The procurement department is crucial in incorporating suppliers into the design process due to their extensive understanding of the supply chain.
Purchasing and the Design Process
As part of the product design team, procurement is given early access to material and component requirements information. This allows the buyers to work directly with suppliers in designing and specifying materials at the beginning stages of product development. It also helps achieve corporate cost and quality objectives, sourcing prototype materials and components, and ensuring a seamless transition to live production.
Design Analysis
During the design analysis phase, procurement reviews all phases of a product structure to assess the necessity of each component, simplify its design and manufacture, and identify opportunities to use less expensive materials. To enhance the value analysis process, procurement can involve suppliers as participants. Suppliers can provide valuable input by studying requirements, submitting bids, and attending formal workshops to contribute their expertise to the design process.
Cost analysis
The procurement team helps the design teams determine a reasonable purchase price in cases where supplier costs are unclear. Buyers can more accurately estimate the production and overhead costs by maintaining close communication with the suppliers. When all the costs are added up, the estimated cost should be a good approximation of the actual cost. This collaborative process is crucial in ensuring that the new component is priced properly.
Cost Analysis – Review and evaluation of actual or anticipated cost data.
Value Analysis
The procurement department helps the design teams to find and select the necessary materials, components, and services that will enhance the value of the design. They work to source these products and services at the most affordable cost. To be successful, every buyer must have value analysis skills and apply them to the process. During the product design phase, procurement acts as a neutral member, focusing on cost management and quality. As new product specifications are established and updated, buyers, engineers, and suppliers work together to agree on component costs and quality levels.
Value Analysis – The systematic use of techniques that identify a required function, establish a value for that function and finally provide that function at the lowest overall cost. Focuses on the functions of an item rather than the methods of producing the present product design.
On-going Specification and Standardization Review
After designs are approved for production, it’s important for both buyers and suppliers to keep working on reducing costs and enhancing value. By gathering feedback from product planning, manufacturing, marketing, and conducting continuous cost and value analysis, there will be ongoing chances to review specifications and functions with an emphasis on reducing costs, simplifying components, standardizing processes, improving quality, enhancing material delivery, suggesting process technology, and reducing material order cycle time.