hero-procurement2

What are the worst procurement pain points with custom manufacturing?

March 10, 2022
Procurement is particularly difficult for companies that practice just-in-time manufacturing.

By John Nanry, chief manufacturing officer and co-founder, Fast Radius

Sourcing custom parts is a complex process that requires efficient communication and visibility into the operations of manufacturing partners. But ongoing supply chain disruptions and surges in demand over the past two years have made procurement even more difficult, especially for companies that practice just-in-time (JIT) manufacturing principles.

While a JIT inventory-management model enables companies to carry minimal inventory at a lower cost, a lack of flexibility exacerbates supply chain vulnerabilities. And when custom manufacturers leave customers to deal with problems—quality issues, shipping delays, etc.—those organizations that practice JIT are likely to experience a hit to their bottom lines.

Fast Radius recently released a study, Charting the Future of Custom Manufacturing, which surveyed 250 engineers, designers, and procurement professionals about their pain points with supply chains and custom manufacturing. The results shine a light on the inefficiencies plaguing procurement processes.

When supply chains falter, JIT puts a strain on procurement teams

Procurement teams require clear communication and efficiency to drive projects forward. But when supply chain problems put pressure on the JIT model, these teams often bear the brunt of the pain.

Nearly half of respondents to our survey have tried JIT and abandoned it, with the majority making the switch over the past two years. This doesn’t come as a surprise, considering respondents’ biggest issues with today’s supply chain relate to the most significant weaknesses of JIT:

●Long lead times: 42% of respondents said long lead times were one of their top supply chain pain points. JIT’s inflexible supply chains mean that companies are often unable to navigate unforeseen roadblocks like natural disasters and materials shortages, which can stretch lead times.

●Rising costs: 40% of respondents cited increased costs as a top supply chain pain point. Costs are on the rise for a number of reasons, from higher material prices to expensive delays, and cost efficiency will likely be an even larger concern in the coming months.

●Lack of flexibility: 35% of respondents indicated that lack of flexibility is one of their biggest challenges. Companies using JIT typically only work with a minimal number of suppliers, shackling their ability to adapt if a supplier experiences a delay.

Although many companies are moving away from JIT, 32% still follow JIT-manufacturing principles. A relationship with a single, trusted manufacturing partner seems to be key to those companies’ JIT success. 

Pain points with custom manufacturers hinder procurement processes

In addition to supply chain issues, current processes and systems make it difficult for procurement teams to work effectively with custom manufacturers.

●Inefficient communication was cited as respondents’ top pain point with custom manufacturers. Ineffective, siloed communication wastes time and results in confusion and the dissemination of inaccurate information.

●Inaccurate quoting from custom manufacturers is a significant issue. Nearly half of respondents reported that less than 25% of the rapid quotes they received were accurate.

●Quality issues with custom manufacturers are a common result of unreliable operations. Nearly two-thirds of respondents said poor quality has harmed their bottom lines. 

●A lack of transparency from custom manufacturers is a significant problem. More than half of respondents said they have discovered delays or errors in production after it was too late to meet their shipping deadlines.

These issues present significant barriers, and they exacerbate existing issues with JIT. Without clear communication with suppliers, more visibility, and competitive costs, organizations’ bottom lines will suffer. But there is one solution that may be the answer to this problem: cloud manufacturing.

Cloud manufacturing integrates every stage of the manufacturing lifecycle into a single digital infrastructure for more flexible, scalable and transparent manufacturing. The system eases procurement pain points by enabling streamlined communication with suppliers, real-time process updates, and more.