RFQ Missteps: How to Avoid them

RFQ Responses: Why are they so laborious? Part 4 – Avoiding missteps

Review

In my last article, I looked at RFP/RFQ response complexity from the perspective feasibility assessments – how a supplier can figure out what they can and cannot do in response proposals for manufacturers. (In case you are wondering, you can read RFQ Response – Why is it so laborious? – Humaxa,  RFQ Responses and Proposals: Why are they so laborious? Part 2 – Intake Process – Humaxa, and Feasibility Assessments in RFQ Responses: Why are they so laborious? – Humaxa if you’d like to catch up.)

Global Locations

When it comes to RFQ responses, there’s a myriad of pitfalls to avoid. When it comes to sourcing parts, as a supplier, you may want to have several global locations from which to source the parts to de-risk the supply chain. Having multiple global locations from which to source parts (and labor) can help reduce supply chain risks. What risks related to supply chains might arise?

1. Natural Disasters
2. Geopolitical Conflicts
3. Trade Restrictions
4. Labor Strikes
5. Material Shortages
6. Economic Instability
7. Port Congestion

Competitive Pricing

If competitive pricing is a concern, it may be helpful to focus on cost optimization. Labor and manufacturing costs vary widely depending on location. Sourcing from lower-cost regions may ease pressure on pricing. Tariffs, trade, and currency variation may also affect costs. It may be prudent to consider:

1. Labor and Production Costs
2. Tarriff and Trade Benefits
3. Currency Hedging

Regional Sourcing Options

You may also be wondering about proximity to manufacturers and just-in-time delivery options. Having regional sourcing options that are physically close to manufacturing sites can help with immediacy of need. Also consider:

1. Shorter lead times needed
2. Lower Logistics costs
3. Faster Responses to Manufacturers

Regional Areas of Specialization

Regional areas of specialization may dictate another reason to have several global locations from which to source parts. Depending on priorities, being close to these specific regions can be a huge advantage when trying to stay ahead of competitors. Access to regional experts can ensure high-quality components. For example:

1. Germany is known for its precision engineering
2. Japan is known for its advanced electronics
3. China is known for its battery technology

Sustainability and ESG Goals

If sustainability and ESG Goals are important, it may benefit a manufacturer to track long-haul transportation emissions and keep manufacturing as local as possible. Diversifying locations can help comply with global regulations regarding forced or underaged labor and unsustainable mining practices. It can also help with:

1. Lowering the Carbon Footprint
2. Ethical Sourcing of Parts
3. Following Local Sourcing Requirements

Scalability and Future Growth

When demand increases, having multiple global locations can help with scalability and future growth. With multiple sourcing options, manufacturers can have leverage when negotiating prices and can position manufacturers to ramp up in emerging markets. Please keep in mind the importance of:

1. Ability to Expand Capacity
2. Emerging Market Penetration
3. Supplier Negotiating Power

I hope this helps with points to consider when avoiding missteps, especially around global locations and sourcing of automotive parts. If you are interested in making RFP/RFQ response generation easy, let me know!

Carolyn Peer

CEO/Co-founder, Humaxa

[email protected]