Outsourcing 101 – Part 1 of 3

A Word About International Sourcing

Being competitive in the world markets requires a combination of quality, technology, price, marketing savvy and after-sale service. Purchasing has direct bearing on factors affecting the company’s competitive position in the marketplaces.

“World Class” is our theme. We strive to be Global Leaders, able to assist our clients in standing up to competition in any part of the world, against any player in the market. Going global plays a key role in keeping our clients and their products globally competitive through the use of world-class suppliers and leading edge sales and distribution processes

You should consider importing if:

• You want to reduce the cost of purchased materials by a minimum of 20%
• You want your suppliers to truly compete for your business
• Your current supplier isn’t achieving at least 5% annual productivity and sharing some of that with you
• Your current source (or the domestic industry) doesn’t have the capacity to meet your production needs
• You’re stuck with getting quotes from the “good old boy” network and they keep coming up with the same old answers
• You think you can’t get to the next level of quality with your current supplier
• You have a new product that requires a new skill set or technology that your current supplier can’t offer
• You want to get ahead and stay ahead of the competition

Sourcing & Procurement

At The Federal Group, we are continuously working to improve our products and services to better satisfy the needs and expectations of our customers. Our suppliers are expected to meet or exceed a list of criteria, some of which are summarized below:

• Prompt and accurate communication
• Compliance with terms of purchase order
• Must meet commitments
• Must maintain confidentiality of business agreements
• Continued innovation and growth with focus on cost-effective processes and products
• Supplier Qualifications – Minimum Standards

Prospective suppliers must meet our minimum qualifications. These may vary by product and by service type, but the prerequisites are:

• Financial Stability – Positive reviews, credit & financial reports from agencies like Dun & Bradstreet to determine financial stability.
• Established Business – Should have been in business for at least a year, and should be able to provide references from customers.
• Insurance Requirements – Must have insurance coverage compatible with the risks of the business.
• Quality Standards – Must provide high quality products and equipment.
• Delivery Schedules – Must meet delivery schedules. Delivery may be to client’s warehouses, job-sites or other specified locations.
• Competitive Pricing – Prices offered for products and services must be competitive within the industry. We expect pricing and discounts to be equal to, or better than those given to other customers with a comparable volume of business.

Other Requirements:

• Quality Program – We rate our suppliers by tracking their performance, our aim being to ensure that the products we purchase are reliable and of the highest quality.
• Quality Control – Suppliers must be able to demonstrate their quality control programs. They should implement QC methods such as statistical quality control to ensure quality of products and services.
• Technical Improvement – Suppliers, in particular manufacturers, should have a research and development program to continually improve their products and incorporate new technology. These improvements ensure maximization of our collective resources.

Supplier Performance Reviews

The performance of our suppliers is vital to the success of our business. Our top priority is to ensure that our clients receive the value for money. Periodically, we review the performance of our suppliers in order to determine any necessary changes or improvements that can be made. The reviews are based on the following criteria:

• Reliability: Can the supplier meet its commitments?
• Cost: How closely did the final tally correspond to the amount indicated at the beginning of the transaction?
• Order Accuracy: Did the product / service delivered match order specifications and quantity?
• Delivery / Timeliness: Was the product / service delivered on time?
• Quality: Does the quality of the product meet standards and specifications?
• Relations: Does the supplier try to maintain good working relations?
• Personnel: Is the staff courteous and professional?
• Responsiveness: How does the supplier follow up on requests, response to issues or problems that arise during transactions?

Third-Party Inspection & Testing

In carrying out inspection services for industry, no project is too small or too large. The Federal Group’s services are tailored to meet individual requirements. With offices situated all over the globe, The Federal Group can respond to a client’s needs with prompt and efficient service at a competitive cost.

Quality is an essential ingredient of our overall business philosophy. Product quality is an integral part of our on-going efforts, superior quality being a priority for our customers.
In pursuit of superior quality and the assurance of maintaining that quality, we have access to a large number of third party testing agencies.

Significance and Use:

The owner, contractor, material supplier and third-party inspector have a vital interest in the success of a project.

Effective third-party inspection can contribute to the success of a project and reduce needless delays, costs, disruptions or disagreement between owners / contractors / material suppliers To be commercially viable, the third party inspector must be able to demonstrate strict conformance to recognized standards. Adherence to this conformance has been a predominant issue with clients and their inspectors for many years.

Accreditation of some kind, whether global in nature such as ISO 9000 or local, such as a single facility audit or a combination of both, has been the most recent vehicle for trying to reach this goal. The result of this is a tapestry of commerce and technology, interwoven with threads of compliance and conformance, both mandatory and voluntary.

This is part 1 of a 3 part series.
Part 2 of 3 will be posted next week.

We sincerely hope you found this article informative and valuable. We welcome your comments or suggestions regarding this article or any other subjects you would like to see us write about.

Thank you,
The Federal Group USA

By Robert Levy – CEO TFG USA
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