HYDRAULIC CYLINDER ASSEMBLY: SOURCING REPORT
1.0 Executive Summary
The appropriate selection of the best vendor for any product requires a critical evaluation of several dealers in order to make a viable decision. The buying company must determine the level of urgency with it requires the product to allow any intermediary to conduct the best sourcing. Because procurement is a procedural undertaking, valuation of the players to be involved is essential to give the best recommendation to the buying company. The buyer always has a predetermined budget that states the expected cost of products and timeline of delivery of anything it has decided to procure. Therefore, the individual who takes the responsibility for identifying the source from which the products will be procured should consider the company’s budget and specifications of the product. The estimated usage of the part is 20,000 units annually. According to the budget of the buying company, each unit has estimated cost equal to $ 9.75. The presentation of information pertaining to various prospective suppliers is useful to the buyers as it enables them to make intelligent procurement bids. As such, I will engage in various activities of evaluating several prospective vendors to help the procurement vice president in making the best sourcing decision. I will prepare the buyer’s quotation using the required product specification and company’s budget. The strategic fit of the product is an important motive for the buying agent. Therefore, I will perform quality assessment of the parts from various prospective suppliers, and evaluate the product on cost and quality fitness as well as the delivery efficiency of the suppliers. The evaluation of different suppliers will involve assessment of their quotations, presentation of samples to the executive, and validation of the samples before recommending the supplier. This is particularly useful to the management because it will enable the procurement department to purchase the best product that will meet the set budget and ensure the targeted profits are achieved.
2.0 Critical Data and Final Recommendation
After carrying out an evaluation of various suppliers based on the criteria I set, the following is my recommendation for the company. I have conducted unbiased evaluations of various suppliers of the required parts and made several conclusions that guided my recommendation. I understand that company’s decision will be on my analysis and the decision made will have short and long-term impacts on the performance of the company as well as its future.
2.1 Milestone of activities
The company has a fixed budget on which to purchase the required components. Also, understanding that the time given for the component to be supplied to the company is limited, there are series of milestone activities that I undertook to ensure that I accomplished every step in the identification of the source as per my plan. The first step in my evaluation was to classify all factors that would reduce the lead time, improve the quality of the component, and ensure the reliability of the supplier. This is important because it helps the management be aware of any benefits and drawbacks that might arise in the procurement process. Before I started visiting the potential suppliers, I prepared some interview questions that provided a guide to the best supplier. The component had to meet the quality standards and cost the best price that favors the profitability of the company. As such, I had to estimate the total cost of the component both at upper and lower limit to be able to recommend the best price and to negotiate the price of the component with prospective suppliers. All these activities took the first three days of the process.
2.2 Sources of supply
I prepared a list of questions that each prospective supplier was supposed to complete in relation to various aspects of the component. Below are the questions and responses of the four suppliers that include ELU, POY, DES, and H-BEST from Juarez in Mexico.
The above interview of the prospective suppliers was a good preliminary for suppliers’ evaluation and decision- making. The response of each supplier provided helpful signals that I used to plan for the next course of actions.
After interviewing each supplier, I visited their distribution center to assess their testimonials and capabilities. At this stage I specifically evaluated the suppliers on certain aspects and the outcomes were different. I reviewed the quality standards for the product in each distribution center for all the suppliers to determine the best supplier in terms of their ability to comply with quality standards. Additionally, I reviewed the level of experience and management skills in each plant and distribution center. The evaluation of the financial capacity of a firm is essential in determining its capacity to meet customers’ specifications. Therefore, I reviewed the basic financials of each supplier to assess their financial capability to supply the required component before the stated deadline could elapse. Also, I reviewed the level of technology and operations as well as the quality programs in e very distribution center. This assessment enabled me to award different scores to each supplier, which I used to recommend the best supplier to the company. The results of these reviews are displayed in the table below
Each supplier was assigned a different score depending on their performance in various aspects reviewed. The scores were assigned as percentages and used to compare the four prospective suppliers in order to arrive at the best. From the above observations there is no single supplier that was excellent in all aspects. Some suppliers were good at one aspect and bad at the other. As such, selecting the best supplier was quite complicated and it required other criteria for evaluation.
2.3 Supplier evaluation and evaluation matrix
This level of evaluation involves considering the financial and some technical aspects of the suppliers, and making relevant comparisons to come up with the best supplier. The evaluation will consider capability in terms of knowledge, machinery, and labor. Additionally, suppliers will be evaluated on the basis of their financial standing in terms of the number of hours they operate and their financial capacity. The storage and testing capacities will also be evaluated. The results of the evaluation can be displayed in a table as shown below
2.4 Quote submission
I submitted a quotation to each supplier and expected suppliers to submit theirs as another way of evaluating them. The following is a sample of quotation that I submitted to the suppliers.
2.5 Supplier’s Quotations
The suppliers will be expected to quote the specifications of their product and meet other requirements stated in the customer’s quotation. For the best selection of suppliers, the company should compare its quotation with those of suppliers as well as the features of the sample with what the suppliers have quoted. Below are the quotations of the four suppliers
2.6 Supplier selection and product acquisition
The selection of the best supplier will involve the consideration of the ability of the vendor to meet all the customer requirements and evaluation criteria. The best supplier will be selected on the basis of quality completeness, cost effectiveness, and delivery efficiency. The supplier to be selected must also comply with all agreements, and express the willingness to adjust the prices in case there are changes in the cost of raw materials. Considering the evaluation carried out on the four suppliers, I would recommend the ELU SUPPLIERS to the company for the procurement of the hydraulic cylinders. This supplier offers the best price and he meets all the specifications required for the product. I have done some price negotiation with various suppliers, and ELU seems promising to reduce price if the company agree to strike the deal with him. Additionally, this supplier has agreed to adjust the price accordingly if there will be changes in the material costs as expected. The reliability of this supplier is higher compared to others, and he has all it takes to meet the deadlines. Therefore, I would recommend ELU to the company for the supply of the hydraulic cylinder at $ 8.6 and a discount of 40%.
2.7 Business and preliminary awards
