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Procurement in mechanical engineering

Putting procurement into production: how mechanical engineering companies can embrace purchasing innovation to tackle current challenges.

Female engineer is checking a machine

The mechanical engineering sector is crucial to the everyday functioning of most other industries, including construction, aerospace, automotive, biomedical, energy, and manufacturing. It has a special responsibility to surmount the myriad challenges facing businesses around the world – from cybersecurity risks and skills shortages to cost pressures and supply chain disruption – to provide reliable and effective solutions. 

In this blog, we’ll look at the challenges that are weighing most heavily on the industry’s shoulders and how procurement solutions can help businesses embrace innovation to tackle them head on. 

What challenges are the mechanical engineering sector facing? 

The Covid-19 pandemic shutdowns had a huge impact on the mechanical engineering industry. Supply chain issues, in particular, were exacerbated by the Suez Canal blocking in mid-2021 and the war in Ukraine at the start of 2022. Not to mention global inflation sky-rocketing the price of manufactured goods and energy costs. 

Let’s look at a few areas where mechanical engineering organisations need to invest their resources to hold steady against global turbulence and constant disruption. 

Robotic assembling of parts in progress

1. The need for increased automation and constant innovation to remain competitive

The digital transformation race is on for all businesses, but there’s significant pressure on mechanical engineering companies to keep up with advancing technologies. Most notably, automation, which speeds up mundane, time-consuming, and hazardous tasks, freeing engineers up to focus on more complex problems. 

Beyond automation and smart systems, more companies are experimenting with drones, IoT, 3D printing, robotics, and AI to optimise processes and improve efficiency. Being able to integrate these technologies into existing workflows is a big shift for some, requiring the necessary skills and experience (see below).

A handshake at a wearhouse

2. Ensuring effective supply chain risk management

Global supply chain disruptions include natural disasters, trade disputes, wars, pandemics, and political instability, and they can make it much harder for mechanical engineering businesses to access the raw materials and specific components required to do their jobs. Often, these businesses rely on specialised parts in small numbers, which is why having a diversified supply chain with good supplier relationships is key.  

Global shortages of the type we’ve seen with chip technology, caused by the proliferation of gadgets and exacerbated by the pandemic, have led to a fundamental change in the way mechanical engineers are designing products. They’ve been forced to come up with alternative solutions based on what components are available. 

Aerial view of a factory

3. Stepping up to sustainability goals 

More and more, mechanical engineers are having to think about the carbon emissions associated with the solutions they’re developing. From electric motors in vehicles to internal combustion engines, their innovation in this space can have a significant impact on global targets. In the construction industry, for example, sustainability has become a business imperative as engineers must meet customer demands and environmental regulations for greener buildings. 

Warehouse manages check the supply of goods at the godown

4. Rising costs and challenges related to materials, energy, and skilled labour

Mechanical engineering projects often rely on expensive materials and equipment; essential research and development can be costly too, especially for smaller companies. And paying the right people to do the work, at a time of skilled labour shortage, doesn’t come cheap. Businesses in this sector must do all they can to plan ahead where possible and control costs. 

There’s also a growing skills gap to consider – businesses need to upskill their existing workforce to create a talent pipeline, as well as collaborate with educational institutions to develop programmes that are aligned with their current and future needs.

Working in a heavy machinery factory

5. Ensuring mechanical systems meet quality standards

In the face of these rising costs and increased competition, it’s vital that businesses still strive for quality assurance at every stage, and not only to meet regulatory compliance. Inconsistencies and low-quality projects can lead to project delays, rework, or even mechanical failures – having a huge knock-on effect for the business.

How can procurement play a strategic role in tackling these challenges? 

Procurement is at the heart of the sector – it’s responsible for around 50% of total spend. Procurement functions ensure people have the daily supplies they need to do their jobs, which means professionals in this department need to have specialised knowledge and stay up to date with all the latest innovations and tools.  

Embrace innovative solutions 

With a skills shortage, there are fewer procurement professionals to strategise and implement plans across the organisation. That’s where reliable, digital solutions can make all the difference. Procurement solutions can provide real-time reports, giving procurement teams an overview of spend, no matter how many people are purchasing items across the business. 

With all the data and controls at your fingertips, you can reduce maverick buying, spend less time and money on procurement, and keep control over who can buy what. While procurement solutions that provide access to verified suppliers and millions of items help you build resilience into your supply chain.  

Major industrial player HOERBIGER operates across oil, gas, and automotive industries, with over 73,000 C-item orders placed every year. Like most businesses in the sector, they needed to reduce procurement processing costs and increase the value procurement contributes to the company. Their search for an innovative solution that would provide transparency, comparability, product availability and usability led them to Unite.   

Increased efficiency for major industrial player

Discover how we’ve helped HOERBIGER reduce administrative costs, discover and integrate new suppliers, and increase transparency across the business.

Partner with suppliers 

Mechanical engineering organisations should also work closely with suppliers to understand the complexity of global supply chains. This will give them the data they need to carry out more effective supply chain risk management and ensure they’re meeting sustainability objectives. Some businesses are choosing to implement policies and set standards around quality, sustainability and performance.  

Make more of supply chain management 

Keeping control of spiralling costs can be supported by optimising supply chain management. The Unite Platform, for example, helps businesses streamline indirect procurement processes and improve supplier diversity. Users can discover alternative vetted suppliers from our network, make the most of our Best Basket feature for price comparison, and negotiate better prices and favourable contract conditions with suppliers with our procurement solutions. Remember, whatever solution you use, it’s important that any steps taken to cut costs do not impact on quality. 

Take an integrated approach 

For too long, procurement has sat on the sidelines, but now all organisations are recognising how intrinsic it is to cost savings, business stability and resilience, and driving sustainability initiatives. Part of putting procurement front and centre is integrating it into existing IT systems, including enterprise resource planning, manufacturing execution and product lifecycle management systems. Unite, for example, can be integrated via API into existing ERP systems, making it seamless and simple to get set up. 

Procurement, engineered to succeed 

Mechanical engineering is facing a range of complex challenges, and addressing these is paramount – not just for the businesses at the forefront but for the many sectors that rely on them. While the road ahead is far from straight, it’s clear that procurement will play a big role in facing them, through strategic thinking, maximising procurement personnel, and innovative new solutions.  

Ready to go a step further?

Discover how Unite can transform procurement for mechanical engineering companies.