strategy? Why or Why Not?

Conclusion Slide 1 of 2 b Single Source is a strategic method to set up partnerships with suppliers in order to: Reduce InventoryReduce Inventory Manage Lower Cost and PriceManage Lower Cost and Price Increase QualityIncrease Quality

Conclusion Slide 2 of 2 b Single Source can be applied in many organizations b Setting up Single Source is a planned and managed process that is ongoing, even after successful implementation.

Works Cited Slide 1 of 1 “Automotive Still Taking Risks with Single Sourcing.” Sep 30, kpm/kpm104.html. Avery, Susan. “Emerson’s MRO buying becomes a competitive weapon.” Purchasing, Oct 17, 1996 v121 n6 p38. Emerson Electric Company Web Site.

Works Cited Slide 2 of 2 Foster, S. Thomas. Managing Quality: An Integrative Approach. Prentice Hall, McNarmara, James. “Tyco buys electrical technology infrastructure co…” Electronic Buyers ‘News. Nov 27, p14. Tuttle, Al. “Becoming A Single Source.” Industrial Distribution. Sep pp