In manufacturing, success requires the coordination of many moving parts. Teamwork secures the right contracts, the best materials, and sufficient inventory.
To further this quest for coordinated manufacturing relations, procurement professionals must develop a deep understanding of the contributions of those in engineering. Of course, it is a two-way street. At the same time, engineering must appreciate the vital tasks performed by their partners in procurement.
Procurement and engineering co-exist within a single family, a single company. Think of them as siblings with different interests who nonetheless share a common interest in the success of the whole.
Role of Procurement
One of procurement’s fundamental responsibilities is to obtain quality parts at the best price. They often face daunting and unexpected challenges along the way. Changes in tariffs are one example. Disruptions due to natural disasters are another. A healthy respect for procurement professionals is in order.
Waves of change
In many companies, procurement is undergoing waves of change. For example, smart manufacturing and big data are more important than ever. Artificial intelligence is also making its presence felt.
Indeed, at some companies, the way parts get made is changing. With traditional CNC machining, material is removed, leaving the desired part. With additive manufacturing (3D printing), a part is created layer by layer. Therefore, CNC machining is a subtractive process, while 3D printing is an additive one. In the right applications, additive manufacturing replaces dozens of parts with fewer more complex ones.
Clearly delineated steps
Procurement must integrate these new realities into its established systems. Success demands a well-defined, disciplined procurement process. Key steps often include:
- Category assessment
- Requirements for the definition & scope
- Strategy development & execution
- Negotiation and contract award
- Implementation and transition
- Supplier relationship management
Role of Engineering
A mechanical engineer takes an idea from concept to reality. In brief, the engineer brings the object to life.
Engineers create and innovate in an environment of technical know-how. They use computer-aided design (CAD) programs to create new product concepts and enhancements. They test and evaluate prototypes to confirm usability and safety. They also apply appropriate standards to the production process.
Change is a way of life for the engineering team as well. For example, some engineers are busy reviewing parts specifications developed for CNC machining. Why? Because, in certain applications, sheet metal fabrication may reduce the number of parts required for a given assembly by 80 to 90% or more. This simplifies procurement while reducing assembly time. Sometimes CNC machining is the best path. In other cases, sheet metal fabrication is the right choice. The expertise of the engineering team is vital in making such determinations.
Relationship Management: Procurement vs Engineering
The inherent problem is this: engineers and procurement pros are evaluated and therefore rewarded in very different ways. For example, price and vendor reliability are both paramount in procurement. In engineering, it is often product improvement and time-to-market.
As a result, the engineering side often focuses on innovation. Simultaneously, procurement relentlessly pursues sustainable profit margins.
Supplier preferences
These different goals tend to make different suppliers attractive to each. For example, there is often an inverse relationship between a supplier’s flexibility and price. Consider that suppliers with the most rigid, standardized processes often quote the price favored by procurement. However, their capacity to meet specifications may be borderline.
The engineering team values supplier flexibility while procurement wants the best price. This makes the relationship between the two inherently problematic. The same is often true of innovation. The more innovative suppliers are often more expensive. Once again, engineering’s goals are on a collision course with procurement.
Engineering teams innovate, make changes and improve products. Engineering’s capacity to innovate in the face of challenges is a measure of the company’s success. The right supplier is needed to carry out engineering’s vision. Ideally, the relationship between the two is flexible and collaborative. Developing quality relationships with suppliers takes time and expertise. Understandably, a supplier’s pricing needs to reflect the extra time devoted to understanding the engineering team’s goals.
Respecting protocols
Sometimes, engineering freelances. That is, its team circumvents established procurement protocols in the quest for suppliers capable of making their vision a reality.
The goal is admirable. In its quest for a better mousetrap, engineering starts a conversation with a prospective new supplier. However, there’s a problem when engineering ventures into uncharted territory. Specifically, they may operate outside of procurement’s approved list of pre-qualified suppliers.
When this occurs, friction between engineering and procurement is inevitable. Also, the supplier normally wants one point of contact with the customer. However, it also wants to work with the customer’s engineers to strengthen its position as a prospective vendor.
How Procurement and Engineers Can Work Together
Proper supply chain management requires quality collaboration between engineering and procurement. Innovative ideas are only as good as reliably sourced, properly priced parts and raw materials. Inconsistent supply chains and/or high costs will bulldoze the best new ideas emanating from engineering.
Indeed, effective supply chains require a symbiotic relationship between the two. Much is at stake. Mutual respect is a precursor to success in manufacturing relations. Negotiating skills are paramount. A knowledgeable negotiator is a more skilled negotiator. In the best situations, engineering delivers deep parts and product knowledge important to the procurement professional.
Fortunately, there are a number of ways to address the inherent challenges. The right solutions for a larger enterprise may differ from those for a more modest one. To better harmonize procurement and engineering, choose design-build strategies, hire a procurement engineer, or consider the creation of cross-functional product teams.
Opt for a design-build strategy
With a design-build strategy, the company enters into a contract with a single supplier. This single entity both designs the product and manufactures it. The supplier’s design team considers production costs every step of the way. Simultaneously, a design-build supplier is incentivized to innovate in order to deliver a better end product.
Hire a procurement engineer
In more complex operations, investing in a procurement engineer may be the right move. A company manufacturing high-end consumer electronics might be one example.
As the title suggests, a procurement engineer demonstrates expertise in both procurement and engineering. One excellent way to overcome the procurement and engineering silos is to employ a single professional who’s comfortable in both worlds. Ideally, the right candidate will understand the intricacies of the engineering side while appreciating the goals of the procurement side.
Create cross-functional product teams
A more comprehensive way to manage the tensions inherent between procurement and engineering is to create cross-functional product teams. Procurement professionals get involved during the design phase. Engineering professionals are engaged throughout the procurement process. Ideally, cross-functional product teams balance cost, functionality, and innovation in a way that is best for the overall success of the enterprise.
Collaboration is also important to reverse-engineer products. Where can engineering tolerate compromise? When does procurement see that a higher-priced supplier is better long-term?
One way or another, it is vital to cultivate an understanding in both engineering and procurement that, ultimately, they want the same things – competitive prices, a reputation for quality, and innovation. All are essential to the success of the company. Ideally, everyone learns to take pride in achieving dynamic outcomes.
Conclusion
Both efficiency and innovation are vital to the health, growth, and profitability of a manufacturer. The relentless pursuit of cradle-to-grave efficiency is essential. This contributes to a distinctive mindset in procurement. Everything is put under a microscope. No process is too minor to be immune from review.
Ultimately, this is like any other relationship – a relentless focus on engineering’s primary responsibilities with a similarly relentless eye toward teamwork. Engineering and procurement are part of one team – one company.
Today, procurement is buttressed by the benefits of AI, big data, and smart manufacturing. When procurement and engineering synchronize rather than conflict, the path to profits only widens. A healthy collaboration between procurement and engineering sets the table for the dreamed-of marriage between better products and higher profits. Get things right at the beginning of the process, and you’ll be rewarded with competitive, profitable products heading to market on those trucks, trains, ships, and planes.
ManuFuture Solutions
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