It is crucial for every manufacturer to create a proper procurement strategy and secure the supply of goods required for production. It represents all processes related to the supply chain and services that allow you to position your goods on the market.
There are three main types of procurement, direct, indirect, and service. The first one represents the simple sourcing of materials that you need in the manufacturing process. Moreover, service procurement is related to proper workforce and external support.
The complexity of this process depends on the industry where you are active, and the type of goods that you are producing or reselling. In that matter, procurement is much easier when you have a small online store where the main challenges are related to finding the best supplier.
On the other side, if you are a big manufacturer, it is crucial to secure the right suppliers for different parts and other resources that will help your business to run without any issues. Here are some tips and tricks that professionals who are working in the automotive and heavy equipment industry should know.
1. Getting a Used Machine Can Be A Good Choice
In case you are producing spare parts for vehicles or some parts for heavy machinery, getting the right equipment is the first step that you will need to do. The most important thing is to get the machine that will be capable of producing the targeted number of parts, while you don’t need to worry about standards and quality. Buying a used machine can be a good option because you can save a lot of money that way. On the other side, you have to be sure that the equipment is in a good condition.
2. Less Space For Flexibility
When you choose to create certain products or parts related to heavy equipment and vehicles, it is complicated to switch from one to another set of products. First of all, it can be quite expensive. Besides that, it is complicated to change the main operation and set them for a different types of products.
For example, if you choose to produce engine parts for the Ford company, you will be limited to making only those products with your current set of machines. In case you are interested in expensing to some other brands, you will need to invest in additional equipment.
3. Find Reliable Suppliers
Another very important thing is that won’t have much flexibility with suppliers as well when you are working in heavy equipment or the automotive industry. The potential problem is that different suppliers might use different standards and processes when they are producing the resources you need.
For example, if you need vents for certain parts, and the standards are requiring a certain size or material, there is no way to simply choose any supplier since there might be a wide selection of similar products but with different materials.
But since we are on the topic of procurement and professionalism, we have to point you in the direction of STS-Global as one of the reliable overseas vehicles and spare parts supply, the company always provides products to the required specifications, and supplies and trades according to “Incoterms”.
4. Invest in Automations
When you compare the starting price related to different types of machines, those with automation might seem like a bad choice because of their high price. However, you should focus on the long-term output that automation can provide. You will be able to hire fewer people and deal with fewer struggles, along with the fact that the product will become more capable.
On the other side, there re digital platforms that will help you to analyze various processes in your company, starting from your workers. You will be able to determine the required working hours, and compare the quantity and quality of products with the current workers. That will help you to decide whether you need more people, and on which positions.
5. Beware of the Challenges
One of the main challenges that many manufacturers are facing is related to the consistency of their suppliers. It is crucial to determine the right amount of certain goods so you can ensure production. Therefore, the best solution is to create your strategies on time and secure proper communication with external services.
The cost management might also cause some troubles when suppliers decide to increase prices of certain goods. That will affect the cost-effectiveness. An even bigger problem is in case that you made some agreements in advance, and you are not able to increase the prices as well.
6. Focus on SRM
When you are working in a big company that is collaborating with a lot of other companies and external services, it can be challenging to control all those processes easily. That is the main reason why you should form a group of people and use digital platforms where you can share data and communicate as a team and with your partners and clients.
There are many advantages of using software in procurement processes. First of all, it will be much easier to secure the supply of crucial goods. Also, you will gather necessary data that you can later use for additional strategies and insights. Besides that, you will secure the main processes, production, supply chain, and the delivery of finished products.
The Bottom Line
Procurement can be quite challenging when you are working in big industries like the manufacture of machines and vehicles. The reason for that is that some many external suppliers and services are important for main processes. On the other side, you will have to find the right partner who will sell your products.
The main challenge is always related to profit. It would be a mistake to simply focus on cheapest suppliers. The best solution is to choose those that can guarantee high-quality resources. However, you should find a way to implement the price of resources into the final price of products that your company is creating.
Sourcing is also a very important process. You will need to stay in touch with your suppliers while researching for new and better options all the time. The same is with buyers. Also, it is crucial to have proper management related to the workforce, which will ensure a higher capacity of production.