Bringing Strategy to the Procurement Process

Earlier this year, KPMG released a global study of procurement functions that found a significant lack of maturity among manufacturing companies. After surveying 585 enterprises, KPMG found that, “many Procurement functions have struggled to raise their game beyond simple tactical activity and (re)negotiating low cost contracts, to a broader and more strategic role within the wider business.”
Although executives are “increasingly looking to Procurement to engage the business in strategic conversations about how the supply chain can be optimised to deliver the greatest returns,” KPMG found that procurement organizations have been “slow to evolve.”
Specifically, KPMG found that:

  • Not enough focus on ongoing supplier relationship management
  • Too little involvement in demand management and even less in the ‘made versus buy’ decision process
  • An often dangerous lack of preparation, mitigation and action around supply chain risk

Common Weaknesses
The report blames the lack of maturity on an inability to build procurement functions that take on a strategic role within the organization. Instead of connecting with – and supporting – other functions within the organization, most procurement groups simply focus on tactical issues such as cost cutting.

Other key areas for improvement that KPMG identifies include:

  • Strategic partnering within the organization. Procurement organizations need to align to key business stakeholders and move up the value chain to ensure that procurement is “involve much earlier in the decision-making processes”.
  • Optimizing operations through a centralized operating model and delivering efficiencies “across the business at a reduced operating cost for the function as a whole.”
  • Prioritizing supply chain risk by pushing this risk “on the broader business agenda in order to protect the business from uncertainty and turbulence”.
  • Leveraging systems and technology “to provide greater clarity into the Management Information and Business Intelligence process.”

Leverage Our Procurement Expertise
Working with a contract electronics manufacturer can give manufacturing companies (OEMs) instant access to the highest levels of procurement expertise, strategy and relationships. At OCM Manufacturing, our purchasing team possesses strong, long-term relationships with reliable global component suppliers. Our processes have been developed over many years, clients, and industries, and we use world-class systems for demand analysis, manufacturing intelligence, supply chain management and procurement.
We’re tapped into supply chain trends and we monitor them on a daily basis, giving us insights that enable us to contribute to strategic decisions. We’re able to provide our clients with well-researched procurement options to meet both design and manufacturing goals.
Working with a contract manufacturing (CM) provider offers these procurement benefits:

  • Procurement and supply chain knowledge gained over hundreds of customers and thousands of niche products
  • Economies of scale
  • Manufacturability expertise and feedback (Can it be built? Can it be built efficiently? Is this the best price it can be built for?)
  • Turnkey manufacturing services through supply chain management, assembly, test, service and support

Our mature procurement, supply chain and manufacturing expertise is here to be tapped! To learn more about our operations or to tour our factory, please contact us.