Manufacturing companies often face several challenges in procurement. Some of the main challenges include:
- Managing supplier risk: Identifying and managing the risks associated with suppliers is a major challenge for manufacturing companies. According to a survey by the Institute for Supply Management (ISM), supplier performance issues, such as late delivery, poor quality, and financial instability, were cited as the top supply chain risks by manufacturers.
- Ensuring quality and compliance: Manufacturing companies are often required to comply with strict industry regulations and standards, such as ISO 9001 and ISO 14001. Ensuring that suppliers meet these requirements is a major challenge for manufacturers. According to a survey by the ISM, regulatory compliance was cited as the second-highest supply chain risk by manufacturers.
- Managing costs: Manufacturing companies are under constant pressure to reduce costs, which can be challenging in procurement. According to the ISM, cost management was identified as the third-highest supply chain risk by manufacturers.
- Maintaining inventory: Maintaining an optimal inventory level is a major challenge for manufacturing companies. According to a survey by the National Association of Wholesaler-Distributors (NAW), managing inventory was identified as the top operational challenge faced by manufacturers.
- Sourcing raw materials: Sourcing raw materials is a key challenge for manufacturers. According to a survey by the ISM, sourcing raw materials was identified as the fourth-highest supply chain risk by manufacturers.
- Managing logistics: Managing logistics and transportation is a major challenge for manufacturing companies. According to a survey by the NAW, logistics and transportation were identified as the second-highest operational challenge faced by manufacturers.
- Keeping up with technology: Keeping up with the latest technology is a major challenge for manufacturing companies. According to a survey by the ISM, technology was identified as the fifth-highest supply chain risk by manufacturers.
- Finding and retaining skilled workers: Finding and retaining skilled workers is a major challenge for manufacturing companies. According to the Manufacturing Institute, a survey of manufacturers found that 80% of respondents reported having a moderate or serious shortage of qualified applicants for skilled and highly skilled production positions.
- Cybersecurity: With the increasing reliance on technology and connectivity, manufacturers are also exposed to a growing risk of cyber-attacks. According to a survey by the Manufacturing Institute, 63% of manufacturers reported being the target of a cyber-attack in the past year.
- Embracing Industry 4.0: Industry 4.0, also known as the fourth industrial revolution, is driven by advanced technologies such as IoT, AI, and machine learning. It is a major challenge for manufacturers to adapt to these technologies and the changing landscape of the manufacturing industry.
In conclusion, managing supplier risk, ensuring quality and compliance, managing costs, maintaining inventory, sourcing raw materials, managing logistics, keeping up with technology, finding and retaining skilled workers, cybersecurity and Embracing Industry 4.0 are some of the main challenges faced by manufacturing companies in procurement.
FactWise offers an end-to-end procurement platform designed specifically to help product manufacturers across industries optimize direct materials management. Our Source-to-Pay solution enables supplier diversity, easy and quick RfX management (create accurate RfX in <1min!), smart dashboards to simplify internal and external communications, holistic vendor analytics to track supplier performance, dynamic analytics to ensure cost reduction, robust goods tracking features to track inventory through customizable goods receival and quality check processes, and accurate, on-time payments to minimize payment deadlines and compliance issues.
Our singular focus is to delight users and provide sustainable positive impact to the product manufacturing organizations we serve, by providing transparency and insights to leaders, streamlining and automating processes to improve efficiency, and driving bottom-line impact by unlocking savings potential.