Strategically Sourcing Materials Is Possible with Tech-Driven Solutions

Key Takeaways:

• Supply chain disruptions are accelerating manufacturers’ technology investments
• Manufacturers can build agility into their supply chains by leveraging digital solutions like aPriori, accelerating time to market, reducing costs, and more

The Full Article:

The Hackett Group’s 2024 Procurement Key Issues Research finds that data and analytics reporting was a top 2024 improvement initiative for 75% of surveyed procurement executives. However, Hackett’s research indicates that only 28% of procurement professionals have adopted generative AI, and just over half were evaluating it.

Even more astounding, a Manufacturing Leadership Council (MLC) study reveals that 70% of manufacturers still collect data manually. An MLC whitepaper finds that, despite the availability of analytics tools, most manufacturers still rely on spreadsheets for manufacturing data analysis.

Digital technologies like artificial intelligence (AI) can help sourcing and procurement become more strategic with supply chain management. They also mitigate disruptions, facilitate better data collection, analysis, and decision-making, improve sourcing materials and supplier relationships, and more accurately anticipate cost and manufacturability outcomes.

Nowhere has the need to leverage tech-driven solutions been more evident than in recent supply chain disruptions. Let’s examine a few examples and how digital technologies make strategically sourcing materials and navigating supply chain obstacles possible.

 

Transforming Unpredictable Disruptions Into Predictable Outcomes

The supply chain is the lifeline of commerce worldwide. Even a slight hiccup in its flow can disrupt business for many organizations. Issues on a larger scale, such as the pandemic, can virtually shut down the supply chain.

Recently, material shortages, inflation, and shipping lanes issues, such as those in the Suez Canal, have strained supply chains and hampered organizations’ business practices. But the potential risks don’t end there. Tighter sustainability regulations, such as reducing a supply chain’s carbon footprint and sourcing closer to home to reduce emissions, put more pressure on manufacturers. Possible election risks, including electronic tampering of results and the CHIPS Act to boost U.S. semiconductor chip production, add to an unpredictable and complex supply chain.

However, tech-driven solutions can make sourcing materials more efficient and lessen supply chain disruptions. A four-pronged approach, leveraging AI-powered design and sourcing insights like aPriori’s solutions, reduces risk and helps manufacturers navigate those that are unavoidable.

 

Mitigate Sourcing Materials Risk with These Four Steps

Becoming more proactive, predictive, and efficient when sourcing materials requires a comprehensive approach. Follow these four steps to get ahead of potential problems and build greater agility in your supply chain management:

1. Quantify impact: Before you can respond to supply chain challenges and determine your approach to material sourcing, you need to understand how the disruptions actually impact your business. Solutions like aPriori’s AI-powered design and sourcing insights via your 3D CAD automatically provide critical feedback on potential manufacturability, cost, and production issues in the early design stages. For instance, if your concern is an election outcome, you can take a non-partisan approach to quantify the impact by analyzing how either outcome will affect the who, what, where, why, and how of your manufacturing operations. Perhaps one candidate proposes tariffs in a country where you source many materials or parts. You can weigh your options in the form of other supply regions via aPriori’s Regional Data Libraries or consider if reshoring or nearshoring is a better alternative. Either way, you will have pre-emptively planned to circumvent potential disruptions.
2. Identify what-if scenarios: Understanding potential risks ahead of time can allow you to take a proactive approach. As illustrated in the scenario above, aPriori’s AI functionality can help simulate potential impact factors to quantify risk and consider alternative solutions. If material, labor, or energy rates go up, aPriori helps anticipate those higher costs, comparing cost drivers (or other risks like manufacturability) that might be impacted. aPriori helps you engage suppliers early in product development to leverage their manufacturing expertise in a cost-collaborative manner for realized savings and relationship growth. For example, sourcing and procurement teams are using manufacturing insights solutions to expedite the costing process when worldwide supply chain issues arise. The automated, simulation-driven software delivers comprehensive cost insights for raw materials, global factories, manufacturing processes, labor rates, and energy costs. It also applies real-world supply chain conditions and other critical variables to generate accurate cost estimates. Now, you can measure, report, and reduce product costs in seconds rather than weeks or months using aPriori’s AI technology.
3. Evaluate trade-offs and understand your options and the impact of each: Once you understand where the risk factors are and the alternative options, you can consider each as well as where you are willing to make trade-offs. Many manufacturers and suppliers lack secure, collaborative, real-time automated sourcing and procurement solutions. Companies are using manufacturing insights to assess their material and process alternatives to effectively reduce risks. For example, perhaps a component can be made more cheaply in India. However, shipping it to the U.S. will cost more as a result of higher fuel prices AND will increase your carbon footprint. aPriori can help you make more informed decisions such as cost vs. carbon trade-offs.
4. Make informed decisions faster: aPriori provides end-to-end visibility. Design engineers can create products that address supply chain issues and related costs while collaborating with cost engineers, procurement, and production. A critical component of strategic sourcing includes a comparative analysis of your potential suppliers. Map the countries where your materials are sourced, balancing that inventory against countries with those available resources. This detailed big picture of the global capacity for both supply and demand will better inform your decision-making and planning.

aPriori’s proprietary AI rule-based analysis enables manufacturers to solve complex optimization problems for 440+ manufacturing processes via these insights.

Tech-Driven Solutions Drive Greater Supplier Collaboration and Sourcing

With the sheer volume of supply chain data that sourcing and procurement teams must sift through, quickly and effectively, it makes sense that tech-driven solutions are essential to this task. Being better equipped to analyze and manage this data ensures that teams can streamline their supply chain management, reduce risk, make better and faster decisions, innovate more, and accelerate time to market.

Proactive sourcing and procurement teams understand the potential of tech-driven solutions. They foster greater collaboration between the product development team and suppliers while optimizing manufacturability, profitability, sustainability, and time to market.