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Get Started with Strategic Purchasing in 2024
Margaret Cunha, senior director, supply chain solutions, DigiKey T
hroughout 2023, the supply chain continued to experience many of the challenges that defined the past several pandemic years, including extremely high demand, production challenges and high costs.
Through it all, buyers have been working to ensure their organisations can source the electronic components needed to fuel innovative designs, finding creative ways to predict needs and adapt to challenges, proving themselves resilient in unexpected ways.
Strategic purchasing helps build that resilience, which comes down to getting the right part at the right time and price. Becoming more strategic involves automating processes to reduce manual time devoted to tedious tasks.
Companies can practice strategic purchasing to build resilience into their supply chains, reducing the amount of manual labour procurement teams must do, while simultaneously making the job more enjoyable and strategic.
Building resilience involves critical thinking, anticipating needs, quick communication and keeping ahead of the curve, but in the end, it’s a worthwhile endeavour to add value to an organisation. For me, strategic purchasing ultimately comes down to people, process and technology.
People
People and relationships are essential in the supply chain. Even as attention turns to automation and artificial intelligence, human connection remains vital to the supply chain. Buyers know that their jobs have changed significantly, particularly in recent years. Purchasing pros need to know things faster, do more with less, and often must deal with the ramifications of global labour and materials shortages, international conflicts and so much more.
Additionally, new import reporting requirements to keep up with, such as NEU and REACH regulations in the U.S. and RoHS and CBAM requirements in Europe, create additional work to track and submit certifications to the appropriate regulators. To be more strategic about this day-to- day work, buyers should develop a digital
DigiKey ships an average of 25,000 orders a day to customers around the world.
plan focusing on taking some of the tedious manual work out of the picture. While developing this plan, don’t forget to leverage your partners’ resources and relationships to your advantage; many suppliers have digital resources you can use to ease processes. Most high-service distributors have importer of record (IOR) status in many countries, which can help alleviate trade compliance paperwork and processes for your team.
Process
With a changing purchasing job comes necessary process changes to accommodate new requirements and tasks. These changing processes often involve increased communication that needs to occur quickly, internally and externally. The supply chain is full of data from thousands of sources, which can enable the automation of time-intensive processes. However, as valuable as data can be, it can also be overwhelming; start by determining which data points your team needs for intelligent decision-making and then figure out how to make it actionable. If you’re collecting data for the sake of collecting data, you’re likely to end up with a bunch of noise that distracts from the most essential information. Data means nothing if it doesn’t translate to something you can act on.
22 MARCH 2024 | ELECTRONICS FOR ENGINEERS
Technology
By finding ways to streamline the collection and analysis of data, purchasing professionals can instead focus more of their time on strategic work that furthers the company’s key objectives and goals.
The best place to start with technology is to identify your company’s biggest pain points regarding procurement activities. Price and availability quoting is where we frequently recommend buyers start when it comes to technology and automating processes. The quoting process often involves a lot of discovery and research, which takes a great deal of time. It’s typically a process that computers handle very well, so it’s a great place for companies to consider automating.
2024 Outlook
Looking ahead to 2024, we are seeing improvements to component lead times yet a softness in the market due to excess inventory, from over buying practices in the last two years. While many are optimistic that the second half of the year will show an increase and end the year strong, the first 3-6 months of 2024 are beginning slow and many customers are cautious of incurring greater inventory risk.
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