5 Best Practices to Balance Your Manufacturing Procurement Strategy
Let’s be honest, cost reduction is often both the motivation behind and the key metric by which success is measured in procurement. While securing premium talent and cutting-edge technology at the lowest price can be measures of effective investment, building a winning manufacturing procurement strategy or sealing its fate often centers around what you give up when cutting costs.
Below is a list of five best practices to ensure you get the most out of your manufacturing procurement strategy via a balanced approach to key factors.
1. Don’t trade away partnership for low prices. A winning manufacturing procurement strategy is one that merges technology and partnership with your tech vendors. While opting for cheaper software and systems may save you cash in the short term, what you may be forced to give up in terms of training and support could cost far more in the long run.
Conversely, the adage “you get what you pay for” succinctly describes signing with a discount vendor, one which withholds the service most necessary to successfully implement their tech: quality support. Ultimately, the money spent versus what is expected to be delivered can always be brought back into play when renegotiating renewal of a service agreement, and poor service is always an excellent reason to justify paying less.
The bottom line is make your vendors work for you!
2. A winning procurement practice is not built on technology alone. Large upfront investment typically necessitates looking for ways to reduce spend, especially when replacing departing staff. The wise manager will seize upon such an opportunity to both save and win, by investing in the development of young talent, which will pay off in the long run.
With regard to spend, a winning procurement strategy should aim to hit that sweet spot between the potentially large outlay on technology and long-term investment in a team ready to employ that tech to its fullest potential.
Ultimately, tech is only as useful as the person wielding it.
3. You never know where that next winning idea is going to come from. Utilizing the full scope of tools and options available is a hallmark of management excellence, and the best managers know that success hinges on wielding tech, talent and teamwork with equity. Nothing could be more accurate when it comes to input, which should be both actively sought out and paid attention when least expected.
In terms of hiring, investing in established talent is just as important as bringing in new hires fresh out of college. Any leader who makes a practice of focusing on a narrow range of the voices around her increases the likelihood of failure, but the leader whose plan doesn’t allow for new ideas ensures it.
Change it up.
4. Procurement can be a source of innovation for company growth. These points should be adding up in your mind to a picture of a diverse team made up of tech-savvy new hires ready to learn and seasoned pros ready to lead. But marshaling this powerhouse to fulfill only the goals that are already set by the company risks wasting your department’s potentially most valuable asset: inspiration.
Think about it. Playing it safe by focusing all your time and energy driving down costs, reducing risk, and ensuring the steady flow of your supply chains will only ever guarantee you keep your head above water. Instead, a winning strategy should leave no avenue of advancement, new idea or tempting risk unexplored.
Drive growth and innovation by employing all possible resources.
5. Translate your winning strategy into recognition and reinvestment in your department. While no one knows better than you that the health of your company is a function of its financial commitment to procurement, senior management needs to know this most of all. Analytics, departmental reporting, and original initiatives combine to provide you with glossy material to persuade your superiors to approve larger future budgets for your team.
Push the key pieces of your new manufacturing procurement strategy beyond the boundaries of your department alone, and convince the higher-ups that a healthy company is one that distributes resources across all essential departments.
Departmental favoritism is divisive, counterproductive and can lead to disaster.
There you have it: five best practices to ensure a balanced, effective, and winning manufacturing procurement strategy.
Now that you’ve read about procurement best practices, read about how to Reduce Operating Costs by Leveraging These Third-Party Partnerships.