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Global Sourcing Spotlight: It's Not Always About Price

When it comes to business, it’s easy and natural to focus only on price, but I’m constantly reminding my customers that there is so much more to products than just the price. In fact, there are several factors that come into play when we search the world looking for the best global solutions.

When great chefs make a recipe, they look for the best ingredients in the world—not the cheapest ingredients they can find, but the very best. Top chefs use global sourcing, not as a money-saving tactic but rather they search the world to find everything from the best lobster to the finest spices. These certainly are not the cheapest.

The same applies when a great craftsman is getting ready to build a desk or a cabinet. They look for the highest-quality lumber, and the best glues and lacquers. Again, certainly not the cheapest, but a way to build the best product that they possibly can.

The same applies to global sourcing of electronic components and other products such as batteries, meta fabrication, magnetics, and printed circuit boards, including prototype production. Not all roads lead to price, and not all decisions should be based there.

It reminds me of a cartoon I saw a few years ago showing a U.S. spaceship ready to take off. On the side was a sign that read, “This rocket was produced with parts from the lowest bidders.” Now I know that is being a bit sarcastic, but how true was it?

Now I am not saying that price is not important, because it certainly is. But in the long run, the most important thing is to find not the best price, but the best overall value. The best value is not always synonymous with cheapest price. Not at all.

When I travel the world, I look for the very best value for my own global sourcing needs Here are six things I look for:

1. Quality. As the adage says, “Quality is number one.” It always was and always will be. If the product doesn’t work, what is the point of sourcing it? When I survey a vendor for quality, I look at their quality systems, their processes, and their record keeping. When you are global sourcing, the provenance of the product is more important than ever. Quality is still number one.
2. Technology. The supplier I choose must be able to produce the products I need, now and in the future. If I find they are really struggling to provide my product, I will move on. I am always searching for companies that are the very best at what they do. It’s simpler that way. I am not in the business of teaching companies how to build the products and goods I need. I want to deal with companies who are industry leaders in providing the goods and products that I need.
3. Reliable delivery. A product that is late is as useless to me as one that doesn’t work. I must be able to count on getting the products I need exactly when I need them. Otherwise they are no use to me. If one of the companies I am dealing with is always late, then I know it’s time to move on. Actually I work hard at finding indications of good delivery performance while I am surveying and qualifying my sources.
4. Service and ease of doing business. How easy is this vendor to deal with? I can judge that from the time I visit them, when I send in that first quote, and how they handle the quote. Is the quote on time? Is the quote accurate? Can I depend on the vendor to support me by always telling me the truth, especially when something goes wrong? When something does go wrong (and you should anticipate that it will sooner to later, even with the best of suppliers), do they handle the problem quicky and efficiently rather than trying to push the blame away from themselves?
5. Pleasant. I know some people think this can be overlooked if everything else is in line, but I disagree. Life is too short to deal with companies and people that are difficult. We all have choices of who we work with every day, and life is a lot better when you deal with pleasant people.
6. Price. Yes, price is always a factor, you can’t get away from that. We all have bottom line budgets. But if everything else is in line, then getting a great price is the proverbial icing on the cake for best overall value.

If you can find supplier/partners who meet all these criteria, you will have gone a long way in developing a great global sourcing supply chain.

Bob Duke is president of the Global Sourcing Division at American Standard Circuits. 

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