The Hidden Costs of Engineering and Procurement Inefficiency

Making proactive supply chain decisions starts with how your engineering and procurement teams work together.

Hardware company leaders often say, "I want supply chain decisions made earlier in the process without taking up our electrical engineers' time for procurement." And that's the ideal. But your team harbors a dark secret: That's not always possible.

The problem? Electrical engineers are already spending as much as a quarter of their time handling procurement-related tasks—and this overlap in duties can have a significant downstream effect on time-to-market and bottom-line profits. 

Fortunately, this is a solvable problem. Here's how your company can help engineering and procurement focus on the tasks they do best.

Overlapping Work Leads to Inefficiencies Across the Board

Engineers and procurement teams bring specialized skill sets to product development. When each can focus on their own role, they work in sync, complementing each other's strengths and weaknesses.

Unfortunately, each team focusing solely on their roles doesn't happen too often. It's not uncommon for engineers and procurement professionals to pick up extra tasks, even if the work is outside their scope. 

Engineers often choose parts based on past design selections or a quick assessment of market availability, which may not incorporate all the realities of procurement requirements. When designs move from prototype to production, procurement frequently needs to purchase parts based on availability, vendor lists, and price.

It leads to a chicken-or-egg problem: Procurement can't do its job if engineers design with parts that are outside of acceptable procurement channels. However, engineers don't know what parts are accessible since they're not procurement professionals. As such, procurement often ends up dealing with bills of material that have procurement challenges, requiring additional engineering questions or alternative part recommendations that, ultimately, still require engineering consultation.

This starts a cycle of engineers taking partial responsibility for procurement or, worse, spending additional time updating designs to accommodate procurement realities. Procurement, in turn, often ventures into some level of engineering specialty, reviewing datasheets or parameters, hoping to offer alternative parts that match the fit, form, and function of the engineer's selection. 

Downstream, this causes confusion and delays in production. If the requirements of procurement and engineering aren't met, the entire production process can grind to a halt until issues are resolved. And that leads to disruptions like:

• Time-to-market slowdowns: If a BOM can't be sourced, you won't have the necessary parts to begin production and keep it running smoothly.
• Increased production costs: The hard-to-find parts engineers ask for often come at a premium cost. If your procurement team replaces those hard-to-find parts with a cheaper alternative that is incompatible, your business can take on significant rework costs or storage expenses. Remaining components will also sit unused during production delays until the burden of resale or disposal of those parts adds additional cost to the organization.
• Elevated risk of supply chain disruption: Without care for supplier and manufacturer relationships, procuring the parts you need in a steady-state production environment becomes more challenging, making it nearly impossible to scale.

Some procurement teams may purchase parts in bulk, hoping that approach will avoid stockouts and delays from overlapping work. However, this presents a financial risk and an infrastructural challenge when storing your electronic components. Suppose your materials aren't kept in appropriate electronics storage. In that case, your clear-to-build status remains at constant risk due to potential manufacturing failure, and both teams can end up scrambling to find a solution. 

Ideal Collaboration Depends on Bidirectional Visibility

Ensuring engineering and procurement avoid taking on tasks outside their respective roles is easier said than done. The key is bidirectional visibility: Engineering and procurement must establish a communication strategy or collaborative work methods so both sides have visibility into what the others need.

Best of all, structured collaboration builds rapport, making it easier for the teams to work together moving forward. The two teams end up creating a functional collaborative methodology, setting everyone up for success.

3 Tips for Keeping These Roles Focused Yet Collaborative

From improved data accessibility to onboarding dedicated procurement software, these three steps will align your engineering and procurement teams on duties while simultaneously bolstering efficiency.

1. Provide engineers with access to supply chain data

Engineers can only account for parts availability if they're looped in on supply chain strategy. Otherwise, they end up guessing which parts are available — or worse, ignoring the concern altogether — leading to the chicken-or-egg problem. 

To solve this, give your engineers access to the supply chain data they need in a simple, actionable form. By providing engineers with the data as early in the design process as possible, they'll be able to proactively account for changing considerations. Down the line, they can be sure the parts they chose will be available and appropriate for use in the final product—no more respins or engineering questions needed.

This approach also sets procurement up for success when it comes time to order new parts. They won't have to re-approach engineering teams based on the available components or try to interpret what the engineers need. They can build their POs confidently, knowing each part will be compatible and available.

2. Get a head start on NPI procurement and materials management

The earlier procurement can start sourcing parts, the better the price they can negotiate. Set up a process to let them know what they need to procure as soon as the engineers finalize the selection of parts. This ensures you have the inventory on hand to meet forecasted demand.

Engineering teams should also identify the components that are hard to source and can't be easily replaced so procurement can spot potential sourcing hurdles before significant work has gone into procuring materials. This way, you don't risk locking in your BOMs only to realize the design can't scale for production.

These steps ensure both teams are equally informed, rather than simply pushing NPI procurement and kitting onto one team or the other. As a result, procurement can lean on their supplier relationships and cost management expertise from the outset, smoothing the handoff of the project from prototype and validation to production.

3. Equip procurement with tools for creating proactive POs

Free your team from the dark secret of overlapping work by unifying your procurement information into a centralized database. Automated procurement software connects all your supply chain data, enabling your procurement team to create POs as early as possible. They'll already know what parts are available and where to order them; all they need to do is fill in the quantities based on demand once your engineers relay the final design lock for production. 

Keeping engineering and procurement teams on the same page requires a platform that gives everyone access to your most important supply chain data. Tools like Cofactr gather all your information across data sources and consolidate it into a single platform. This provides your engineering team with a clear view of what parts need to be prioritized for procurement, and your procurement team can prepare their POs in advance.

Cofactr Gives Your Teams the Visibility They Need to Succeed

By connecting your inventory levels, supplier performance, and parts availability into one platform, Cofactr delivers the visibility needed to make informed decisions at every stage of product development and boost efficiency by 20%. 

Engineers can see which components are consistently available before finalizing their designs, preventing last-minute changes and ensuring a smoother production process. Meanwhile, procurement teams can track parts availability and supplier reliability, allowing them to place proactive POs.

See why leading electronics manufacturers like Stoke, PatchRX, and Neros trust Cofactr to streamline procurement and scale operations. 

Book a demo today.