Sourcing at Hydroline
Sourcing at Hydroline
Hydroline’s sourcing department is responsible for defining our suppliers and creating a competitive supplier network that is able to meet our and our customers’ needs. Our sourcing department is responsible for both Vuorela and Stargard factories’ sourcing needs and their focus is in the needed materials and components for hydraulic cylinder manufacturing. Our sourcing is constantly improving the cooperation with the existing ones and also looking for new, efficient suppliers. The focus on improving are the delivery reliability and quality improving; as these rise to a better level, usually the cost-effectiveness improves along with them.
One example of cost-effectiveness is a buffer stock. Creating a buffer stock together with a supplier improves the cooperation and effectiveness on both sides. A supplier that has a buffer stock has the needed components and materials in their storage and these can be delivered to our factories with a fast delivery time. This requires careful cooperation from both sides as the supplier needs to know what needs to be in storage and how much at all times.
One of the most important tasks of sourcing is to continually find cost savings for manufacturing; bidding on different categories is a big part of sourcing. Practically, how the cost savings are found, is that certain products are chosen where the cost savings could be found and different suppliers are contacted with offer inquires which then are compared with each other.
Our supplier network is mainly local and easy to work with. A lot of our suppliers a located near to our factories and this brings more efficiency for the cooperation as well as extra benefits compared to those who are located far away. Our supplier network is about 70% domestic and 30% are from all over Europe and a few from Asia. A good supplier relationship is not tied to the distance; it is all about cooperation. We have been working together with most of our suppliers for many years now and this is one example to point out that we really trust our suppliers and continuously want to improve our cooperation with them.
Hydroline measures its suppliers monthly throughout the year. The sourcing department keeps eye on the suppliers’ delivery accuracy and quality level. The quality level is measured with a PPM (Parts Per Million) indicator/measure. Our goal level for this year is 1500; of course, the lower the better. Our delivery accuracy goal is 95%, on a longer time period a little bit more.
Our supplier demands can be found from our Supplier Playbook that is available from our website on demand. From the Playbook, a potential supplier can find for example the details of our sourcing policy, selection process, quotation process and approval process. Everything a new supplier needs to know about sourcing at Hydroline is compiled into the Playbook. Our suppliers also need to follow our Code of Conduct which creates the guidelines for all our operations.
As the hydraulic cylinder market is a constantly growing market, we also are executing our growth strategy. This does not only concern our cylinder manufacturing in general but also everything that is tied to it. This means also sourcing. Our sourcing department is heading towards more direct supplying. For example, the materials for cylinder manufacturing are searched directly from the manufacturers instead of using merchants. This way the purchasing price is cheaper and, in this case, the price advantage plays a big role. Also, as there are less middlemen, there is a smaller risk for the material or component to get damaged. The evolution of supplying has been ongoing for years now; for example, 10 years ago all of our suppliers were domestic but because of the internationalization, there are more opportunities nowadays and a middleman is no longer needed in many cases. This also provides cost-savings to our customers as we are able to purchase more directly and the costs can be cut.