“Cost down; risk management up.” This is what I usually say after a long discovery session with customers. The phrase is intended to hit the bottom line of what Manufacturing procurement teams are facing and give people a phrase that sticks in their mind, something to take away with them as they consider a practical strategy to attack problems both in the immediate and longer-term.
As discussed in the first installment, the overarching concern is cost and the risk it poses. High-frequency, mass-market manufacturers and low-frequency, specialty manufacturers are not monoliths. They experience challenges in different ways, which require solutions that draw upon unique use cases and the full force of our collective expertise.
“Cost down; risk management up” is how we both lean into this moment and lean out, so we never lose sight of a fundamental reality: we all have the same problems, even if they don’t seem to have anything in common. Procurement teams often get lost in such discussions. To many stakeholders, they are still a logistical afterthought rather than a critical component of 21st-century business strategy.
How Manufacturers Avoid Getting Bogged Down in the Immediate
Talking to Manufacturing customers, really hearing their concerns, is a balancing act. I absorb what they are saying without becoming overwhelmed. Like any facilitator, I cannot help anyone if I lose perspective or get bogged down in the immediate.
As tariffs and other geopolitical uncertainties continue to challenge us, the Hackett Group’s 2026 Procurement Agenda and Key Issues Study, which I quoted last time, highlights the key functional concerns Manufacturing procurement teams face. According to the 200+ experts they surveyed, 48% say Supplier Negotiation is of “critical importance,” 46% say Strategic Sourcing is of “high importance,” 45% say Category Management is of “high importance,” and 47% say Demand Generation is of “high importance.”
“Cost down; risk management up” is the thread that connects these challenges. No matter what our role is we want to know that our problem is being addressed. My own role is to turn functional challenges into strategic business priorities. As someone who has worked both for high- and low-frequency manufacturers, I understand how cost and risk mean totally different things depending on what you’re creating
For high-frequency manufacturers, the most immediate problem is dealing with supplier volume. If you are manufacturing cellphone screens or some other mass market item, there is a low bar to entry among suppliers, so there will be a lot of them competing for the business.
A converged, intelligent solution like JAGGAER One simplifies the process. Not only does it offer RFx templates to enforce consistent bid formats, it gives manufacturers supplier profiles with certifications, capacity, ESG, and performance data. The solution offers intelligent scoring and role-based workflows that guide teams step-by-step through the onboarding process. The goal is to streamline workflow and allow users to access data when negotiating competitive bids.
Managing negotiations and risk at scale not only address cost, they also foster more collaborative relationships with suppliers. For instance, if you are a supplier who didn’t get chosen, you get contextual feedback on where you feel short and steps to improve your offering. “Cost down; risk management up” isn’t simply a top-down mandate; it’s a guiding principle for everyone involved.
On the fulfilment side, manufacturers can manage delivery dates and quantities, so teams control spend and avoid the problem of overstocking. A converged, intelligent workflow also means that teams can do forecasting and be alerted to invoice mismatches and other discrepancies in price, quantity, and line-items.
Making Friends with Ongoing Supply Chain Risk
When customers ask how they can enhance their solution, my advice always trends toward customized tools that reduce the cost and risk around ongoing uncertainty. At a time when choosing the wrong supplier can impact sales upwards of 30% (source: American Society of Quality), manufacturers need to avoid getting caught out by sudden market changes or situations where they are forced to choose a less-than-perfect supplier.
With a solution like JAGGAER Advanced Sourcing Optimizer (ASO), manufacturers manage complex sourcing, drive competitive bidding and unlock cost benefits they might have otherwise overlooked. Whether you are a high-frequency manufacturer with millions of suppliers or a specialty low-frequency manufacturer with only a thousand, you are looking for a procurement solution that does two things:
- Helps negotiation
- Helps risk management – whether it takes the form of Category Management or Supplier Risk Management
If this breakout sounds a lot like my mantra “cost down; risk management up,” that’s no accident. Cost and risk cannot be uncoupled. When you are talking about one, you are always talking about the other—and often you are unfortunately doing so without true visibility into the complexity of the situation.
According to Dun & Bradstreet’s Manufacturing Pulse Survey Report, drawn from a survey of 2,000+ manufacturing procurement professionals, 47% of U.S. manufacturers cannot (for now) monitor beyond Tier 3. Lack of data is the culprit, leaving manufacturers with limited ability to mitigate risk and ensure continuity. The good news is that by getting everyone into the same workflow, we can add their data to our layers, thereby improving visibility and monitoring, as well as automating low-level tasks.
In this installment, we wrapped a few product suggestions around our discussion of cost and risk. Next time, we bring AI into the discussion to demonstrate how the technology can go beyond the hype to deliver tangible results for manufacturers competing in a market where “cost down; risk management up” is essential for survival.
