Direct Procurement sets the pulse of manufacturing.
Integration of the supply chain
Simply put: manufacturing organizations succeed by generating new ideas, testing the ideas, improving the engineering, and streamlining the assembly. Integration of the supply chain, throughout these facets of business, is vital. Business systems are integrating with production control and show floor equipment, and transparency is meeting with automation, but there remain areas for improvement within the part lifecycle.
Manufacturers rely on trusted suppliers. They know the suppliers by part/material, and many are assured of participation in applicable RFQ events.
11% of M&A activity involves materials suppliers
Since 1985, there have been 126,795 mergers/acquisitions among industrial manufactures
There were 934 automotive component manufacturer mergers/acquisitions, at a value of $99.1 billion, in 2018 alone?
Source: Institute for Mergers, Acquisitions & Alliances
There is a possibility that some strategic suppliers your organization has been successful with has more capabilities now – of which may be overlooked. Reverse sourcing provides a mechanism for known suppliers to opt in for consideration in alternative markets and parts/materials.
Production Part Approval Process (PPAP)
New parts, engineering changes, corrections, design change, process change, change in source of subcontract, transfer of tooling, and new production locations = PPAP. Manufacturers deal with scores of spreadsheets being emailed around, with changing dates and responsible parties. The criticality to determine production will be consistent and repeatable is high – and manufactures benefit from PPAP software to drive speed and accuracy.
Low-cost Country Sourcing (LCCS)
LCCS has been an effective procurement strategy to cut operating expenses; however, as labor costs rise in Asia, and new tariffs take effect, production costs have increased. Thus, many strategic supplier relationships that were previously stable, are now under review as new source strategies are considered. The need to efficiently determine true cost of alternative supplies rises in importance.
Transparency & Collaboration
Top-performing manufacturers maintain three distinct qualities: 1) agile in ability to react to sudden changes in demand or supply; 2) adaptability as markets and environmental conditions change; and, 3) an ability to align interests of suppliers and their company to optimize performance. In a truly global supply chain, this is a monumental task; however, leveraging effective Supplier Information Management and Collaboration strategies lay the foundation to achieving these qualities.
We have successfully helped discrete manufacturers tackle many of today’s part lifecycle challenges.