In today’s fast-paced automobile manufacturing landscape, a smooth supply chain has become more important than ever. In this context, Sakthivel Rasu, a manufacturing executive from a Fortune 500 heavy equipment company has demonstrated how strategic dual sourcing (increasing the number of options of suppliers for procuring critical components or materials) can change production efficiency when compared to single-sourcing strategies.
The executive led a comprehensive dual-sourcing initiative that achieved approximately $1 million in annual cost savings across more than 200 parts. “When you rely on a single supplier, you’re exposed to numerous risks – supply issues, Improper supply efficiency, higher costs, country bans.”
The change of dual-sourcing began with an approach to identifying critical components affected by single-source suppliers. The team conducted detailed analyses of each part, exploring potential new suppliers who could manufacture similar components at reduced costs without compromising quality. This resulted in reduced supply chain risk, improved quality, and reduced piece part price. He and his team also developed the local source supplier for each continent to minimize the supply chain risk and at the same time they also developed locally backed-up sources of suppliers, so that if something happens to the main source, the supply chain remains unaffected.
The dual-sourcing projects involve 15+ significant suppliers that impact more than 200+ part numbers, “The goal is to develop a dual source for critical components to prevent supply chain risk and ensure continuous production”, notes Rasu.
The continuous production process was not without its hindrances. Working with more than ten significant suppliers across the globe required careful coordination. “It took between six to nine months just to receive sample parts from each supplier and to test their capabilities,” the executive notes. With each new resource supplier came the required tasks ofassessments such as detailed quotations, design updates, sample parts, validation, supplier capability evaluation, supply chain risk, quality study and (PPAP) production part approval process.
One of the most significant hurdles was maintaining design consistency across different suppliers, however, there were also enough desired benefits of having two sources for the same parts like improved design and quality, ease of manufacturing/assembly, and reduced part defects to go ahead with the dual sourcing strategy.
Looking at the field Rasuemphasizes the importance of integrating dual sourcing considerations into new product development from the start. “Engineering teams must work hand-in-hand with purchasing and quality departments to understand the supplier quality and the supply chain dynamics to avoid manufacturing delays in implementing new productsand in maintaining current production,” he advises. “Regular review meetings with quality teams, purchasing departments, and suppliers can help monitor and reduce supply chain risk and improve quality metrics.”
As manufacturing continues to change and grow in an increasingly uncertain global environment, dual sourcing can provide a compelling case for companies to reconsider their sourcing strategies. The results from Rasu’s implementation demonstrated that with careful thinking, the diversification of source supplies can help maintain a continuous production cycle making the supply system more robust.
Link to article –
Dual Sourcing vs Single Source: Unlocking Resilience and Flexibility in Modern Product Development
