No matter what the economy is doing, maintaining a healthy bottom line is always at the top of mind for businesses in any industry. For businesses that rely on a metal parts supplier for their machine components, assessing the supplier’s capabilities, technological advancements, and manufacturing processes is a great place to start. However, one area that some people might overlook is procurement.
Believe it or not, the procurement practices of your machine components supplier can have a significant impact on your bottom line. After all, procurement plays a vital role in determining the cost, quality, and overall success of your metal components.
A Quick Overview of Procurement
In the context of metal manufacturing, procurement is the process of acquiring the raw materials needed to produce your metal parts. It can be fairly involved but in general, procurement usually includes:
- Material sourcing
- Supplier selection and management
- Cost negotiations
- Logistics and supply chain management
- And contract and risk management
How well your metal supplier executes each of these steps (as well as any others that might be relevant for your project) will have a direct effect on things like the cost of production, your delivery timelines, your part quality, and the ability of your supplier to scale with your needs.
How Does Procurement for Machine Components Impact Your Bottom Line?
Cost of Production for Machine Components
One of the most direct ways in which procurement for machine components impacts your bottom line is in the cost of production. Efficient procurement practices such as negotiating favorable rates for raw materials, bulk discounts, and long-term contracts can all help minimize the overall cost of production for your machine components.
On top of that, if your supplier has developed a strong relationship with vendors, this can lead to streamlined processes and reduced waste. Metal parts suppliers may also be able to leverage their connections to enhance value engineering, a process designed to lower part costs without sacrificing quality.
Timely Delivery and Project Schedules
Efficient procurement also helps ensure a more stable supply chain for both you and your metal parts manufacturer. With timely delivery of raw materials, your metal supplier can better meet production schedules, avoid delays, and minimize the risk of disruptions. When your metal supplier can also offer inventory management programs that are supported by good procurement practices, they can help reduce the chances of shortages and minimize the need for expensive expedited shipping for your machine components.
Total Cost of Ownership
Procurement decisions should take into account the entire lifecycle of your machine components. When your parts supplier prioritizes procuring high-quality materials, the upfront costs can sometimes be higher. However, the reduced maintenance and replacement costs can positively impact the total cost of ownership of your metal parts.
Scalability and Flexibility
When it comes to scalability, metal parts manufacturers with reliable suppliers of their own can more easily adjust to meet your production needs with minimal delays. This helps reduce the risk of product overstocks and production shortages.
Flexible procurement practices also enable your metal parts suppliers to adapt more quickly to changes in market demand. With this capability, your supplier can adjust production levels and introduce new products more seamlessly than if they were waiting on a delivery of raw materials on a regular basis.
Risk Mitigation and Consistent Quality
And finally, look for a metal parts supplier that diversifies their procurement strategy If your metal parts manufacturer relies too heavily on a single source for raw materials, any disruptions with that supplier can have negative ramifications for your machine components supply. A diverse procurement strategy reduces your reliance on a single source and provides backup options when necessary.
Your metal suppliers can also have a major impact on the quality of your end-product by ensuring the raw materials come from high-quality and reputable sources. All of which results in more reliable, durable, and long-lasting parts for your critical applications.
OGS Delivers the Highest Quality Service for Your Machine Components
At OGS Industries, we’ve been committed to providing durable, high-quality metal components since 1959. We’re a full-service metal manufacturing shop that provides metal stamping, fabrication, and machining services for clients in a variety of industries.
Our commitment to top-notch customer service has made us a reliable partner for Fortune 1000 companies like GE, Volvo, Lockheed Martin, and Transtar, to name only a few. We also offer vendor management and inventory stocking programs, as well as local deliveries, to optimize your supply chain and keep your productions on schedule.
Contact our team of experts today to get started with a free quote.