COG chairman, Nigel Wallis, looks at the role of procurement in through-life management and the importance of inter-departmental collaboration
Discussion about the role of procurement often focuses on achieving the right quality, right quantity, right price, right place and right time. While the ‘five rights are of paramount importance, in the modern commercial world there are many other issues confronting the procurement professional and they can all be summed up using one word: risk.
There is the risk of obsolescence, the risk of items falling foul of export control restrictions such as ITAR and EAR, the risk of counterfeit components, the risk of single sourced items, the risk of changing legislation including RoHS and REACH, the risk of world events creating problems in the supply of material, to name but a few.
So how can these risks be mitigated, or at least managed? And whose job is it to manage them?
Historically, and hopefully this is ancient history, procurement staff were viewed as merely order clerks. Nowadays, procurement has a pivotal role to play in the selection and management, not just of suppliers, but components as well. In the past, for example, procurement and engineering teams have almost worked autonomously. How many purchasers have been frustrated by a new design coming ‘over the wall’ and being given mere weeks to action the bill of materials after engineering has spent months designing it? How many commercial issues has that same purchaser then discovered in the BOM, when it’s too late to change it?
Only by engaging with engineering at the beginning of the design, can procurement really have a useful input. Of course, that works the other round as well. It is vitally important that procurement understand the challenges faced by the engineering team.
Realistically, engineers would not choose to design in a single-sourced part if there was another option. Often, as is the case with complex ICs, there is only a single source available for a part with specific functionality required by the application. Conversely, a supplier selected by engineering for their technical ability could be rejected by procurement if their quality is consistently poor, or if the part is subject to export control restrictions.
Export restrictions are worth considering here. Is it commercially astute to design in a competitively priced part that is subject to export control, if the procedures and resource required to actually get the thing delivered far outweigh any cost savings?
What about counterfeit components? Is the procurement department fully aware of the threat of counterfeit components? Is, for that matter, the engineering department? Are they getting round the table to discuss it? If not, why not? Counterfeits are a very real threat to all manufacturing industries.
Maybe the answer to that question is that there is a perception that the responsibility lies with another department. But it doesn’t: counterfeit avoidance is an inter-departmental issue in the same way that obsolescence management is. In fact, obsolescence is probably one of the most regular issues that confront both engineering and procurement personnel.
So here’s the rub! As chairman of the Component Obsolescence Group (COG) I am surprised that despite the amount of information available and regularly disseminated on Obsolescence (and indeed on most, if not all, of the other risks noted above) at COG meetings, the procurement function is vastly under-represented. I find this curious.
To give this a real-world perspective, 10 years ago an engineer decided that it would be useful for a procurement guy to go to a COG meeting in order that they understood the risks of obsolescence. I was that procurement guy, and the information COG has imparted has been immensely important to my various roles within the supply chain. In fact, my current role is working with engineering on new designs, helping to design-out risks and to assist with the development of through-life support strategies. It’s very much a collaborative effort and it works well.
In summary: only by working together, can engineering and procurement teams understand, and therefore manage, all of the commercial and technical risks.
Tackle new risks
New risks to the supply chain are arising regularly, so how can the modern purchasing professional ensure that they are up to date with the latest issues?
COG holds the answer. If you work in procurement, and are faced with any of the issues mentioned in this article, get along to a COG meeting and network with like-minded industry professionals from all levels of the supply chain. The next COG members meeting will be held on Tuesday 25 September at the National Air Traffic Services, Southampton. If your company is already a member, then you can attend free of charge. Non-members should contact the COG office who will advise how you can attend your first meeting, again for free.
Clearly, procurement’s role does not just involve managing supply chain risks, but managing and mitigating many other commercial risks too. Come to a COG meeting and find out what issues are threatening your supply chain, how you can mitigate these risks and who is available to help you do this. As the COG motto says: “We’re in the know- are you?”