The Importance of Outlining a Sourcing Roadmap

The Importance of Outlining a Sourcing Roadmap

Aside from the ever-present sourcing pressures to meet target costs for parts, there’s a mind-numbing list of timing considerations that must be simultaneously considered to launch a new program on budget, and on time. An immensely practical and helpful tool for juggling multiple parts and timelines is a Sourcing Roadmap.

The order of the required steps for program development is also critical when it comes to sourcing custom parts with tooling. These unique dependencies make sourcing complex product assemblies more challenging because when variable A changes, variables B and C are impacted, etc.

If you’re tasked with strategic sourcing, it’s important to have a plan for where you are and where you want to go.  

“Procurement and strategic sourcing are often confused; they’re two different things. Procurement is the tactics of facilitating contracts and purchase orders while strategic sourcing is the process by which you select your supply partners, and how you work with them,” says Wil Knibloe, Principal at Advisory Services firm Crowe, LLP.

Executing the strategic sourcing process effectively takes more or less time based on an organization’s sourcing efficiency. Empowering teams with the right technology tools during specifics steps in the process can reduce your time spent on involved tasks and increase focus on strategic ones that maximize impact. And that’s where a Sourcing Roadmap comes into play.

Executing the Right Task at the Right Time

There are various forms of the chart, but the common theme is a horizontal timeline that includes multiple linked steps in a part’s and/or module’s lifecycle. These steps need to be completed in sequential order to ensure strategic sourcing is completed at the right cost, time, and risk.

Typically, 10 to 20 steps are outlined, along with the number of weeks required, to help map and prioritize the right tasks to focus on, and when. Typical steps in a Sourcing Roadmap include the following:

  1. Part/System Engineering
  2. Identify and Engage Suppliers
  3. Define and Review Quotes
  4. Negotiate and Agree on Contract
  5. Select and Source Supplier
  6. Prototype Tool / Prototype Manufacturing
  7. Design Validation (DV) Testing
  8. Tool Manufacturing
  9. Part/System Manufacturing
  10. Production Validation (PV) Testing
  11. Production Part Approval Process (PPAP)
  12. Inbound Transportation

These steps are intended to help better communicate the ideal kickoff and conclusion, as well as critical path, activities. Strategic outputs include determining the longest lead time items, and pinpointing program dependencies and bottlenecks that can be focused on to compress overall launch timelines.

A common enhancement often includes adding a dot that advances left to right to highlight where a part/module is at in the process. A standard current date vertical line is also typically added to quickly visually communicate what parts/modules are on track or behind schedule.

Additional key sourcing and program milestone dates can also be added to provide further clarity. As a tip, less is usually more as it relates to presenting actionable information. As a program advances through the development process, filter the time horizon to a narrower window – e.g., the next one to two weeks – to help improve focus on near-term tasks. Some key sourcing and program milestones often include the following.

Sourcing Milestones

  • Issue Engineering Design and Testing (ED&T) Purchase Order
  • Issue Prototype Tooling Purchase Order
  • Issue Prototype Part Purchase Order
  • Issue Production Tooling Purchase Order
  • Issue Production Part Purchase Order

Program Milestones

  • Prototype Builds 1, 2…
  • Material Requirement Dates (MRD) 1, 2…
  • Start of Production (SOP)

Micro Adjustments Key to Launch Compression

Partnering to craft a strategic Sourcing Roadmap plan, and working the plan, increases your organization’s chances for sourcing success. The more that cross-functional teams, specifically engineering and purchasing, can partner earlier on in product development, the better the end-to-end product development process flows.

Strive for seamless information flows. The drag reduced between work steps will result in program launch timelines being compressed. Working more flexibly by making small adjustments throughout a program offers an opportunity to get better results with less effort.

Timing Data is Key

A critical enabler of timeline compression is configuring the Sourcing Roadmap dashboards to align with your industry, value chain and company’s strategic goals. As an example, one automotive tier I supplier that produces interior modules might want to prioritize parts and purchased subassembly deliverables. A similar but slightly different automotive tier I supplier that produces body-in-white assemblies, such as closure panels, might want to prioritize tooling and raw materials deliverables.

Mapping out all the inputs, parts and systems and the respective desired timing, typically in weeks, is a key foundational data element that enables accurate tracking of target to actual timing.

Focus Time to Maximize Impact

How a Sourcing Roadmap is applied depends in part on your organization’s products, and desired level of spend focus. As an example, do you manufacture one product, such as a vehicle composed of assemblies, or an assembly, such as an interior instrument panel composed of parts?

Categorizing product spend early on can help add clarity to how best to prioritize work tasks. Initially, it’s often helpful to focus strategic sourcing efforts on the most expensive parts to maximize cost savings. However, this viewpoint alone can prove misleading. Adding additional points of view from which to categorize spend often leads to optimal results.

Two additional approaches that work well to further categorize spend are labeling part statuses – i.e., Purchased, Modified Custom (PMC) – and priority – i.e., using A, B and C levels. “A” parts are typically custom, involve new processes, are strategic, and typically have a high supply risk. “B” parts are typically modified, involve standard processes, and present a moderate supply risk. C Parts are typically purchased, are commodities commonly available off the shelf and present a low supply risk.  As a tip, most organizations maximize their cost reduction impact by focusing most of their effort on custom A and B level parts.

Proactive Communication Improves Success

There are two extreme ways to live. Have a plan and manage the plan or have no plan and the work manages you. I’ve lived through both, but certainly prefer the former.

Ultimately, it’s people that design, engineer, and source products that eventually make their way to customers hands. The better people communicate timing information the better the results generated. If you and your organization feel as though you’re constantly under pressure and don’t have enough time to properly execute strategic sourcing, deploying a Sourcing Roadmap could be the right tool for you to elevate your work and flow.

Add a Sourcing Roadmap to your strategic sourcing toolkit to accelerate cross-functional communication, maximize supply performance results and compress your time to market.

-William