Material Sourcing: The Good, The Bad, & The Ugly
Sourcing. Is it worth your time?
You’re thinking, are you nuts? Of course it is.
And you’re right. But, how you source is a much better question than why you source.
Let me explain…
Skylink, Material, Sourcing
Last quarter a leasing client won 3 new leasing contracts. They were excited. Thrilled for the new chunk of monthly cash. Things looked great.
Until they couldn’t deliver the aircraft.
Each aircraft needed a C-check. They didn’t have the time to source and process all the aircraft material.
They also didn’t have enough money to purchase all the parts they needed for the maintenance checks. They’d have the money once the lease payments came in.
They had a decision: To cancel their contract or find a way.
This lessor reached out to a trusted material adviser (of course it was Skylink) for help.
How could they get all of the material they needed with very little upfront time and money? That’s the solution they were after.
And that’s the solution they got. Agreeable terms were met, 100 parts a month were delivered in support of the maintenance checks.
All parties were happy. That’s the goal of sourcing.
Let’s take a further look of aircraft material sourcing. The good, the bad, and the ugly.
The Good
The story in the beginning of this post is the good of sourcing.
With a clear goal in mind, our client sourced the right solution for their unique situation.
It wasn’t about blasting 1,000 emails to random strangers. It was about contacting someone they knew, liked, and trusted. Working together to piece together a solution.
This is a great example of productive sourcing. And the result, huge gains for the lessor. Price was important but quality, trust, and on time delivery were way more important.
That’s the goal of sourcing in procurement. Work with people whom you know, like and trust.
The Good Tip: Source only with aircraft material partners who you know, like, and trust. On average your list should be 5 or less.
The Bad
You’re overwhelmed. You have 100 parts you need to source. You shoot off an email with hundreds of RFQs.
Emails are coming in…
No quote. $100. $5,000, and on and on.
You look at your inbox and you want to faint. It’s sloppy. It just doesn’t make sense. There’s no way you can effectively source all of this and still be on time.
The bad happens when your unorganized in your sourcing efforts. It’s the approach a lot of us take who just shoot off an email to a mass list of people.
That’s not efficient. When sourcing, you must be strategic. Unless time and money is of no concern. And I’m guessing both are a very big concern.
The Bad Tip: Just like with the tip in the previous section, start sending your RFQs to a smaller list. Preferably to 5 people. Once you start getting quotes in, fill in the rest and contact more people if you have a deficiency. You want to spend most of your time with your trusted material partners.
The Ugly
You have 500 people on your email list. Any time you need a part you blast the list. You’re on a hunt for the cheapest price.
There’s no name, no human gesture. Just an email blast and a PO.
The problem with this strategy is you’ll undoubtedly get poor service with cheap pricing. You’ll encounter plenty of scammers and cheats. And worst of all, you build no connection with your material partners.
Just as it’s important for your material partner to get to know you, you must also build a relationship with them. You should know them very well.
It’s procurement 101: Build relationships. You’ll get more long term value from people you know, like, and trust than blasting an email to hundreds of people.
The Ugly Tip: If you want to source effectively, be human. Build relationships. Stop mass emailing and think about the results you’re trying to achieve. You’ll have a lot more fun doing it this way.
There it is, the good, the bad and the ugly of material sourcing.