The Danger of Choosing the Lowest Cost Supplier
Abstract
Tim and Fred discuss the common behavior of only focusing on purchase price when working with suppliers.
Key Points
Join Tim and Fred as they discuss how to recognize and avoid the drive to the lowest cost supplier.
- Do we always want the lowest price (NO)
- Building a partnership for major benefits
- Cost is determined by what we prioritize
Enjoy an episode of Speaking of Reliability, where you can join friends as they discuss reliability topics.
Join us as we discuss topics ranging from design for reliability techniques to field data analysis approaches.
SOR 015 Dealing with the Drive to the Lowest Cost SupplierTim Rodgers
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Hey guys – love this podcast this week – particularly the total life cost / ownership discussion. If only Purchasing depts had KPIs that involved total life after ordering. Problems with cost cutting often takes months and sometimes years to appear.
thanks James, we had fun putting this one together. I agree that we often work for reliability improvements which is counter to the purchasing groups focus on lowest cost. It can happen, and I’ve seen it a few times work very well, change the formula for part cost to include the cost of failure… changes everything. cheers, Fred