Global Material Logistics

Sparton Corporation offers its customers the benefits of competitive component pricing due to its strategic materials procurement process.

The Corporate Materials Logistics team and a multifaceted supplier managed inventory process began in early 1997. Sparton began to work with a small group of distributors based on the breadth of their line card, history, pricing, performance and growth capabilities. Sparton sought strategic account status with these suppliers to be recognized as one corporation rather than individual buying locations.

Today, Sparton negotiates for component contract pricing on approximately 60-70% of procured components, stabilize pricing, reduce the transaction costs and quoting time, and obtain improved pricing.

The Corporate Materials Logistics team determined that a substantial decrease in material overhead costs would be achieved by processing component transactions with Sparton's strategic suppliers electronically. A supplier managed inventory program known as FlexLink was created.

The Corporate Materials Logistics team operates under the guidelines of 'electronic everything'. In the fall of 1999, Sparton began trading its first piece of electronic demand data with the supply base. Gradually, more parts were added to the program. Today, approximately 40% of all components that Sparton purchases are traded electronically and the number continues to grow daily. As the system matures and more data is traded electronically, Sparton is able to reduce inventory and material overhead rates and gain greater flexibility for its customers.

Under the current FlexLink model, Sparton can trade up to about 60% of its component needs. To manage the remaining 40%, Sparton will be implementing FlexLink II. FlexLink II is a simulated electronic data interchange (EDI) program that will operate across the internet and allow small or nonelectronic suppliers to trade information with Sparton electronically.

Sparton has also implemented the Material Win Transition program. This process takes a customer's bill of material, approved manufacturer list and product demands and drives the output through Sparton's Materials Resource Planning (MRP) system. The Win Transition team utilizes the MRP output to set the supply line in place before the planned production run. Sparton buyers set the components up to trade electronically through FlexLink from the start of the project. The implementation of this new process has provided numerous benefits which allow Sparton to be more responsive to its customers. Approximately 55% of all new components are traded electronically from start-up.