Supplier Conference Large Aero Engine NPI Sourcing
Negotation & Contract Management
Challenge / Requirement
Working with a large UK Aero Engine manufacturer with responsibility for sourcing electrical harnesses, due to the flexible nature of electrical harnesses, they are generally one of the later items on an aero engine to be sourced, but are required relatively early during the initial testing of the engine prototype.
With a shortened window to source multiple products for a new (New Product Introduction) NPI program, the challenge was to provide effective sources for the products in preparation of prototype requirements.
Process
To maximise the effectiveness of the sourcing exercise in the limited time frame, a Supplier Sourcing Conference event was chosen as the arena which would offer the most cost effective results.
Five suppliers were contacted to submit initial bids prior to being invited to a three day event. The event consisted of different bid submission rounds in an attempt to hone understanding of the product requirements and pricing. Each supplier was allocated a negotiation team consisting of two buyers working in tandem to assist the suppliers and relay any queries to the relevant technical or commercial expert. A backroom team collated all received bids and directed the negotiation teams to achieve the optimum from each supplier.
Outcome
Sourcing activity which would under normal conditions take approximately three to four months was completed within a 5 week period from initial supplier contact to RR contract approval being provided.
Two suppliers were chosen at the conclusion of the event comprising of an existing strategic partner and a new supplier both with Low Cost Country production capacity.
Benefits
During the event there was a 20% cost reduction with a further 10% following further technical/re-engineering discussions with the chosen suppliers equating to £20m saving from a £60m contact award.
