MEGA INSTRUMENTS (MI) Mega Instruments supplies instruments which are used in vehicles to measure wear and tear of car tyres and brakes. MI supplies the instruments for 10 different car models. Linford makes similar instruments for 4 car models which represents 77% of the market. Linford is MIs only competitor and within a short period of 4 years Linford has captured 68% of the market due to competitive pricing. MI offers 2-year warranty on its products compared to 1 year offered by Linford. MI outsources the manufacture of their instruments to Compco Ltd. MIs current contract with Compco does not include any KPIs about maximum number of defects allowed per batch or delivery lead time. MI has had a long-term contract with Compco for last 10 years and as per the terms of the contract, Compco has increased the price by 5% every year. Both MI and Linford coat the exterior of the products with rust proof paint. However, MI also paints the internal parts of the instruments with similar rust proof coating.

Question: As the newly appointed Supply Chain Director for Mega Instruments, Illustrate the 3 steps MI can take to reduce its supply chain costs and create cost advantage.