2. In-depth Due Diligence
Once Sourcing1 has identified the expenditure categories that provides the most promise, a more thorough due diligence is required. This involves significant data mining and information gathering. For example, we expect our clients to have a complete understanding of the program’s annual and monthly volumes, specifications, requirements, and any distinctions associated with the current program and current supplier(s). It is also valuable to interview all current stakeholders that have a vested interest in the program so that each one has all the critical data needed along with their input, expectations, and perspective. Also, these interviews can assist in compiling both current and future requirements for the program. Keep in mind that invoices can provide basic information such as pricing, terms, freight and volume information, but they do not offer any insight into special services, unique deliverables, future demand and next generation requirements.
Finally, it is always wise to invest in a value analysis to ensure our clients are receiving the optimum value and what is being specified is not hindering their competitiveness and productivity. Whenever there is a specification required for a product or service – Sourcing1 expects to be asked why! An over-engineered product can result in unnecessary costs associated with a specification or tolerance that is not really required. On the other hand, a supplier may be able to provide an additional service or specification improvement – which could significantly reduce the downstream labor or processing costs – resulting in a better overall value.