Maintaining the status quo is easy, particularly if things seem to be going well. When tried-and-true methods have worked for decades, there’s less incentive to fix what isn’t broken. That’s true in any facet of business, including procurement. But change inevitably happens. The COVID pandemic was a clear wake-up call to reevaluate existing procurement methodologies. Beyond that, the continuous evolution of manufacturing technology adds another variable to the mix, putting pressure on procurement officers to recognize and respond to change.
The good news is while you can’t forecast the global disruption, you can stay ahead of manufacturing advancements and adapt accordingly. In this blog post, we’ll explore key innovations in manufacturing that every procurement officer should be aware of to keep their organization agile and competitive.
Several important elements comprise modern manufacturing trends. Let’s look at each one and their influence on effective procurement strategies.
Industry 4.0 is the reference to the fourth industrial revolution. At its core, it is the transformation of manufacturing through the integration of digital technologies, automation, and data analytics. Combining physical hardware with digital technologies such as the internet of things (IoT), big data analytics, artificial intelligence, and cloud computing produces a connected and smart manufacturing capability.
Each element plays a vital role in the process: IoT provides connectivity among machines, monitors performance, detects problems, and optimizes workflows. AI and machine learning algorithms help manufacturers make better decisions and detect defects before they occur. Big data and real-time analytics make sense from all this information and optimize processes such as quality control and supply chain transparency and optimization.
Industry 4.0 isn’t just the placement of smart machines on the factory floor. It’s a holistic change to the manufacturing process, including the supply chain that feeds that process. Procurement officials who heed this trend stand to increase efficiency from better supplier selection and contract management, cost reductions from optimized purchasing decisions, and more resilient sourcing capabilities through smarter procurement and logistics.
Additive manufacturing, or 3D printing as it is commonly known, is a trend that deserves attention because of how it’s transforming manufacturing. Developed as a rapid prototyping process, it has evolved into a legitimate manufacturing technology that partners alongside traditional methods such as machining, molding, forming, and joining. One of its principle values is the ability to create physical objects without needing support tooling, avoiding a costly and time-consuming aspect of traditional manufacturing. Additionally, parts can be produced wherever a 3D printer can be located, and 3D printing’s innate design freedom accommodates more custom manufacturing solutions. The bottom line is that for many applications, additive manufacturing can make things faster, optimized for the application, and, in many instances, for a lower cost than traditional fabrication methods.
The ability to produce on demand at the point of use upends the conventional supply chain concept of centralized production that feeds distribution channels. Although that model worked for many years, globalization, political upheavals, wars, and other factors laid bare its flaws. In contrast, additive manufacturing short circuits the challenges of conventional supply chains, significantly reducing lead time delays and facilitating production where and when needed. Procurement officers who ignore the beneficial effects of additive manufacturing on supply chain resilience do so at their peril.
Changes in government policies and national trade relations combined with political and economic uncertainty have led companies to bring manufacturing back to their home country (onshoring) or a country in close proximity (nearshoring). The benefits include better management of production processes and quality, more predictable pricing and improved cost stability, and enhanced supply chain resilience through simplified logistics and less dependence on overseas operations.
The current risks to conventional supply chains challenge the validity of the original purpose for offshore production – namely, to reduce cost. In today’s environment, local production offers greater benefits, which makes sense from a procurement perspective because it mitigates risk and achieves greater cost control. This includes reduced supply chain disruptions, faster lead times, protection from global cost fluctuations, and improved quality control.
It should be no surprise that in any competitive business endeavor, keeping up with technology’s progression is vital. Otherwise, you risk falling behind and suffering the consequences. In manufacturing, that principle applies across the business, from the shop floor to the procurement office.
This is particularly true when it comes to additive manufacturing. A business that relies solely on traditional manufacturing methods, such as legacy machining operations, to develop new products risks falling behind faster-moving companies that embrace AI-powered generative design and additive manufacturing. Why? Because the latter can accelerate the development cycle through faster prototyping and design optimization, ultimately getting products to market faster.
Relying on outdated procurement workflows like manual supplier selection and vetting can slow down the contract finalization process and delay production. That can translate into lost business opportunities and a competitive disadvantage. Contrast that scenario with AI-driven procurement tools that automate supplier decisions, resulting in faster approvals and reduced lead times for obtaining supplies. In today’s fast-paced business environment, it simply makes sense for companies to embrace procurement best practices such as automation, data-driven decision-making, and real-time supply chain visibility to avoid inefficiencies and reduce costs.
The first step in making any change is realizing that change is needed. The next step is deciding how and where to engage to learn more about initiatives and technologies that can move your organization forward and allow you to make informed decisions.
For example, AI-powered procurement tools let you to make faster and more cost-effective decisions. This reduces workload, streamlines operations, and improves risk management. Several options to explore include AI-based platforms such as GEP Smart, Coupa, and SAP Ariba. All three are cloud-based procurement and supply chain management platforms that streamline processes and optimize spending.
As was previously mentioned, adopting additive manufacturing is an effective way to mitigate supply chain disruptions and increase localized production. While this requires careful consideration, you can start small and grow, as many businesses have learned. One of the best ways to experience the benefits of this technology is to work with an additive manufacturing service provider such as Stratasys Direct. A service provider can work with you to identify applications and provide the data and information you need to ultimately bring the technology in-house.
Trade shows are another valuable opportunity to investigate current technology advancements, particularly related to additive manufacturing. Check out the following industry trade shows that highlight the benefits of additive manufacturing:
When tallying the benefits of additive manufacturing, two consistent advantages are time and cost savings, especially when compared to traditional manufacturing methods. Cost reductions often stem from eliminating the need for expensive tooling, which can be a major investment depending on the application. Time savings result from avoiding long outsourcing lead times and circumventing supply chain disruptions, ultimately putting parts in hand faster.
As evidence of these benefits, the following stories show how additive technology offers companies tangible savings:
Roush Performance develops automotive aftermarket performance and style improvements. When a design change threatened the production schedule, Roush pivoted to using 3D printed parts for the new design instead of injection molding, which would have required a long tool-up time.
Cycle Time Reduction = 50%
Cost Savings = 35%
As a tier-one supplier to major aerospace OEMs, East/West’s production schedule is demanding. When a metal-forming die was damaged in the course of completing a customer order, East/West quickly 3D printed a replacement die using carbon-reinforced nylon to use in place of the metal tool.
Time Savings (vs. replacing with conventional metal die) = 87%
Cost Savings = 80%
Angel Trains provides rail cars for the UK rail industry. As equipment ages and the need for replacement parts increases, traditional supply chains can’t keep up. As a solution, Angel Trains turned to 3D printing replacement train car interior parts to avoid the delays of conventional sourcing.
Lead Time Reduction = 94%
Achievable Part Cost Savings = 50%
The future of manufacturing and its impact on procurement is one of continuous evolution and it behooves any procurement officer to stay abreast of changes or risk having their company fall behind. Enhancing supply chain resilience through new technologies only strengthens a company’s competitive position because it reduces vulnerability to disruptions, improves operational efficiency, and enables faster response to market demands. Consider the resources mentioned above to stay abreast of best practices in procurement management, as well as current and future manufacturing trends, including those related to 3D printing technology.
As a complete additive manufacturing solutions provider, Stratasys has the hardware, software, services, and support to answer any questions you may have as you consider this technology. Contact us today, and let us answer your questions about how additive technology can benefit your organization.
