AI-Guided Part Procurement Savings

One missing or wrong part can delay a product launch, increasing costs and potentially impacting quality. With growing global disruptions, companies need reliable suppliers of the right parts. Collaborating on the 3DEXPERIENCE platform, Engineering and Procurement professionals have the information they require to source the right parts from a vendor nearby, economically and efficiently.  

By carefully managing resources and inventory and working with Engineering to make better informed decisions about whether to reuse, purchase or make a part, Procurement contributes directly to the bottom line.

Artificial intelligence spend analytics can help Procurement professionals find the right component at the right price from the right supplier in order to decrease part procurement costs significantly.

The main differences between parts purchasing and procurement are in their scope and strategic approach:

The three main types of procurement are Direct, Indirect and Services Procurement:

1. Direct Procurement: Involves the acquisition of goods, materials or services directly related to the production or operation processes of an organization. These items are typically essential for the organization's core activities and contribute directly to its output or service delivery.
2. Indirect Procurement: Covers the acquisition of goods, materials or services that are not directly used in the production or operation processes but are necessary to support the organization's overall functioning. This includes items such as office supplies, maintenance services, IT equipment and marketing services.
3. Services Procurement: Focuses specifically on the acquisition of services required by the organization to support its operations or achieve its objectives. This includes services such as consulting, outsourcing, legal services, maintenance and repair services.

The procurement process is important in business for several reasons:

• Cost Savings. Effective procurement strategies can lead to cost savings by negotiating favorable terms with suppliers, leveraging economies of scale and optimizing purchasing processes. This helps businesses reduce expenses and improve their bottom line.
• Supply Chain Efficiency. Procurement plays a critical role in ensuring a smooth and efficient supply chain. By sourcing quality materials and services on time, businesses can minimize disruptions, improve production efficiency and meet customer demands more effectively.
• Risk Management. Procurement helps businesses manage supply chain risks by diversifying suppliers, assessing supplier performance, and implementing contingency plans. This reduces the likelihood of disruptions due to supplier failures, market fluctuations or other external factors.
• Quality Assurance. Procurement ensures that businesses obtain high-quality goods and services that meet their specifications and standards. By selecting reputable suppliers and conducting thorough inspections, businesses can maintain product quality and customer satisfaction.
• Innovation & Competitive Advantage. Strategic procurement can drive innovation and give businesses a competitive edge. By collaborating with suppliers to develop new products or processes, businesses can differentiate themselves in the market and stay ahead of competitors.
• Compliance & Ethics. Procurement helps businesses ensure compliance with regulations, standards and ethical practices. By vetting suppliers, monitoring their practices, and enforcing ethical sourcing policies, businesses can uphold their reputation and mitigate legal and reputational risks.

The seven stages of procurement typically include Identifying Needs, Supplier Identification, Vendor Evaluation & Selection, Negotiation, Purchase Order, Receipt & Inspection and Payment & Performance Evaluation:

1. Identifying Needs: Understanding and determining the goods, services or materials needed by the organization to fulfill its objectives.
2. Supplier Identification: Researching and identifying potential suppliers or vendors capable of supplying the required goods or services.
3. Vendor Evaluation & Selection: Evaluating potential suppliers based on criteria such as quality, price, reliability and past performance in order to select those most suitable.
4. Negotiation: Negotiating terms and conditions, including pricing, payment terms, delivery schedules and service levels, with selected suppliers to secure favorable agreements.
5. Purchase Order: Issuing a purchase order to the chosen supplier, detailing the agreed-upon terms and specifying the quantity, price and delivery details of the goods or services.
6. Receipt & Inspection: Receiving the goods or services from the supplier and inspecting them to ensure they meet the agreed-upon specifications and quality standards.
7. Payment & Performance Evaluation: Processing payment to the supplier for the delivered goods or services and evaluating supplier performance against pre-established metrics or KPIs.

Procurement in the supply chain involves acquiring goods, materials, or services from external suppliers to support an organization's operations. It includes activities such as supplier identification, selection, negotiation, purchase order processing, receipt and inspection and supplier relationship management. Effective procurement ensures:

• availability of quality materials
• minimized costs
• reduced risks
• optimized supply chain performance