January 16, 2023 by bullmoose bullmoose

Why More Aerospace Manufacturers are Leveraging Strategic Sourcing

Strategic sourcing processes allow manufacturers to choose the best vendors based on more factors than cost alone. By evaluating other characteristics such as quality management practices, efficient operations, design capabilities, and sustainability, purchasing managers are using strategic sourcing techniques to look at the “bigger picture” for long-term growth.

Strategic Sourcing vs. Traditional Purchasing

During the traditional purchasing process, purchasing managers often make supplier decisions based on the lowest cost per unit and discounts provided for high-volume orders. However, this often results in selecting multiple vendors to work on similar projects — meaning more complex procedures for your internal team.

Conversely, strategic sourcing:

Evaluates the best possible value through the total cost of business
Agrees on quality standards for fewer inspections and waste reduction
Invests in select suppliers for simplified ordering and invoicing arrangements

Why Does Strategic Sourcing Matter?

Statistics show most businesses spend over 60% of their revenue on purchasing goods and services, while implementing strategic sourcing practices can result in as much as 70% of potential procurement savings. In fact, strategic sourcing often comes with immediate returns for procurement managers by freeing up resources to expand the core business and allowing staff to spend more time doing what they were hired to do.

For example, as manufacturing technology continues to become more automated, engineers have more time to dedicate to creative thinking and design. The same goes for purchasing managers and strategic sourcing.

Strategic sourcing procedures offer three significant and immediate benefits:

Financial Incentive – Streamlining procurement operations frees up resources, reduces costs, and increases the overall value of purchases.
Decreased Risk – By evaluating more than cost, purchasing managers reduce operational risk by taking factors such as financial stability, sustainability, and innovative momentum into consideration.
Goal Alignment – Gaining a partner in business operations helps to ensure that a company’s business goals align with those of their vendors. A robust, trustworthy relationship is paramount for success.

Strategic Sourcing Applications within Aerospace

Growth in the aerospace and defense market has increased the need for electronic manufacturing services and suppliers. Although military specifications were once regarded as the most rigorous compliance standard, these regulations have recently been upstaged by modern commercial quality standards. Since the acceptance of IPC6 Class III standards, most electronic manufacturing services (EMS) companies now maintain the required quality standards necessary for military-spec manufacturing.

As such, there is a growing acceptance of EMS outsourcing, and nearly all U.S.-based aerospace and defense contractors outsource at some level. Some aerospace and defense leaders who are currently outsourcing include:

Lockheed Martin
Boeing
Northrop Grumman
Raytheon
General Electric
Harris
Motorola
EADS
Rockwell Collins
United Technologies
Honeywell

Sourcing & Consulting Services with Liberty Electronics

As your strategic business partner, Liberty Electronics takes pride in our commitment to quality with vendors that choose us for strategic sourcing. We are ISO 9001-certified and AS9100-certified, and our inspection process is rigorous. Our staff is dedicated to providing a competitively priced, world-class product that will exceed your expectations and your standards.

Maintaining the highest quality means ensuring our manufacturing personnel receive continuing education for on the job requirements and achieves the following certifications:

IPC/WHMA-A-620 + Space Addendum
IPC J-STD-001 + Space Addendum
IPC-A-610
NADCAP AC7121

Liberty Electronics’ team works with top defense and commercial OEMs who want to expand their capabilities through teaming with an outsourcing partner. Contact us today to learn more about how Liberty Electronics can help drive efficiency in your aerospace supply chain with enhanced strategic sourcing processes.

July 13, 2020 by bullmoose bullmoose

Liberty, Independence, and Reshoring

In an interesting convergence, the new United States Mexico Canada Agreement (USMCA) trade deal has taken effect within days of celebrating Independence Day here in the United States of America. The new deal replaces the old North American Free Trade Agreement (NAFTA) that was implemented on January 1, 1994. While the net effect of NAFTA has been the subject of spirited debate, there are two unfortunate realities. First, the US trade deficit with these countries increased from $17 billion to over $177 billion per year, and over 800,000 US jobs were displaced during NAFTA’s 26-year existence. Likewise, and worse for Americans, since China joined the World Trade Organization (WTO) in 2001, 3.4 million US jobs have been displaced, and the annual US trade deficit with them peaked in 2018 at over $400 billion. To add insult to injury, trade with China has strengthened a totalitarian regime that oppresses the Chinese people and views the United States as an obstacle to their global ambitions.

In achieving the goal of helping to level the playing field, the new USMCA deal and others that could follow will likely increase the costs of goods produced in what were previously identified as “low cost regions.” In addition to trade deal changes, the costs of “low cost region” supply chains have been severely impacted by things like increased tariffs, the COVID-19 pandemic, natural disasters, wage growth, energy costs, and destabilizing factors, which include crime and the threat of armed conflict.

So as Americans celebrate Independence Day this year, many US companies are declaring independence from offshore supply chains. The Thomas Industrial Survey, for example, recently reported that 64% of manufacturers are likely to bring production and sourcing to North America, and this number has been growing. The Institute for Supply Management reports that nearly 75% of companies are reporting supply chain disruptions due to the coronavirus. It’s no wonder more and more firms are reshoring.

Numerous case studies reveal that manufacturers that reshore can expect to reap improvements in a number of areas, including product quality, lead times and delivery, inventory costs, innovation and faster product development, and reduced threat of theft of intellectual property and supply interruptions, among other benefits. As a result, manufacturers are looking to achieve a reduction in the Total Cost of Ownership (TCO) of the products that they begin to source domestically.

In our experience with our customers, reshoring, and even changing suppliers within the same country for that matter, can be a daunting task. There are tools and methodologies, however, that we find make the process much less susceptible to potential pitfalls, and minimize both the cycle time and cost of the project.

Robust configuration management and ERP systems, for example, are essential to get the right products at the right time. Hundreds, thousands, and even more parts need to be ordered and delivered at the correct revisions and at the right times in order to ensure supply continuity. Early collaboration, gold standard assemblies, both physical and digital, and even reverse or re-engineering can be key, especially to uncover and address “tribal knowledge” that is not captured in the technical documentation. Both the ability to quickly scale capacity, and rapid tooling development, including using 3-D printing, can also help ensure a smooth process.

Ultimately, we’ve found that our commitment to your success is the key factor in getting your products moved from an incumbent supplier in a timely and cost-effective manner. If you are looking to reshore your products to a US EMS contract manufacturer, we invite you to consider Liberty Electronics. Let freedom ring!

Sources:

https://reshoringinstitute.org/reshoring-knowledge-library/reshoring-case-studies/
https://ideas.repec.org/a/elg/rokejn/v2y2014i4p429-441.html
https://monroeengineering.com/blog/study-reveals-which-manufacturing-companies-are-reshoring-the-most-jobs/
https://www.newsweek.com/china-trade-deficit-has-cost-us-millions-jobs-across-all-50-states-report-1184426
https://www.thebalance.com/u-s-china-trade-deficit-causes-effects-and-solutions-3306277