The Sorcery of Sourcing

Want to optimize costs in sourcing? The best method is to gain an intimate understanding of your suppliers’ products and technologies.

It’s perhaps no coincidence that the word “sourcing” sounds a lot like “sorcery.” A good sourcing manager can indeed appear to know black magic. But Lenka Hrušecká, Sourcing Manager Holic & Projects at Fortaco Group, says doing the job well comes from a combination of relationship building, pure curiosity, and a willingness to understand the suppliers’ world.

Relationships matter

Sourcing is finding the right source for the right costs and right quality with right delivery. “My job is to ensure that the components for everything we assemble in our factory has a source,” says Hrušecká. “That means we build relationships over the entire supply chain and challenge suppliers to improve costs. But not only costs. We ask they improve delivery, quality, and bring innovations and new ideas.”

Hrušecká’s team deals with approximately 200 suppliers, with around 50 of those considered strategic partners. “It’s impossible for our team to know all 200 personally,” she says, “so we invest real time with our strategic partner suppliers to whom we’re closely connected. We invest time in suppliers who want to grow with us, have a good combination of offerings, have the potential to be innovative, and can offer R&D support.”

Depending on your industry, 200 may seem like lot of suppliers, given the constant challenge to streamline and reduce the number of partnerships. “Before you can reduce the number of overall suppliers, you have to develop your strategic suppliers,” says Hrušecká. And that’s done through as many face-to-face meetings as possible with suppliers and her team, as well as category managers. The objective: learn their businesses, learn the cost drivers, learn the limitations and technologies.

Curious about screws

There are always calls to bring down costs and improve cash flow. But in order to do that Hrušecká says you have to understand what’s behind the prices, and what factors ultimately influence the final price. “You’ve got to have a hunger for information. You’ve got be curious about material groups, like screws, polycarbonates, even the simplest materials. The most basic screw will have a huge story behind it.”

For example, suppliers can tell you how the screw is treated and whether it’s possible to reduce the variety of screws used in assembly. “Suppliers can significantly reduce your costs by not only reducing the price, but also by proposing solutions to reduce assembly time, administration, or warehousing,” she says. “Suppliers, if there’s a good relationship, can offer better tools to allow operators to work faster and more efficiently, and they can support you in bad times, as well.”

“Glue is another example,” says Hrušecká. “How’s it made? Is it curing too long and influencing the final product, and final costs? And polycarbonates: what’s important and what differentiates them? High optical, low optical? What are the regulations and norms? Ours is a strangely wonderful business. You’d probably never imagine that suppliers talk about cabin glass with love!”

A fresh, female approach

Hrušecká studied marketing in Bratislava, worked in media, advertising, and then found herself as marketing director at Bratislava’s biggest shopping mall. Moving to western Slovakia with her family, she joined Fortaco as a junior in the sourcing department. “I wanted to learn the business from the ground up,” she says, “so I studied drawings, absorbed the technical details, and after six months I was responsible for ready-to-weld parts.” She bounced around a bit in the industry, but returned to Fortaco, becoming sourcing manager for three Fortaco factories across Europe dealing with cabin and vehicle assembly.

Hrušecká loves the teamwork in what is a predominantly male industry. “There are very few women in the factories, and women perceive different things than men. This combination actually makes for a great team, though it’s not always easy to convince men of this.”

“I once told a future boss in an interview that I was creative and improvisational, and he suggested improvisation wasn’t the best approach to the job,” she says. “But since then I’ve seen the approach bring some very interesting solutions for customers. This way of seeing the world can really impact the numbers.”