Research & Best Practices

Industrial Procurement Strategies Manufacturers Should Know


MRO (Maintenance, Repair and Operations) plays a major role in the uptime, productivity and, ultimately, profitability of every manufacturing organization. Without effective MRO management and practices, downtime will increase, maintenance processes will be disorganized and overall costs can quickly spiral beyond budget. Procurement is a key component of effective MRO — in many ways — forming the backbone of an MRO strategy. Industrial procurement goes beyond simply ordering parts (although that function plays an important role that is not as simple as it may seem).

Today’s best procurement strategies involve advanced technology, data analysis, collaboration, communication, relationship management and more. These strategies are critical in developing a reliable, cost-effective plan — one that helps to ensure MRO parts are on hand when needed, are easily located, are part of an intuitive overall maintenance function and cost-effectively procured. Without these strategies in place, your business is not operating as well as it could be and is likely losing ground to competitors. This piece will look at how to develop a reliable, economical strategic sourcing process — applicable to direct spend and indirect procurement strategies.

What is industrial procurement?

Procurement of industrial equipmentis the process of buying the goods and services manufacturers need to do their jobs. This includes everything from the raw materials they use to the machinery in their facilities and any third-party services they choose to outsource.

Procurement strategies for reliability and cost efficiency

These strategic industrial purchasing tactics have been identified as the top ways to improve your MRO and procurement functions. You can reap the benefits in productivity, quality, performance and profitability:

  • Incorporate technology: Technology continues to impact almost every area of the manufacturing and industrial sectors, and procurement is no exception. By incorporating technology such as sensors, inventory monitors, storeroom controls, asset performance, tracking and even AI, blockchain and machine learning, procurement functions can harness vast amounts of data to aid in decision making. For example, AI can be used to achieve more-accurate demand forecasting to ensure manufacturers aren’t over- or understocked. Incorporating Industrial Internet of Things (IIoT) technology means your systems can file orders for materials automatically when they reach the end of their existing supplies. We’ll expound on data later, but in this context, technology can play a major role in more proactive, informed ordering, supplier selection, maintenance processes, etc. With more information further in advance, you are better equipped to remain in control and avoid costly surprises and emergencies.
  • Increase your focus on downstream benefits: Procurement does not exist in a vacuum. Faster, more streamlined procurement does not just mean hitting benchmarks or assuring that a part is on hand for the next repair — it plays a critical part in production speed and time to market. By presenting procurement as a key business function within the larger ecosystem of the facility, you are more equipped for budget and resource buy-in from stakeholders. Further, you can successfully integrate procurement processes with other business functions.
  • Develop and improve supplier relationships: Suppliers are an integral component of the procurement process. By inviting collaboration with suppliers and focusing on mutual success metrics, you will be better equipped to work as a team resulting in a positive impact for both parties.
  • Understand the entire supply chain: Rather than only looking a step or two upstream in the supply chain (to immediate suppliers, for example, and their suppliers) today’s availability of data, information and technology give us the potential to examine and analyze the entire supply chain — historically and in real-time. Harnessing these tools can assist with early detection of potential supply chain disruptions and could help you identify backup and supplemental supplier solutions — so you can avoid costly delays.
  • Apply data and metrics: As mentioned above, data can contribute to more proactive, predictive procurement tactics. Yet with a large swath of data available from today’s technology, you can go even further — using data to track and analyze suppliers and develop performance benchmarks. By tying these benchmarks to the success of you and your suppliers, you are equipped to identify and pursue tangible performance — and cost — benefits.
  • Identify risks: When it comes to procurement in the manufacturing industry, there are numerous risks to manage. These can include supply chain disruptions, volatility in pricing and regulatory compliance issues. A good industrial procurement strategy for mitigating these risks is to diversify your supplier base as much as possible. Predictive analytics also can help you anticipate changes in the market and enable you to secure favorable contractual agreements in advance.
  • Sustainable procurement: Working with green-certified suppliers and choosing sustainable materials can help reduce your carbon footprint and lessen the impact on the environment.
  • Implement cost management plans: Certain cost-saving measures can help your company save money when planning the procurement of industrial equipment and other resources. These can include purchasing in bulk, seeking out longer-term contracts for better rates and automating certain tasks using technology for greater efficiency.

At ATS, we offer supply chain and procurement services as part of our MRO asset management solution. We are experts in results-oriented program implementation — driving efficiency, reducing downtime and eliminating manufacturing waste. Our industrial procurement services include intra-site logistics, warranty tracking and specialists who focus on hard-to-find parts sourcing. For more information, contact ATS today.

Let’s Talk

This field is for validation purposes and should be left unchanged.