It is a simple guide that I would like to share. And it also has a simple process flow on how things could be done.
Why I wrote this blog? I noticed that there are OEM folks that might not be at the competitive position to negotiate with their suppliers. Thus, they could not negotiate for a better pricing & be competitive with their competitors.
Below is a mindmap guide as an overview, in JPEG form. I do have the PDF copy.
Here are the details in point forms. If you would like a well formatted copy, please email me.
How to buy off a supplier's pricing, if you are from OEM
o Pre-requisite
You are involved in supplier pricing
You are from OEM
You need to approve pricing
o What do you need?
A few suppliers
A business or a purpose
An RFQ package
Complete BOM & spec package
Manufacturing flow
Test requirements
• ICT or Flying Probe
• BST?
• Functional test
• System Test
Quality requirement
Annual volume
RFQ timeline overall
Sample products or pictures
o What are the catchy items
Incorrect costed BOM
Incorrect UOM
Incorrect labor assumptions
o General Process Flow
Identify business/opportunity
• Identify potential contract manufacturers for RFQ
o Reach out to the CMs
Confirm interested, send RFQ
• Info
o BOM & specs
o Quality requirement
o Manufacturing flow
o Timeline
o Test requirement
o Any materials with contract pricing?
Provide the list
• Provide a specific format for RFQ
o Organize a Q&A session with suppliers
All questions answered
Suppliers worked on RFQ package
Follow up with suppliers for RFQ status
Suppliers to submit RFQ
Review & buy off
o If ok, business award
o Start project?
o Transfer project
o Qualification plan
Once approved, full business award granted
o How to review?
Check BOM
• Part numbers
o CPN
o MPN
o Description
• Qty per
• UOM
Obtain internal costed BOM
• For comparison purposes
Check process flow from suppliers
Check suppliers' committed capacity
Labor cost
• Cost per component price?
o Depends on
EAU
Complexity of product
Stability of design
Items to consider?
• Shop rate
o Building space needed
Depreciation period
Depreciation cost
o Water & electricity
o Total equipment cost
Depreciation period
o Labor required
DL
IDL
o Wastage
o Effective working hours
o Manufacturing process
Clean?
Non clean?
Cleanroom requirement?
Conformal coating
o Rework rate
• EAU
• Number of heads used
o To see if there is duplicated stations
• Where are the bottlenecks
• Suppliers ROCE %
• SPI?
• SG&A cost
• Inco terms
If you would like to have more on the strategy, please email me. I can share more on how to catch where the contract manufacturer hides their fat, and what are the items to look at.
Hope you enjoy this.
As usual, please email me if you have additional comments or request. Your feedback is highly appreciated.
Thank you & best regards,
Ronald Gan
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