Summary: the world of manufacturing is changing. Engineers are spending more time focusing on procurement in manufacturing, shopping and buying just the right part/sub-assembly to deliver the end-product to market quickly. Processes and systems need to be updated in order to meet this changing role.
Being an engineer might not seem like a job more prone to build over buy.
But increasingly, this isn’t the case.
We’re seeing engineering managers spending more time shopping for parts, making sure they’re right, and assembling their output than building complex assemblies from the ground up.
Today, we’re going to look at why this is happening, and what it means for manufacturing procurement.
The state of manufacturing procurement
Manufacturing procurement is undergoing a revolution.
Because the state of how complex manufacturing works is changing.
And no, we’re not talking about blockchain or digital transformation or digital twins or digital threads or any of the other “digital” buzzwords that get thrown around.
Those are important, but we’re talking about something even more fundamental.
And it starts with the engineering manager.
20 years ago, engineers spent most of their time solving the problems related to building stuff.
But that world is changing.
Engineers still solve problems. That is, after all, their core job.
But the problems they solve are different. Now, it’s less about “will this metal hold” or “how do we cram more computing power into a small space” and it’s more about:
“what parts and sub-assemblies do we need to meet our product market fit?”
The changing product development network
Over time, products have become more complex. Think about a car from 1980 compared to a car now: the technological differences alone are staggering.
Consumers now expect some (or all) of the following:
- Bluetooth compatibility
- Head-up Display (HUD)
- Voice activation
- App integration
- Self-locking cars
- Automated braking systems
And to power all of this, the car essentially needs a computer.
So now engineers have a challenge: they need to work out how to build a computer that goes in a car.
This involves a lot of parts and lot of expertise auto engineers don’t necessarily have. After all, they’ve been building cars for 20 years, not comparing Intel chips to maximize durability and computing power. Suddenly, manufacturing procurement is a bigger part of the engineer’s job.
The new world of manufacturing procurement
The result of these changes is clear: organizations are now forced to either be amazing at everything, vastly expand their own manufacturing capabilities, and extend themselves beyond their core competencies…
Hit the shopping malls and get engineers involved with manufacturing procurement.
And again and again, organizations have chosen to do the latter.
Engineers now spend more of their time browsing for specific parts of specific sub-assemblies.
And it’s not just the OEMs and their peers like Apple, GM, and Dell who are doing this.
The evolution of smart technology to fuel the internet of things means that virtually everyone is working with someone like Intel to procure at least some of the parts they need.
CIMdata predicts that most products are made up of 70% procured in stuff.
That means that most manufacturers, and the engineers who work for them, are only manufacturing 30% of the total.
The rest, they’re buying and sticking together.
As one engineer at a California tech company put it:
90% of design is shopping.
What this means for the industry
Once you start to puzzle it out, the implications of this change are staggering.
First, it means that engineers need to work much more closely with suppliers than ever before:
- Quality control is critical. If even one part is wrong, the entire complex assembly might be off. And since the number of different purchases has increased significantly, the potential cost of errors has increased as well.
- Design/engineering changes are more challenging. Engineers might have to call 100 different suppliers to tell them about a change as it cascades through the final product.
How the industry can adapt
- Products are more complex than they used to be.
- That complexity drives more procurement. Products are regularly comprised of 70% procured-in parts now.
- As a result, engineering managers are spending more time shopping for just the right part and less time-solving manufacturing engineering challenges.
So how can manufacturing win in a world of complex manufacturing procurement?
Organizations need to be able to work together across the supply chain in an extremely close way, both at a peer-to-peer level (P2P) and at an organizational level.
Organizations need their systems to talk to each other and they need their internal software to hook into the broader product development network. It’s no longer enough to just have an ERP, PLM, SCM, and CRM — they all need to be interconnected.
Organizations need to simplify their processes. If workflows and ways of working are clunky and manual, no one’s going to follow them. In a self-contained organization, this isn’t such a big deal — after all, you can usually track down the relevant person to get to the bottom of why they did what they did. But in a long and complex supply chain, that’s just not possible.
Organizations need to automate their workflows and establish clear version/revision control, both to keep everyone on the same page and to meet rising compliance requirements.
Procurement in the manufacturing industry is central to what engineering managers do. They’re spending more time shopping for the right part/sub-assembly. Systems need to keep up with these changes, as organizations work more closely and with a wider range of suppliers.
If organizations want to stay ahead in a world where 90% of designing is shopping, they need systems and processes that create a shared version of the truth, meet regulatory requirements, and keep lots of suppliers on the same page.
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