Design of a global sourcing strategy to reduce assembly components cost: A case study

Nowadays customers' requirements demand higher quality and better products but at a lower and more competitive price, such as the agricultural enterprise in this case study. The company defined a global goal of cost reduction for all its facilities to continue being competitive and a leader in the agricultural market, so the opportunity was set on the hydraulic sub-assemblies components and parts. The present case study was developed at the strategic sourcing department, looking to reduce the hydraulic components cost supplied by different providers due to the scale economy through the global supply chain without affecting the quality delivered in their final products and facing the demand growth. The methodology used to accomplish the goals at the present study and research, was divided in four different stages such as a diagnosis of the current situation, the design of the new sourcing strategy, implementation of the strategy and monitoring and control of the results and key process indicators, also based on the Design for Manufacturing and Assembly methodology (DFMA) and Kraljic's global sourcing strategy to accomplish the expected target on the total cost reduction.