Your new requisition order comes in. You need to procure 1,000 aircraft parts. You look down at your screen and want to explode. You become stressed. You wonder how you and your team will get it done on time and on budget (a realistic budget that is).
As you look at the list, you notice a mix of rotables, expendables, and consumables. Now, it’s even more complicated.
What are you to do? How are you going to get this done?
First, let’s talk about what you shouldn’t do.
What Not To Do
Your immediate reaction is to forward this list to everyone on your contact list. It sounds like a great idea. But, it’s not.
Processing costs are real. When you use this shot in the dark method, you create chaos for yourself. It’ll cost you between $50 - $200 for every PO you process. And that doesn’t even begin to tally your shipping, issue resolution, and sourcing costs.
Here are even more reasons why it’s not a good idea:
You have no plan. You’ll get a mix of quotes. You have to send, process, input and review all these quotes.
It’s a purchasing nightmare. Sending POs for all the different quotes you get back will cost you a ton of processing money.
Logistically, it’s wasteful.
You’ll “stir up” the market. Prices will increase as the market thinks demand has increased.
Don’t just forward the list. Issues will arise once you start processing your requirement. And, what if there are people on your list you’d never work with. Or you simply don’t like them as a material supply partner. It wastes your time.
Take a deep breath. Take a step back.
Now let’s process your 1,000 part requirement efficiently…
Source, Process, and Chase
Processing a 1,000 aircraft part requirement takes a plan. If you don’t have a plan you’ll waste time and money. I’m pretty sure that’s not your goal.
Step 1: Choose 3 Trusted Material Partners
You might be thinking, I can’t just choose 3. That’s okay. Take a deep breath and choose your 3. These material partners are people who have a track record of not only delivering on time, but whom you can communicate easily with, who resolves issues as they arise, and who has a good understanding of supply chain efficiency.
The reason you’ll choose 3 is because you want to keep each of them honest. You want to make sure you’re not paying 10x the fair market value. You may spend a little more per unit and that’s okay. Your processing cost will reduce dramatically. You just want to make sure you’re getting fair pricing. Not cheap. Fair.
Step 2: Establish A Deadline
You can’t be AOG for 1,000 parts. If you are, there’s a much bigger problem.
What’s the realistic date you need your quotes by? Choose a date and relay this information to your trusted material partner. It’s very important you choose a realistic deadline. Or they’ll think the task is impossible, not worth the time, or unrealistic.
Setting realistic deadlines and outlining clear expectations will make this requisition go smooth.
Step 3: Clean Up Your List & Spot Any Issues
Your RFQ should be in Excel. It’s easier for you to communicate with your partner. It’ll also be easier for them to process. Skim through your list. Notice if anything doesn’t look right. Odd conditions, no quantity, part number typos, and other things like that.
Here’s how your columns should look:
Tag (any special tag requested?)
Some partners will send you the Excel sheet back while others will send you something a little more formal. Just talk with them on how you want it.
Step 4: Send RFQ
Once you’ve established your deadline and created a list, now it’s time to send it.
It’s always best to send these emails addressed to one person. They’ll know you’re talking to them and you’ll avoid the diffusion of responsibility. They’re also human so talk with them. This is why choosing your top partners is important. You can be human and they can listen. With mass email lists it gets too noisy and too complicated.
Send your RFQ. Address any information (like due date) in the body and attach your RFQ sheet.
Step 5: Review Quotes
You’ll soon start to receive quotes. Once you do, process them according to your top priorities. The biggest priorities are usually time and budget constraints. If you don’t have time, start reviewing leads times. If you’re on a tight budget, look at prices.
The goal is to get a good picture of which partner can do what for you. Note the vendors you want to send a PO to as you process your 1,000 part quotes.
Step 6: Send POs
Now it’s time to send POs. Each PO you send costs your company between $50 - $200. The less POs you send the more you’ll save on processing, chasing, and shipping costs.
When you send the PO, don’t just focus on the per unit price. Focus on the big picture and your total savings through a $ave by Consolidating mindset. It’s always good to think about your total cost of ownership.
Step 7: Chase POs
The final step is for you to chase the POs. If you’ve done everything right up to this point, you won’t have many POs to chase. You’ll have a select few who you sent to your dedicated material partners.
It’s okay if you have a couple that drifted off to someone else if they had the right capabilities, but 90% of your 1,000 part requirement should go to 3 or less strategic material partners.
This simple strategy will save you a ton of time and money on sourcing, processing, chasing, and shipping costs. It’ll give you more time to focus on your core activities. That’s the goal, right?
Do you have a 1,000 part requirement? Have you in the past? Tell us your processing story below.