By Mitchell Rona, Executive Vice President #GlobalSourcerer
Global sourcing experts often rely on the legacy of the deals made in the past as the benchmarks for planning the future. Most loyal and reliable suppliers will maintain these legacy deals, only asking their buyers to cover the markers of cost, which are visible in the public domain. However, these suppliers may decline to quote new projects to these same customers, because the legacy prices are artificially low, and cannot be matched in the current climate. If they were to quote market value prices for new projects, customers might experience comparative “sticker shock.” This may not be true in all cases, but global sourcing experts with a long historical view are observing these types of changes in the market.
Customers who switch contract manufacturers will find that the legacy price most likely will not be transferrable, and if they are able to sustain that price with a reliable and reputable source, they should remain where they are.
However, many suppliers, particularly those who are honoring legacy deals at a minimal profit, or even a loss, may prove unreliable on crucial measurements like quality and service. Customers in such cases often find that an increased Total Cost of Ownership (TCO) will deliver improved quality, service, and peace of mind.
To make an informed and strategic decision about sourcing, consider the following:
- Is my core business sourcing globally manufactured castings and fabrications?
- Am I devoting sufficient time, energy, capital, and resources to my core business?
If the answer to these two questions is no, then consider the following:
SIGMA OEM has 35 years of boots on the ground, in-country experience in global markets. Our sourcing professionals have the leverage, reach, purchasing power, and infrastructure of a $250Million company behind them. This economy of scale offers significant benefit to customers in terms of risk mitigation, cost effectiveness, quality, and service.
As the climate continues to be volatile with regard to global sourcing, prudent business professionals will seek experienced, reliable suppliers to ensure continuity and avoid interruptions in their supply chains.