In today’s dynamic market, procurement is far more than just a buying and purchasing center. Forward-thinking organizations have transformed the department into an untapped gold mine that creates value for the entire end-to-end manufacturing process—from design and sourcing to production and delivery. Our latest e-book, “Is Manufacturing Missing Out On Procurement’s Value Add? “, explores how direct procurement can substantially enhance the manufacturing process. Here are some key insights from the e-book.
Moving Beyond the Traditional View of Procurement
Many companies still view procurement primarily as a place to limit costs. According to The Hackett Group’s 2024 CPO Agenda, cost reduction remains the top priority for Chief Procurement Officers (CPOs). However, this narrow focus overlooks the broader impact procurement can have when elevated beyond its traditional role and positioned as a strategic partner.
Digital Tools: The Key to Unlocking Value
A major reason why many manufacturers have not fully realized the potential of procurement is the lack of appropriate digital tools. An advanced source-to-pay platform is crucial for unleashing procurement’s potential and optimizing supply chain performance. While the prospect of digital transformation in procurement can be daunting, partnering with a world-class provider can guide your organization through a journey of improvement, delivering success across various metrics such as margins, profits, production targets, quality scores, ESG scores, and customer satisfaction.
Early Supplier Involvement in the Design Phase
At JAGGAER, we advocate for involving procurement early in the new product introduction process. Collaborative tools enable the integration of Engineering, R&D, Quality, Logistics, and Procurement from the initial design phases. This early involvement allows procurement to provide critical market and supplier intelligence, advising on component sourcing risks that could delay production.
The greatest value-add often comes from integrating trusted suppliers into the New Product Development (NPD) process. Early Supplier Involvement (ESI) has been shown to shorten development cycles and lead times while reducing development costs and risks. Collaborating with innovative suppliers can help manufacturers command premium prices and even create new revenue streams.
Strategic Sourcing with Superior Supplier Intelligence
Superior supplier intelligence is a major value driver especially at the sourcing stage. It empowers procurement teams to make data-driven decisions that go beyond standard commercial metrics. Platforms like JAGGAER One bring together enterprise buyers, suppliers, and partners on a single, cloud-based solution. A centralized approach simplifies the identification, sourcing, and onboarding of new suppliers. This ensures a continuous flow of products and revenue while impressing customers with ethical and transparent sourcing practices.
The wealth of data available empowers teams to perform multidimensional analyses of cost, risk, delivery times, logistics, ESG impact, and more. Automation of procurement processes through AI technology further enhances efficiency and allows procurement teams to focus on strategic priorities.
Making the Production Process Seamless
The production phase benefits significantly from effective procurement strategies. Ensuring the right products are in the right place at the right time is the most crucial priority as manufacturers. Strategic procurement facilitates efficient, repeatable, and audit-proof new product introductions. On top of that, real-time supplier collaboration builds resilience into the supply chain, helping to manage risk and prepare for future disruptions.
Optimizing Delivery with Digital Channels
Managing inbound logistics is one of the most challenging aspects of manufacturing. Digital tools optimize your logistics by providing a single channel for all send and receive order information, offering complete oversight of inventory management. This reduces stock levels, lowers working capital, and prevents stock-outs, enhancing overall logistics efficiency and decision-making.
Procurement holds untapped potential for adding significant value to the manufacturing process. By leveraging advanced digital tools and strategic supplier involvement, manufacturers can transform their procurement function into a powerful value driver. To explore these concepts in more detail, download our free e-book, “ Is Manufacturing Missing Out On Procurement’s Value Add? “.
