Monday, 29 October 2012

Can a $10 hinge be strategic?

I bet if I asked the average person that question they would look at me blankly. Even if I asked 'where would a hinge be positioned in a Kraljic matrix?', I suspect most would think it was on the lower end of risk.

But what if the hinge is on a laptop?  What if it was going to adversely impact on the new Windows 8?  Today's WSJ has a fascinating article 'Window 8 Success Hinges on $10 Part' which illustrates the importance of laptop hinges.

Strange thing is the number of times procurement people tell me that low value purchases are not where there attention should be focused.  My response could be something about the straw which breaks the camels back; now on reflection I think I will refer to the $10 hinge which moves the laptop's back. Aim for lowest price and a single source supplier and you may just have made a mistake!

Lesson learnt: strategic sourcing is about more than price.

1 comment:

  1. Interesting post, doc. I suspect that the supplier knows the importance of the hinge, as is charge $10 with a 60% gross margin vs. the $7-8 that it will cost when proper supplier development commences after the launch of Windows 8.