The industrial machinery and automation industry is highly competitive, with organizations constantly striving to optimize their supply chains, improve compliance, and achieve better cost savings. In this context, procurement tools can play a critical role in helping organizations manage their global sourcing and supply chain management. By providing valuable insights into spending patterns, supplier performance, and contract compliance, procurement tools can help organizations make informed decisions and identify opportunities for process improvements. In this essay, we will explore the benefits of using procurement tools in the industrial machinery and automation industry, with examples and analytical reports to support our arguments.
What are the benefits of procurement tools in the Industrial Machinery & Automation industry?
Supply Chain Optimization
One significant benefit of using procurement tools in the industrial machinery and automation industry is the ability to optimize the supply chain. According to a report by Forrester, improving the supply chain's operational efficiency has emerged as one of the top priorities for industrial manufacturing firms, and procurement tools can play a crucial role in achieving this objective. Tools like FactWise can help organizations track inventory levels, forecast demand, and manage vendor relationships effectively, enabling companies to reduce lead times, ensure on-time delivery, and improve supplier performance, leading to increased operational efficiency.
For instance, Caterpillar Inc., a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives, implemented a procurement tool to manage its global supply chain. According to a report by Deloitte, Caterpillar’s supply chain digital transformation has enabled the company to achieve significant savings, including a 10% reduction in procurement costs and a 20% reduction in lead times.
Another benefit of using procurement tools in the industrial machinery and automation industry is improved compliance. According to a report by McKinsey, procurement is an area of high risk for many industrial manufacturers, particularly in relation to supplier compliance with regulatory requirements and internal policies. Procurement tools like FactWise Source-to-Pay can help organizations manage this risk by providing real-time access to supplier information and enabling quick supplier onboarding and offboarding.
FactWise empowers procurement organizations with dynamic, holistic supplier performance analytics across key supplier metrics like price, on-time delivery, quality etc., so that buyers have a high degree of decision intelligence. Our supplier selection algorithm helps you prioritize preferred and well-performing vendors, while also discovering new suppliers that match your ESG or other ethical requirements and quality standards.
For instance, General Electric (GE), a multinational conglomerate that operates in various industries, including aviation, healthcare, and power generation, implemented a procurement tool to manage its global supply chain and improve supplier collaboration. According to a report by SparkMatrix, GE achieved cost savings of over 12% through increased visibility and collaboration with its key suppliers, and improved risk management through real-time access to supplier information.
Improved cost saving
Procurement tools can help organizations achieve better cost savings by providing real-time data on supplier pricing and contract terms. These tools can also help organizations identify cost-saving opportunities and negotiate better contracts with suppliers. According to a report by McKinsey, companies that use procurement tools can achieve cost savings of up to 15% of their total spend.
FactWise Source-to-Pay enables up to 25% cost reduction via supplier analytics, supplier diversity, enhanced supplier management, and up to 31% increase in governance and oversight. Product manufacturing companies are choosing FactWise to optimize their end-to-end procurement journey for direct materials, from sourcing from the right vendor and negotiating the best price, to goods receival and critical quality check workflows that enable manufacturing teams to meet industry standards, and complete accurate, on-time payments to ensure strong supplier relationships.
For example, Siemens AG, a German multinational conglomerate that specializes in industrial automation, power generation, and transportation systems, implemented a procurement tool to automate its procurement processes and improve spend visibility across its global operations. According to a report by Forrester, "Siemens achieved cost savings of over 15% through improved procurement processes and contract management." A recent report by Forrester states that procurement leaders in industrial manufacturing firms are increasingly turning to digital procurement tools to achieve cost savings, improve supplier collaboration, and mitigate risk in their supply chains.
Improved Supplier Relationship Management
Procurement tools can help organizations manage their supplier relationships more effectively, leading to better collaboration, reduced risk, and improved quality.
For instance, Johnson Controls, a multinational conglomerate that specializes in building automation, energy storage, and HVAC equipment, implemented a procurement tool to improve its supplier relationship management. According to a report by McKinsey, Johnson Controls was able to achieve cost savings of over 10% through better supplier collaboration and improved supplier performance. In addition, ABB Ltd., a Swiss multinational corporation that specializes in industrial automation and power technologies, implemented a procurement tool to automate its procurement processes and improve supplier collaboration. According to a report by Deloitte, ABB achieved cost savings of over 20% through improved procurement processes, supplier collaboration, and contract management.
FactWise enables organizations to increase efficiency by up to 20%: our procurement solution automates RfX creation, management, and negotiations as per pre-defined parameters and requirements, to ensure teams can improve efficiency and accuracy, and reduce time spent on error-prone, repetitive, low-value-add tasks.
Increased Transparency and Traceability
Procurement tools can provide greater transparency and traceability throughout the procurement process, enabling organizations to track supplier performance and compliance with regulatory requirements.
For example, Schneider Electric, a multinational corporation that specializes in energy management and automation solutions, implemented a procurement tool to enhance transparency and traceability in its supply chain. According to a report by Forrester, Schneider Electric was able to achieve cost savings of over 10% through increased transparency and traceability in its procurement processes.
Improved Risk Management
Procurement tools can help organizations identify and mitigate supply chain risks, such as supplier non-compliance, supply chain disruptions, and cyber threats.
For instance, Bosch, a multinational engineering and technology company that specializes in automotive components, industrial automation, and consumer goods, implemented a procurement tool to improve its risk management capabilities. According to a report by McKinsey, Bosch was able to achieve cost savings of over 15% through improved risk management and better supplier collaboration.
In conclusion, procurement tools are increasingly vital for organizations in the industrial machinery and automation industry to enhance global sourcing and supply chain management. As the industry undergoes digital transformation, tools like FactWise play a crucial role in improving data analytics, supplier relationship management, transparency, traceability, and risk management. Leveraging these procurement tools enables organizations to optimize their supply chains, reduce costs, and gain a competitive edge in the evolving automation industry.