Empower the Procurement Process To Drive Product Profitability

Key Takeaways:

Sourcing and procurement teams grapple with many issues, including inflation, complex supply chains, and pricing negotiations. If they are not addressed proactively and effectively, they can have a domino effect, including cost overruns, production delays, and missed product launches
Solutions like aPriori’s provide detailed, physics-based cost analysis, giving you an unprecedented level of insight into what components should cost

The Full Article:

Today’s sourcing and procurement teams are on the front lines of cost management. You’re tasked with securing the best value for raw materials and components, navigating complex supply chains, and ultimately contributing significantly to product profitability.

However, without effective oversight, these challenges can lead to serious consequences:

Cost overruns that erode profit margins
Delays in production schedules
Missed product launch deadlines
Strained supplier relationships and reduced agility in responding to market changes

What if you had a powerful intelligence tool that provided deep insights into the true cost of manufacturing, empowering you to negotiate smarter, source strategically, and unlock unprecedented cost savings? Enter Manufacturing Intelligence, and specifically, how solutions like aPriori Technologies are transforming the procurement process into a proactive driver of profitability.

For too long, procurement practices and decisions have relied on static price lists and historical data, often lacking a clear understanding of the underlying manufacturing costs. aPriori changes the game by providing a detailed, physics-based cost analysis, offering an exceptional degree of insight into what components should cost

Here’s how:

Go Beyond the Price Tag: Understand your true cost drivers. aPriori doesn’t just show you a price; it simulates the manufacturing process, breaking down costs based on material, labor, machine time, and overhead. This detailed “should-cost” analysis empowers you to:

Negotiate with Unprecedented Leverage: Armed with a clear understanding of the manufacturing costs, you can engage potential suppliers with greater confidence and negotiate based on data, not just quoted prices. Identify potential overcharges and justify your target pricing with factual insights.

Example: TE Connectivity discovered that one supplier wanted to pass on their increased energy costs to them, charging them a 9-10% cost increase on a specific part. Watch Sylwia Lambert explain how they leveraged aPriori.

Identify Cost Reduction Opportunities: aPriori highlights areas where manufacturing costs can be optimized. This could involve exploring alternative materials, suggesting design modifications for better manufacturability (working collaboratively with your engineering team or your supplier(s)), or identifying more efficient manufacturing processes at the supplier level.

Example: Thompson Aero Seating was challenged to identify the true should cost of its 50 most expensive stock machined parts. Learn how the company used aPriori’s automation-driven should cost analysis to save 40% on those parts.

Evaluate Supplier Competitiveness: Compare quotes from different suppliers, both regionally and globally, not just based on price, but also on their underlying cost structures. Identify truly competitive suppliers versus those with inflated margins, leading to more sustainable and cost-effective partnerships.

Drive Value Engineering Initiatives: Collaborate with engineering and suppliers to identify opportunities to reduce costs without compromising quality or functionality. aPriori provides the cost visibility needed to quantify the impact of proposed value engineering changes.

Strategic Sourcing Powered by Intelligence: aPriori enables a more strategic approach to sourcing beyond transactional purchasing:

Risk Assessment and Mitigation: Understand the cost implications of different sourcing regions and potential supply chain disruptions. aPriori can help you evaluate the cost benefits and risks associated with various sourcing strategies.

Make vs. Buy Decisions with Clarity: When faced with the decision to manufacture in-house or outsource, aPriori provides a detailed cost comparison, taking into account all relevant manufacturing factors. This enables data-driven decisions that optimize profitability.

Global Sourcing Optimization: Analyze the cost competitiveness of different global regions for manufacturing specific parts. Factor in labor rates, material costs, and transportation expenses to streamline procurement management and make informed global sourcing decisions.

Building Collaborative Supplier Relationships: Share cost insights with key suppliers to foster transparency and identify mutual opportunities for cost reduction and operational efficiency, building stronger, more collaborative, long-term relationships.

Example: Alstom has more than 20,000 parts to cost annually and over 280 customers worldwide. As a result, every new Request for Quote (RFQ) opened the door to a possible delay, especially since suppliers can often take up to three weeks to return a quote. Discover how aPriori enabled Alstom to not only move to a Zero RFQ process but save 40% on supplier costs as well.

Directly Impacting Product Profitability: By leveraging aPriori’s manufacturing intelligence, procurement teams move beyond simply managing costs to actively driving product profitability. Every well-informed negotiation, every identified cost-saving opportunity, and every strategic sourcing decision directly contributes to a healthier bottom line for the organization.

Empower Your Team with Manufacturing Intelligence

Equip your sourcing and procurement professionals with the insights they need to make impactful decisions faster. aPriori transforms the procurement process from a cost center to a strategic driver of product profitability, empowering your team to unlock significant savings, improve supplier selection, build stronger supplier relationships, and ultimately contribute to the overall success and growth of the manufacturing enterprise.

Embrace the power of manufacturing intelligence. The result will be a more successful procurement process and efficient, profitable business operations.