In the search for better performance and lower costs, industrial production activities are often caught in the crossfire and compromised. How can anyone benefit from the procurement function’s expertise in the midst of this chaos? The function must meet the global objective of ensuring the margins’ constant increase. Responsible for all sourcing and purchasing operations, it ensures that all the elements required to produce the finished product are available: raw materials, components, outsourcing…
By nature, the procurement department is in constant contact with the company’s other departments. Each of its actions has a direct influence on the flow and quality of the production. Its members are able to make the best decisions for the company thanks to their in-depth knowledge of the market, its actors and inner workings. This makes them a precious ally for the continuous improvement of the production process and, ultimately, a driver of growth.
Procurement Management & Risk Reduction
The recent changes in the industrial landscape have allowed the procurement function to progressively gain more responsibilities in each phase of the value chain. Procurement and supplier relationship management are essential in order to meet the price and quality requirements.
As consumers lean towards personalized products, a company has to rely on the reactivity and flexibility of its supply chain to maintain its competitive edge. In this situation, purchasing management can be a real headache for some companies. Yet there are available solutions.
Quality, Cost, Delivery: the trifecta
As factors of risk and competitiveness, quality, cost and delivery have a direct influence on the efficiency of the production chain. At its level, the procurement function can optimize production by influencing these three points:
- Quality. It goes without saying that the quality of your raw materials has a direct impact on the life cycle of your finished products. So, choose your suppliers carefully! To choose the right one, perform an in-depth analysis of the market followed by an assessment of the suppliers. There are many tools available to help you gather information about your suppliers: business sector, customer satisfaction, legal conditions… Mobility Work Hub platform helps you identify potential partners based on community reviews and lets you contact them directly through your CMMS.
- Cost. In this instance, the role of the function is to control the costs linked to the supply and distribution networks and to acquire industrial equipment and consumables at the best price. Stock management has a real impact on the company’s working capital. Stock shortages will likely hinder production activities. Excess stock will not only create extra costs but will also expose the company to the risk of obsolescence. Therefore by regulating the flows and stock of industrial equipment and consumables, the function helps lower the overall cost of production.
- Delivery. The ability to meet deadlines is a key criterion when picking your supplier. The slightest delay in delivery can lead to unplanned downtime for your production chain. The procurement teams are able to synchronize the supply with the production by rationalizing their management processes.
All these elements have one thing in common: the supplier relationship. With the automation of an increasing number of supply chain processes, collaboration between the different actors is becoming all the more essential.
Optimizing supplier relationships
Company data is regularly exchanged between all the different actors of the supply chain: industrial suppliers, production teams and even the procurement function. Over the next few years, supplier relationship management will increasingly take on even greater importance. Trades will become more frequent and varied and collaborations will be closer than ever before.
At the same time, suppliers have to comply with higher and higher expectations regarding price, quality and deadline compliance, as well as social and environmental impact… The procurement teams must analyze each of these criteria, so they often rely on mass data analysis to identify potential partners and assess their performance.
Broaden your horizons with new connected and community-based tools like the Mobility Work Hub platform. Suppliers share their official portfolio of products directly on the platform to allow Mobility Work CMMS users to access detailed product sheets. Look through them, consult our community of maintenance experts and contact your future partners directly.
Access our partner’s official catalogs in your Mobility Work CMMS.
Once you’ve completed your sourcing operations, make sure to minimize the supplier risk as much as possible. Using next-generation SRM tools, procurement teams now benefit from real-time visibility on their suppliers’ activities and from a greater control over the purchasing process.
Industry 4.0: responsiveness and efficiency
The arrival of the IIoT (Industrial Internet of Things) led companies to rethink their supply chain strategy to make it: decentralized, more reactive, closer to the production teams...
Every day, a large quantity of data is generated and collected in the manufacturing industry. However, very few companies seize this opportunity and use this data to its full potential even though systematic data analysis enables a company to identify its weak points and to automate its purchasing processes.
IoT: for operations and support
Currently, one of the procurement function's main concerns is answering the production chain’s needs as promptly as possible. However, the lack of communication between both teams can make this task particularly challenging. Industry 4.0 solutions help improve your response time and even predict production requests.
IoT allows you to connect different equipment and control panels together, as well as informational and management systems, at all levels within the company. The concept of smart manufacturing relies on this type of interconnectivity. This 4.0 production method encourages streamlining the planning, production and logistical processes within the factory. In time, this management and data analysis system adds new value to the production chain.
Optimizing your industrial maintenance
Let your equipment do the talking! Set up smart sensors at every level of your production process. Get updates on your equipment status in real time. Set up an alert to get notified once a critical threshold has been reached. Schedule your industrial maintenance operations via your next-gen CMMS software. Adapt your supply to your maintenance team’s actual needs. Now, that’s what we call “Procurement 4.0”.
These days, most companies have chosen the “just in time” method: less stock, no more downtime… As a result, maintenance teams play a pivotal role in ensuring the productivity of the factory. Yet the data collected by your IoT sensors is invaluable for the implementation of a predictive maintenance strategy. Collecting and analyzing data as well as using machine learning allows you to get incredibly precise measurements of your overall equipment effectiveness (OEE).
Analyze your production chain's data in real time.
The procurement function enhances operational performance while reducing company costs by analyzing the end client’s and the production chain’s consumption patterns (consumables, spare parts or even equipment).
According to a study conducted by the French consulting firm Capgemini in 2016, only 5% of surveyed companies were satisfied with the current digital transformation of their supply chain. Furthermore, the authors of the study claimed that the next few years would be critical. Companies should therefore speed up their digital transformation and instill a real culture of change to seize the new Industry 4.0 opportunities and maintain their competitive edge.