{"id":12427,"date":"2025-02-18T09:59:08","date_gmt":"2025-02-18T17:59:08","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=12427"},"modified":"2025-06-10T12:24:27","modified_gmt":"2025-06-10T19:24:27","slug":"keys-to-mastering-procurement-in-manufacturing","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2025\/02\/keys-to-mastering-procurement-in-manufacturing","title":{"rendered":"Keys to Mastering Procurement in Manufacturing"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”12428″ img_size=”full”][vc_column_text]Nobody can deny that Procurement<\/a> has been one of the business functions that has changed more over the last decades. Those days when buyers worked with limited choices in terms of supplier selection, when they selected suppliers based on geography proximity or long-standing relationships, when the procurement strategy was just based on cost\u2026are far away. The situation nowadays is quite different. Buyers in manufacturing organizations have moved from playing just a tactical role to support business operations to playing a more strategic role, one that takes care of keeping under control and mitigating procurement challenges that can affect the efficiency, cost-effectiveness and overall competitiveness of a business.\u00a0<\/span><\/p>\n

Procurement challenges can arise at multiple stages of the procurement process, from sourcing raw materials, to procurement operations and <\/span>managing supplier relationships<\/span><\/a>. Definitely, not an easy task. Let’s delve deeper on some of the procurement challenges that manufacturers commonly face today at different parts of the procurement process and understand how buyers can cope with those.<\/span><\/p>\n

Sourcing Raw Materials: Keeping Cost Control and Protecting Business Margins<\/span><\/h2>\n

Not really a surprise, one of the main goals of strategic buyers is to keep costs under control, and that is not an easy task in a global context.\u00a0<\/span><\/p>\n

On one hand, buyers are confronted with <\/span>fluctuating prices<\/b> for certain raw materials such as metals, plastics and chemicals, which can fluctuate due to factors like market demand, geopolitical instability and <\/span>inflation<\/span><\/a>. One of the solutions to this challenge would be to negotiate fixed price agreements with a selected supplier, in order to secure supply continuity during the duration of the contract at a prevailing market price. During the negotiation of these types of contracts it is important to understand not only the agreement price that each supplier can offer, but also the long-term \u201ccollar price\u201d range that every supplier proposes, which defines maximum and minimum prices in order to avoid significant fluctuations for both parties.<\/span><\/p>\n

On the other hand, strategic buyers need to be very cautious about <\/span>hidden costs<\/b> before making their <\/span>sourcing<\/span><\/a> decisions. Unforeseen costs such as shipping, handling, insurance, customs duties, or taxes can add up, making it difficult to control the total cost of procurement. It is important to capture all hidden costs as accurately as possible, in some cases this information can be provided directly by potential suppliers, while in other cases information can be provided by other departments in the organization such as the logistics or legal department.\u00a0<\/span><\/p>\n

Procurement intelligence and using the right technology to capture all the required information during the sourcing<\/a> process is key to overcome the challenges described above.<\/span><\/p>\n

Procurement in Manufacturing: Ensuring Supply Continuity<\/span><\/h2>\n

Something that has not changed over the years is that it is critical for manufacturers to get the right materials, at the right time and with the right quality\u2026and this is something that has become more difficult in a global context. Manufacturers need to make sure that they keep an eye on the \u201cuncontrollable\u201d in order to react quickly and minimize impact. Some examples of the \u201cuncontrollable\u201d events that can affect supply continuity are:\u00a0<\/span><\/p>\n