Secrets to Improving Your Procurement Efficiency

Efficient procurement processes can significantly impact the success of any company. Reducing input costs is one of the benefits provided by efficiency in procurement. They also help maintain a steady flow of high-quality parts and raw materials. Additionally, they play a vital role in project planning and supplier quality activities.

Procurement is more than just shopping around for the lowest prices, negotiating lead times and asking for quotes. It encompasses many workflows which can add value to the whole organization.

There are many webpages giving advice to original equipment manufacturers (OEMs) who aim to increase their procurement efficiency. However, as a full-service contract manufacturer, RiverSide Integrated Solutions (RIS) frequently sources components for our customers. Over time we have distilled our procurement expertise.

Approach procurement as a value driver

Contract manufacturers have built relationships with vendor overs time. This allows them to stay well-informed of current updates and changes happening with vendors across the market. They can also consolidate shipments for multiple customers and spend less on unnecessary expedite fees. Also, because their buyers incorporate feedback from stakeholders across departments and product lines, they have a clearer picture of the quality of every supplier.

The cost of looking for potential replacements for end-of-life parts is also trimmed down. For example, it could lead to streamlined component validation and a quicker overall replacement process.

A big tip for buyers: strive for a full understanding of your organization’s business. The more involved you are, the easier it is to spot opportunities earlier and more accurately.

Focus on relationships, not RFQs

Some companies try to validate vendors by sending bid requests as frequently as possible. On the surface, this seems like a surefire way to keep material costs low. In reality, finalizing those deals, researching and qualifying new vendors is very time-consuming. This can also paradoxically lead to increased costs.

Developing a team of trusted (and trusting) vendors is actually more efficient. This streamlines procurement. It also creates partnerships that brings significant and sustained savings.

Develop Close Relationships with Just a Few Vendors

Call it the open secret of supply chain management. The key to more efficient sourcing is to invest in positive, long-term relationships with your suppliers.

When you have a long-term relationship with your suppliers, you build their confidence in your business. This, in turn, gives them the confidence to grow with you and invest in their own business. Their growth and investment yield efficiencies through economies of scale and adoption of technology. The benefit of these upgrades then comes back to you in many forms. These include higher quality parts, shorter lead times, lower prices and greater responsiveness to changes.

Not only that, but those suppliers will be in a better position in the future to support any moves you want to make. When you focus more on partnership, you will increase procurement efficiency and improve supply chain resiliency.

Stable, ongoing and fair business relationships establish goodwill with your suppliers. So too does the assurance of future business. It also gives them an excellent reason to prioritize you over their other customers when disruptions occur (e.g., storms forcing factories to close, strikes, damage due to transportation accidents). Thus, your business is less likely to be impacted.

Conversely, constantly changing suppliers reduce the reliability of your operations while increasing the risk of poor service. This behavior will also create an air of distrust around your brand. Without a good image, the number of vendors who want to work with you in the future will diminish.

Consider Opportunities to Outsource Costly Vendor Comparison

As a full-service contract manufacturer in business since 1984, RIS understands the value of supply chain partnerships. It’s the cornerstone of our business, and we have the experience required to deal with any situation. RIS offers total-package solutions tailored to fit each of our customers specific needs. We have the flexibility to provide value for OEMs at all stages and any size.

About RiverSide Integrated Solutions

RIS is an advanced contract manufacturer providing robust solutions in circuit board assembly and product assembly. We employ more than 350 people and provide services to OEMs worldwide. We operate two state-of-the-art manufacturing facilities within the US.

With all of the choices in contract manufacturers out there, we know it can be challenging to find someone who understands your business model and has your best intentions in mind. RIS has always proven to be a win-win-focused relationship.

As your one-stop shop, we have the capabilities, capacity, quality assurance standards and resources to support all of your manufacturing needs. We understand that supply chain management is complex and very time-consuming, so we urge our customers to utilize us in the fullest capacity.