Direct Materials Guidebook: 6 Key Principles for Manufacturing Road Ahead

MetalMiner welcomes Jason Busch, executive editor of our sister site, Spend Matters.

Metals spend can be complicated.

But for many manufacturers, direct materials procurement encompasses an even broader portfolio than just metals.

In our continuing research into better procurement practices for manufacturers overall, Spend Matters and MetalMiner are excited to announce the publication of our most recent research brief covering the direct materials procurement marketplace: A Direct Materials Guidebook – Six Key Principles for the Manufacturing Road Ahead.

You can also join us on Tuesday, July 17^th from 11am-12pm CDT for a webinar covering this very topic.

What we uncover in this research may surprise you.

In this analysis, we suggest that any future evolution of direct procurement will undoubtedly build on the significant shifts we’ve seen in global manufacturing in the past two decades. In this next stage of growth, MetalMiner and Spend Matters believe technology will catch up to current market requirements. This rapid evolution has not changed the core differences of direct spend compared with other procurement areas (e.g., indirect, services).

Fundamentally, unlike indirect procurement, direct purchasing is about buying quality and delivery capacity while managing against time and risk. Price, historically, has been a relatively secondary focus because, in many cases, more advanced procurement teams put targeted price/cost models in place as they became more organizationally mature. Any future evolution of direct procurement will surely build on this past focus.

In addition to focusing on the business skills and process change required to drive a new level of direct materials sourcing and supplier management success, this transition requires a new system of record for direct materials. This research brief offers a guidebook to this transition. We believe there are six themes that companies should include in their broader direct materials sourcing guidebook — focused on technology and beyond. These are:

• Don’t be at the mercy of the global market
• Always remember that your company name is on the box
• Don’t take a generic approach to your industry-specific needs
• When suppliers become your strategic partners to success, everyone wins
• Break down the walls between engineering and sourcing at all costs
• Build a bridge between your PLM and sourcing solution capabilities

This paper explores these six themes in detail as well as the broader direct materials sourcing environment today. It concludes with a snapshot of some of the direct materials platform requirements that companies will deploy in the decade to come.

What do these transitions in procurement best practices mean for technology specifically?

Check back for Part Two.

And don’t forget to register for the webinar!