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Contributing to Business Innovation and Value Enhancement for Diverse Clients

Looxent provides clients with practical and implementable solutions, driving fundamental change that leads to significant improvements in business value. Through this approach, Looxent positions itself as the most trusted partner for clients, consistently proving its reliability and commitment.

Engineering & MachineryHeavy Industry’s Reliance on Suppliers: Building and Managing Exceptional Partnerships is Key

Amid strengthened government policies promoting mutual growth and an increasing recognition that supply chain competitiveness equals corporate competitiveness, the importance of supplier management continues to rise. Supplier management now transcends reactive problem-solving to encompass periodic evaluations of supplier capabilities, fostering strategic partnerships, and advancing joint initiatives for supplier performance improvement.

In the power plant components and EPC (Engineering Procurement Construction) sectors, the industry’s nature demands that firms focus on design and core components while outsourcing extensive materials and construction services to suppliers. Given the project-based variability in specifications due to client requirements or site conditions, suppliers’ delivery and quality capabilities are critical. This reality underscores the necessity for robust supplier management and development capabilities. Aware of these challenges, the client proactively pursued supplier development initiatives and decided to enhance its existing supplier management processes by embedding them within a comprehensive system.

Establishing Sourcing Groups: The Foundation for Tailored Evaluation Standards

The client’s purchasing activities encompass a vast array of items and diverse procurement methods, including outsourced services and construction. One key objective of this project was to develop evaluation criteria tailored to the unique characteristics of each purchasing category. The initial step was grouping purchased items by production characteristics and market similarities (Sourcing Group classification). To ensure the number of sourcing groups remained both manageable and reflective of the data, extensive data analysis and workshops with purchasing teams were conducted.

Ensuring Evaluation Efficiency, Objectivity, and Differentiation

The evaluation criteria were developed by leveraging the client’s existing framework and benchmarking against best practices in comparable industries. Particular attention was paid to achieving three key objectives:

  1. Efficiency: Designing evaluation metrics that require minimal time investment from evaluators.
  2. Objectivity: Establishing consistent and clear evaluation standards to yield reliable outcomes.
  3. Differentiation: Assigning weighted scores that effectively distinguish high-performing suppliers from underperformers.

These considerations ensured that the evaluation process could balance practicality and analytical depth, resulting in actionable insights.

System Implementation for Streamlined Supplier Management

The client is now in the process of implementing a system to support supplier pool management, performance evaluations, and development programs aligned with the newly established procedures and criteria.

Through this supplier management framework project, the client has achieved a structured approach to managing supplier pools by sourcing group, selecting partners based on performance metrics, and operating development programs for supplier growth. These efforts are expected to improve supply stability, enhance quality competitiveness, and ultimately strengthen total cost competitiveness alongside suppliers’ foundational capabilities.



*EPC (Engineering Procurement Construction): A business model in which a single contractor oversees the design, procurement, and construction phases of a project, frequently used in power plant and chemical/refinery plant construction.



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LOOXENT

A  21F. Parc.1 Tower2, 108, Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea 07335

T  02-546-8222      F  02-546-8226

E  service@looxent.com 

© 2024 LOOXENT. ALL RIGHTS RESERVED.