To be sure, a knowledge-based sourcing model is not appropriate for every situation. If a company is buying a part or component just once and is unlikely to require the supplier in the future, there is little need to spend resources on improving operational and systemic output. However, any company’s most important supplier agreements involve the most essential components. In those cases, manufacturing productivity improvements are critical in maintaining high quality, reliability, and a continuously advantageous cost base. Knowledge-based sourcing may not be easy, but by implementing the four steps outlined here, most companies will find themselves on the road to making the transition, relatively certain to reach the end.
Reprint No. 07207
Bill Jackson (email@example.com) is a senior vice president with Booz Allen Hamilton in Chicago. He works on major organizational change programs, including restructurings, postmerger integrations, and growth, for a variety of industrial clients, especially in the global automotive industry.
Michael Pfitzmann (firstname.lastname@example.org) is a principal with Booz Allen in Chicago. He serves automotive and other industrial clients and specializes in sourcing, manufacturing strategy, competitive cost analysis, and operations management.