China sourcing for a leading airline
Airline management found that the items used onboard its planes – ranging from plasticware to seatbelts and carpeting – were increasingly manufactured in China. However, the sourcing was conducted exclusively via distributors and middlemen based in the US. Purchasing executives believed that cost savings could be achieved by sourcing directly from providers in China. But the organization was not prepared or staffed to implement such a strategy.
- Spend categories: Analyzed the airline’s purchasing patterns to identify those items most amenable to direct sourcing from China, regarding feasibility and potential savings.
- Supplier identification: Identified a qualified supply base in China, based on in-country research, supplier visits and providing sample products for inspection.
- Sourcing process: Deployed our well-tested strategic sourcing process to obtain competitive bids from Chinese suppliers and US distributors.
- Supplier selection: Assessed supplier proposals, across key criteria, and supported the client with negotiations and contract awards.
- Realized overall cost savings of 29%, on an all-in basis.
- Used the same supplier, in certain cases, but contracted directly rather than indirectly.
- Retained US sources or distributors, in a majority of cases, but applied China-sourcing leverage to achieve significantly reduced prices.
- Launched an ongoing internal capability to manage international sourcing activities.