ABSTRACT

Unless you are very vertically integrated, the purchased content of your product represents: most of its cost, is the overwhelming driver of its quality, consumes the greatest amount of your cash in inventories, and pretty much controls whether you make a profit. In fact, it is the single biggest driver of whether you will grow and prosper or go under. So the logical thing is to do your buying via an online auction and turn it over sight unseen to the lowest bidder, or source the key components with some factory in China you have never seen via some agent you found on the Internet, right? Or maybe just give it to the sales rep who drops in and takes your buyers to lunch and springs for a bottle of scotch at Christmas. Put that way, the approach most manufacturers take to the sourcing and purchasing function sounds outrageous.