$1 Billion Automotive Supplier:
Low Cost Country Sourcing of Machined Aluminum Castings
Business Challenge
An automotive supplier struggled to remain competitive and sought ways to reduce
costs on key components. The parts were highly complex and required precision
machining capabilities.
Approach
Leveraging our partner's global sourcing network, a rigorous sourcing process
was executed and multiple suppliers were identified and qualified across multiple
regions. On-the-ground resources performed supplier factory inspections and
facilitated client visits. A South Korean supplier was selected based on low
labor costs, government aid for exports, and competitive machine rates.
The selection of the supplier was only the beginning. Next, the focus turned
towards Logistics Optimization. Rates were negotiated with freight providers
and a safety stock program was developed with parts maintained in local warehouses
near client plants.
Results: 24% Cost Reduction
After testing and approval, our Korean office stayed available for active supplier
management support in the event the client required assistance.
Net Savings, including the additional logistics costs, exceeded 24% of original
total costs. The supplier's performance on these parts led to expansion of the
relationship to include other parts.
