Rubber and Polymer Sourcing for Automotive: A Hidden Supply Chain Risk
Rubber and Polymer Sourcing for Automotive: A Hidden Supply Chain Risk
When people speak of supply chain risks in the auto industry, they tend to turn toward semiconductors, steel, or rare earth minerals. Very few pause to think about rubber and polymers. Yet, take them away and the industry would grind to a halt. Cars wouldn’t have tires, seals, or hoses. These substances permeate the world around you, but you hardly ever hear about them.
In this blog dive, we’re going to talk about the ways rubber and polymers are sourced and why it matters for the automotive industry, what makes it especially tough for procurement pros to manage, and how the rise of EVs is reshaping demand.
The Role of Rubber and Polymers in Automotive Manufacturing
Manufacturers depend on two main streams: first, natural rubber, which is mainly extracted from plantations in Asia, and second, synthetic polymers, which are made from petrochemicals.
Natural rubber is important for its flexibility and durability, whereas polymers provide strength, heat resistance, and weight reduction. It generally helps in today’s fuel-efficient designs.
Every car contains far more rubber and polymer than most consumers realize. These materials are used extensively in:
1. Seals and gaskets that keep engines and transmissions airtight.
2. Hoses and belts that manage fluids and power transmission.
3. Bushings and suspension components that absorb shock and improve comfort.
4. Dashboards, bumpers, and interior trims made from synthetic polymers and resins.
In some estimates, polymers account for a vast volume in modern cars, especially as automakers focus more on lightweighting.
Even though they are a much smaller percentage of the total material cost than steel or aluminum, rubber and polymers are mission-critical. And if a factory runs short of polymer resins or critical rubber parts, entire assembly lines can grind to a halt.
Why Rubber and Polymer Sourcing Is Different From Other Materials
Rubber and polymer buying isn’t logic that applies to buying steel or aluminum. The issues are more complex.
1. Heavy Dependence on Southeast Asia for Natural Rubber
The rubber industry, for one, was geographically concentrated. Nearly 90% of it comes from Southeast Asia, largely Thailand, Indonesia, and Vietnam. It is produced all over the world, millions of small farmers at the mercy of weather, soil quality, and diseases.
2. Synthetic Polymers and Oil Price Linkages
Synthetic polymers are bound to the oil markets. They derive from petrochemicals, which means their prices many times behave in sync with crude oil. Any geopolitical shake-up in the world’s oil-producing regions can send polymers soaring, pinching automakers that are already running on razor-thin margins.
3. Stringent Quality Demands from Automakers
The bar for quality in auto is unusually high. Parts have to endure intense heat, pressure, and wear over multiple years of use. That implies procurement groups cannot just replace suppliers in the event of shortages. There is only a finite set of suppliers that can meet the standards on a consistent basis, further constraining the choices.
Hidden Supply Chain Risks in Rubber and Polymer Procurement
Risks involved in rubber and polymer sourcing tend to go unnoticed until they become severe.
1. One of the largest risks is environmental vulnerability. Rubber plantations are subject to climatic risks, floods, storms, or extended droughts can decisively affect yields. Crops have been ruined by diseases such as leaf blight. Piled onto this is increasing pressure to stop deforestation associated with rubber farming, leaving procurement leaders competing on cost and sustainability.
2. Price volatility has ever pursued these markets. Price volatility typifies natural rubber, whose prices have fluctuated wildly in the past few decades, while prices of synthetic polymers rise and fall with oil. For manufacturers producing on huge scales, these fluctuations ripple across whole product ranges.
3. Compliance and ESG pressures are also mounting louder. Car companies are being called upon to demonstrate that their sourcing is both sustainable and ethical. Joining initiatives such as the Global Platform for Sustainable Natural Rubber (GPSNR) is becoming less voluntary and increasingly a reputational imperative.
4. There are logistics and geopolitical risks. With all the production based in Southeast Asia, a disruption at ports or shipping lines can hold up deliveries globally. Shortages of containers during the pandemic showed just how exposed these supply chains are.
How EVs Boost Rubber and Polymer Demand
The shift to electrical mobility introduces even greater complexity. EVs do not contain engines in the conventional sense, but they rely heavily on sophisticated polymers and rubber products.
Battery packs, for instance, need specific polymer encasements and insulation to control heat and safety. Light polymers offset the tremendous weight of lithium-ion batteries to enable EVs to be more efficient. Thermal stability and water resistance are essential for battery safety, and rubber seals and gaskets have an even larger role to play in this case.
Even the tires vary. EVs need low-rolling-resistance tires that are capable of withstanding more torque and heavier loads without degrading prematurely. This necessitates proprietary rubber compositions, which further strain the supply.
Therefore, EV take-up doesn’t decrease reliance on rubber and polymers; it heightens it. Procurement leaders need to obtain not only greater volumes but also higher-specified grades of those materials.
Conclusion
Rubber and polymers might not top supply chain conversations the same way that semiconductors or lithium do, but they are not ones to be ignored. They are the unsung heroes of car performance, safety, and comfort. The issue is that their sourcing is accompanied by special vulnerabilities, geographic concentration, oil dependence, climate risk, and increasing ESG focus.
As EVs continue to grow, demand will only be higher, compounding procurement even further. What was once deemed “secondary” material is now at the forefront of the next generation of vehicle development.
Automotive procurement executives must go beyond cost. They have to think resilience, they have to think sustainability, and think diversified supplier base. Traceability technology spend, strategic supplier relationships over the long term, and sustainably sourcing programs will also be key to addressing these unseen vulnerabilities.
Is your company getting ready to build resilience in rubber and polymer purchasing?
Leverage Moglix Business to drive agility through end-to-end procurement solutions for sourcing rubber and polymer components. Turn your weakness in the rubber/ polymer supply chain into a strategic advantage with us. Get in touch today to see how our technology-driven platform can provide the visibility, reliabilit,y and cost savings your automotive venture needs.
Procurement Challenges in Building EV Battery Supply Chains
Procurement Challenges in Building EV Battery Supply Chains
It is not an exaggeration to term electric vehicles as the ones transforming the global automobile scene. Over the last five years alone, the market for EVs has transitioned from niche to mass. The International Energy Agency records that EV sales passed the 14 million mark in 2023, nearly double their level in 2021. That’s not a modest change; it is a revolution in the way the world perceives mobility.
But underneath each EV driving down the street is a tale of ruthless supply chain stress. Unlike traditional cars, where steel, plastics, and electronics hold sway in procurement, EV manufacturing is rooted in batteries. And batteries are voracious consumers of resources. They demand lithium, cobalt, nickel, and graphite, minerals that are unevenly dispersed across the globe. Consequently, procurement executives have the dual challenge of obtaining sufficient supply and doing so in a manner that is cost-efficient, ethical, and resilient.
Here, in this blog, we are going to discuss the special procurement issues in EV battery supply chains, from raw material shortages to sustainability, and how businesses are coping with this changing world.
Grasping the EV Battery Supply Chain
In an effort to better grasp the procurement puzzle, it is beneficial to first consider how EV batteries are assembled.
An average battery pack consists of cells, modules, and packs. The most complicated part of it all is the cells. They are dependent on a combination of cathodes, anodes, separators, and electrolytes. All these need particular materials. The cathodes, for example, require lithium and nickel; anodes are constructed from graphite.
It begins in mining, proceeds to refining, proceeds further to chemical processing, and then goes to cell and pack assembly. Procurement is absolutely essential at every step. If there is a shortage of mining capacity, or refining is geographically aggregated, then procurement groups have to work their way out by finding alternatives or negotiating long-term agreements.
What sets this supply chain apart from the norm in the traditional automotive world is its fragility. However, steel or aluminum from multiple global suppliers can be easily obtained, while battery-grade lithium or cobalt is much more concentrated, often in politically unstable or geographically limited regions.
Challenges in EV Battery Supply Chains for Procurement
Procurement teams in this domain do not merely buy materials but are stepping into a minefield of risks. Some of the greatest challenges are:
1. Shortages and Price Fluctuations
Lithium has been referred to as the “white gold” of the EV era, and for a good reason. Prices have skyrocketed between 2020 and 2022 before tempering down, but the underlying problem persists: demand is increasing faster than supply. A new mine for lithium can take close to a decade to come online, with automakers bringing new EV models to market every year. This mismatch creates cost predictability nightmares for procurement leaders.
2. Converged Supply Chains
More than 70% of EV battery manufacturing is done in China. That level of concentration is effective from a manufacturing perspective but dangerous from an acquisition point of view. Any geopolitical strain, trade restriction, or domestic interruption can have far-reaching effects across the world, exposing manufacturers to vulnerabilities.
3. Long Lead Times
Unlike with conventional auto components, which generally can be procured in a hurry, EV battery materials are long-range. Approvals to mine, facilities to refine, and gigafactory expansion all have multi-year schedules. For procurement buyers, this entails planning decades in advance, in some cases making gambles on technologies and suppliers that won’t deliver for years.
4. ESG and Ethical Issues
No EV maker would want to sell “green” vehicles manufactured using materials associated with child labor or ecologically harming the environment. But this is a genuine fear, particularly with regards to cobalt mining in the Democratic Republic of Congo. Procurement professionals are compelled to trace and certify sourcing, balancing commercial requirements and ethical considerations.
5. Logistics and Transportation
Batteries are heavy, bulky, and hazardous materials due to their flammability. Shipment across continents entails specialized care and strict mandatory requirements. This imposes another level of expense and complexity that procurement teams have to contend with.
Sustainability and Circular Procurement
There is another dimension to procurement in EV supply chains: sustainability. There are increasing demands from regulators, investors, and customers for cleaner solutions. For procurement teams, this is not a “nice to have”; rather, it is fast becoming a compliance requirement.
One such promising sector is circular procurement. Rather than using virgin mining, firms are going in for recycling. Recycling EV batteries at the end of their life are being stripped down, and major metals like lithium, cobalt, and nickel are recovered for reuse. Recovery rates as high as 95% for major materials have been estimated by some studies.
In tandem, “second-life” uses are being developed. Batteries that are no longer up to scratch for EVs can be used for stationary energy storage applications, like backing solar farms or balancing power grids. That minimizes waste and increases the choice procurement teams have in sourcing practices.
By integrating circularity into procurement, businesses are able to decouple themselves from raw material scarcity while still meeting sustainability objectives. The EU Battery Regulation is already moving in this direction, requiring recycled content in new batteries, which is where the global market is going.
Increasing Competition Among OEMs for Battery Supply
If procurement issues were not complicated enough, competition between automakers makes it more difficult. It’s a regular sprint with every major OEM in the race: Tesla, BYD, Volkswagen, General Motors, Hyundai, and several dozen others. The truth is that battery availability is limited, and the large players are moving quickly to acquire it.
Tesla, for example, has entered into multi-year deals directly with Australian lithium miners. Volkswagen has taken stakes in cell production joint ventures in Europe. Chinese giants such as BYD are integrating vertically, from mining through to finished cars.
This race for military equipment is detrimental to smaller automakers and startups. They lack the volume or budgetary strength to secure supply commitments.
Procurement teams in these organizations must think out of the box!!
Moglix Business specializes in tech-enabled B2B procurement and supply chain solutions, offering MRO sourcing, custom manufacturing procurement, and infrastructure industry supplies to enterprises. Their digital transformation capabilities directly address EV battery supply chain procurement challenges through vendor consolidation, complete visibility dashboards, tech-enabled tracking, and integrated procurement platforms that enable predictability, cost efficiency, and agility at scale for complex manufacturing supply chains like those required in EV battery production.
Margin Protection via Site Aggregation: How Procurement Drives Profitable Growth
Margin Protection via Site Aggregation: How Procurement Drives Profitable Growth
Construction companies across India are fighting a tough battle. Project bids are becoming razor-thin, material prices keep climbing, and clients still expect the same quality at the lowest possible cost.
For companies that are working on large-scale projects, even a small increase in their input cost % can turn their profitable contract into a financial burden.
Take an example, a contractor whose firm bagged three highway projects in different states. They ordered steel; in one state, it was more expensive than in another. Cement was procured during a price hike, and logistics costs ballooned because trucks were traveling half-empty. The company delivered the projects, but the margins were almost gone.
This story is more common than many admit. The root cause is simple: most firms still treat each site as its own procurement unit. It feels natural since projects vary in timelines and needs. But this approach quietly drains profitability.
The smart players are shifting to a different approach. They are aggregating material demand across multiple sites and negotiating as one large buyer. This approach to site aggregation is helping contractors protect their margins and turn procurement into a real profit driver.
In this blog, we’ll find out how the procurement teams can protect margins through site aggregation and drive profitability in projects.
The Margin Pressure in Large Projects
Step into any contractor’s office today, and the frustration is the same. Here are some
1. Clients push for the lowest bids while still demanding top-quality materials.
2. Commodity prices for steel, cement, and fuel swing unpredictably.
3. Skilled labor is harder to find and more expensive to retain.
Now imagine these pressures multiplied across multiple project sites. A company running housing projects in three cities may source cement separately at each location. One site negotiates with a local supplier and pays a fair price. Another, short on time, accepts higher rates. A third places an order during a price surge and pays even more. By the end of the quarter, the same company had paid three different prices for essentially the same material.
That’s not all. With separate orders, purchase volumes are smaller, which means weaker bargaining power with suppliers. Each site builds its own vendor relationships, doubling administrative work. Different suppliers provide varying material grades, raising the risk of quality mismatches. And then there’s logistics: one truck goes out half-full to Site A, while another makes a nearly identical journey to Site B the very next day.
The combined effect is brutal. What looked profitable during bidding becomes a struggle to break even once fragmented procurement costs add up.
What is Site Aggregation in Procurement?
Site aggregation flips this fragmented model on its head. Instead of treating every project as a standalone buyer, companies combine demand across all sites and negotiate centrally.
Think of it like pooling your shopping list with neighbors. Instead of each person going to the market and paying retail prices, everyone combines their list, buys wholesale, and saves more.
In infrastructure, the difference is enormous. Imagine a company constructing ten highway stretches across states. If each site orders 100 tons of steel separately, suppliers see them as small customers. But if procurement aggregates the demand into a 1,000-ton order, the company suddenly has leverage. Suppliers not only offer better rates but also prioritize deliveries for such a large, steady client.
Site aggregation can be done in stages. Some firms start small, aggregating within one region. Others combine demand by material type, like steel or cement, across sites. The most advanced treat their entire portfolio as one coordinated procurement operation.
Why Site Aggregation Protects Margins?
The power of site aggregation lies in the cumulative benefits it creates:
1. Volume pricing power
Bigger orders secure better discounts. A company sourcing 500 tons of steel in one go can save 5–15% compared to fragmented orders. Those savings directly strengthen margins.
2. Smarter logistics
Instead of each site arranging separate deliveries, suppliers plan efficient routes that serve multiple sites. This cuts per-ton transport costs by 20–30% and reduces empty return trips.
3. Reliable suppliers
Suppliers prioritize larger and predictable contracts. Aggregated demand locks in their commitment to delivery schedules, reducing costly site delays.
4. Leaner inventory
Instead of every site keeping a separate buffer stock, companies can optimize inventory across projects. Excess from one site can be shifted to another, reducing waste and carrying costs.
5. Stable pricing
Centralized contracts shield companies from sudden price spikes. All sites pay the same negotiated rate, bringing predictability into cost planning.
Best Practices for Implementing Site Aggregation
Shifting to site aggregation isn’t as simple as pooling orders. It requires process discipline and the right tools. Successful companies follow a few best practices:
1. Classify materials smartly: Standard materials like steel, cement, and aggregates are perfect for aggregation. Specialized, site-specific items may still need local sourcing.
2. Forecast demand centrally: Gather needs from every location and input them into a single demand plan. Continuously update as project timelines change.
3. Facilitate cross-site sharing: Establish simple policies for redistributing surplus material from one site to another to minimize waste.
4. Train site teams: Site supervisors and managers should know how central procurement impacts their schedules and how to coordinate accordingly.
5. Leverage digital platforms: Manual tracking isn’t going to work. Digital procurement systems provide visibility across locations, automate consolidation, and enable simple monitoring of supplier performance.
Procurement as a Profit Driver
For decades, procurement was seen as a cost center, a function that cut purchase orders and managed invoices. Site aggregation is showing companies that procurement can be a strategic profit lever.
By concentrating spending, procurement teams are able to gain negotiating leverage, level out cash flows, and minimize waste. They create more robust relationships with suppliers that extend beyond transient price negotiations. Senior leaders are beginning to hold procurement accountable not only for cost avoidance but also for its direct effect on the profitability of projects.
Together with Moglix, discover how much margin your company could safeguard if all project sites were bought smarter.
Moglix Business accelerates margin protection and revenue growth for businesses through site aggregation in procurement, allowing cost savings across multiple project locations, supplier consolidation, and landed cost optimization. Our technology-enabled solutions accelerate supply chain visibility and simplify buying, allowing clients to attain greater margins and sustainable expansion while minimizing leakages and procurement expenses.
From RC-Approved to On-Site: The Speed Advantage for National Projects
From RC-Approved to On-Site: The Speed Advantage for National Projects
Stand at any major construction site in India and you’ll see the same frustrating scene repeated daily. Workers arrive ready to work, but they spend the morning waiting. Equipment sits idle. Project managers make urgent phone calls, asking the same question: “Where are the materials?
This isn’t a story about projects that haven’t started yet. These are active construction sites where the Rate Contracts are already approved, budgets allocated, and timelines set. Yet somehow, basic materials like cement and steel remain stuck somewhere between “approved” and “delivered.”
For India’s infrastructure push, this gap has become a silent killer of project timelines. The National Infrastructure Pipeline (NIP) depends on thousands of projects moving simultaneously. When materials get stuck in bureaucratic or logistical limbo, entire programs slow down. What looks like a simple procurement issue on paper becomes a major roadblock to national development.
The projects that succeed have figured out something crucial: RC approval is just the starting line, not the finish line. The real race begins when materials need to move from approved supplier lists to actual construction sites.
So, in this blog, we’ll understand why speed is an important factor for national projects.
Understanding RC Approval in National Projects
Rate Contract approval might sound like government jargon, but it’s actually quite straightforward. It’s like a pre-approved shopping list with fixed prices. Every time a project needs cement or steel, government agencies negotiate bulk rates in advance with qualified suppliers, instead of running separate tenders every time.
Here’s how it typically works: A highway project needs various grades of cement procurement over two years. Rather than tender separately for each cement purchase, the agency creates a Rate Contract with approved suppliers. These suppliers have already proven their competitive pricing, delivery capabilities, and quality standards.
This system makes sense on paper. Projects get predictable pricing, suppliers get assured business volumes, and procurement teams avoid repetitive tendering. A cement manufacturer might be RC-approved for highway construction across multiple states. A steel company could have Rate Contracts for metro rail projects in several cities.
But here’s where reality gets complicated. RC approval doesn’t mean materials are sitting in a warehouse ready for pickup. It doesn’t account for production schedules, transportation challenges, or competing demand from other projects using the same suppliers. The approval gives you the right to buy at agreed prices – it doesn’t guarantee immediate availability.
This disconnect between approved and available creates the first challenge in the RC-to-site journey.
RC-Approved vs. On-Site Availability: The Real Challenge
While RC approval brings order and transparency to procurement, it also creates a gap. Materials may be approved on paper, but still not physically available at the site.
Common challenges faced in the RC-to-site journey are:
- Processing Delays: Even with pre-approved rates, government procurement involves multiple authorization levels. Purchase orders need review, approval, and processing. What should take days often takes weeks.
- Production Scheduling: Popular suppliers serve numerous projects. When they receive orders, existing commitments might push new production weeks into the future. High-quality suppliers often have the longest waiting lists.
- Manual tracking: Paper-driven systems or fragmented spreadsheets make it difficult to know when materials will actually arrive.
- Site Readiness: Sometimes, materials are ready before sites can receive them. Incomplete access roads, inadequate storage facilities, or missing security arrangements create delays at the final step.
- Each delay seems minor individually. Combined, they extend material delivery far beyond initial estimates.
This lag between RC approval and on-site delivery can leave equipment idle, workers waiting, and deadlines slipping further away.
Why Speed Matters for National Projects
Every day lost in material delivery can affect the entire project. Speed is not just a convenience; it is a necessity for four key reasons:
- Avoiding cascading delays
Construction projects depend on tightly linked activities. If steel is delayed, concreting is delayed, which then pushes back finishing work. A single procurement gap can disrupt an entire schedule.
- Cost savings
Idle machinery, extended labor deployment, and missed deadlines all increase costs. Faster RC-to-site movement reduces these unnecessary expenses.
- Loosen Public Confidence
Citizens and businesses make decisions based on promised infrastructure completion dates. Companies plan factory locations expecting highway completion. Families relocate assuming metro line operations. Persistent delays undermine confidence in all future infrastructure commitments.
- National targets
India’s infrastructure goals under the NIP demand thousands of projects to be completed on time. Speed in procurement directly influences the pace of national progress.
The Speed Advantage: Moving from RC-Approved to On-Site Faster
Smart project managers have developed strategies to compress the time between RC approval and on-site delivery. These approaches don’t require policy changes or additional approvals – just better coordination and planning.
- Early Supplier Engagement
Instead of waiting for formal orders, successful teams engage RC-approved suppliers during project planning phases. They share tentative material schedules, discuss potential challenges, and explore solutions before problems arise. This early communication allows suppliers to plan production runs and arrange raw materials proactively.
- Regional Supply Mapping
Rather than just knowing which suppliers are approved, smart teams map supplier capabilities geographically. A cement plant in Gujarat might be RC-approved nationally, but a smaller facility in Rajasthan could deliver faster for western India projects.
- Vendor Managed Inventory (VMI)
Suppliers maintain stock closer to project sites, ready for immediate dispatch. Thus, vendor-managed Inventory reduces the dependency on long transport times.
- Buffer Planning
Successful projects build time and quantity buffers into their procurement schedules. They order materials slightly earlier than necessary and maintain small inventory cushions for critical items. This buffer absorbs inevitable delays without affecting construction schedules.
Best Practices for Accelerating RC-to-Site Movement
The most successful infrastructure teams follow specific practices that consistently deliver faster RC-to-site movement. These aren’t complex innovations – they’re systematic approaches to managing practical challenges. Here are the best practices infrastructure teams should follow:
- Map approved suppliers by region
Maintain visibility of which RC-approved suppliers can deliver faster to specific project locations.
- Build buffer inventories for critical items
Materials like steel, cement, and aggregates should have pre-planned buffer stocks in high-demand zones.
- Digitize the approval-to-dispatch process
Moving from paperwork to digital approvals speeds up the time between RC confirmation and supplier dispatch.
- Use multi-supplier contracts
Relying on a single RC-approved supplier increases risks. Distributing demand across multiple approved vendors reduces dependency.
- Track shipments in real time
Integration with GPS-enabled logistics and project dashboards keeps project managers updated on delivery timelines.
- Refresh RC-approved lists regularly
Supplier performance should be reviewed continuously. Underperforming suppliers must be flagged and replaced to ensure reliability.
Conclusion
The speed and scope of India’s national projects are unprecedented. Therefore, Procurement needs to transform from being a slow, paper-driven process to one that is quick, transparent, and digitally enabled to meet tight deadlines.
RC-approved projects can be confident of compliance and quality, but they will enjoy that edge in competition if materials are quickly transferred from approval to the site. Businesses can end this gap and continue projects with the help of digital procurement platforms, real-time visibility, and more intelligent supplier management.
The message is clear for project managers: RC-approved should equate to RC-available, and similarly to RC-on-site right away. Speed is not only critical, but it also makes the difference between meeting and missing deadlines.
Transform your procurement speed with Moglix Business today!
Connect with us to discover how we can narrow down your procurement timelines and keep your national projects moving at full speed.
How Smart Procurement Impacts First-Time-Right Production in Automotive Plants
How Smart Procurement Impacts First-Time-Right Production in Automotive Plants
Some companies thrive by building accuracy into every process, while others struggle under the weight of rework and inefficiency. In the automotive industry, operational excellence determines market survival. The concept of First-Time-Right production has emerged as the clearest indicator of which players are driving the industry forward and which are being left behind.
This blog will help you understand the important aspects of First-time-Right Production in Automotive Plants, automotive procurement, and challenges in implementing the same.
Understanding First-Time-Right (FTR) in Automotive Manufacturing
First-Time-Right (FTR) is the capability of an automotive factory to get it right the first time in producing a part, component, or system without rework or adjustments. It is a practice that combines precision, process discipline, and supplier quality to provide spotless execution on the shop floor.
Having FTR is very important in the automobile industry since any defect has a direct impact on efficiency. In an industry where just-in-time schedules are the norm, even minor errors create a ripple effect on the supply base, clogging assembly lines and potentially increasing chances for missed deadlines. Reworking or scrapping materials delays delivery dates, escalates expenses, and consumes a lot of time.
FTR also impacts brand image and customer confidence. A vehicle shipped with zero production defects not only minimizes warranty claims but also creates long-term loyalty. With increasing competition and electric vehicles introducing new complexities, first-time-right production is no longer a goal-it’s an operational imperative.
Role of Procurement in Driving FTR
1. Supplier Selection: The selection of the proper supplier lays the groundwork for quality. Suppliers with strong certifications, reliable records, and capability for uniform output have a direct bearing on the ability of a plant to achieve FTR goals.
2. Quality Contracts: Quality contracts with rigid quality assurance specifications assist in aligning supplier responsibility. Having specifications built into agreements minimizes deviations and ensures expectations are understood from the beginning.
3. Collaborative Development: Engaging suppliers at the outset of product design and development allows possible problems to be resolved prior to manufacturing. This coordination enables smoother implementation when parts arrive on the plant floor.
4. Risk Management: Procurement operations represent the first line of protection against supply chain interruption. By diversifying suppliers and keeping tabs on geopolitical and economic risk, procurement guards against FTR objectives.
5. Cost Versus Value Balance: Lowest cost sourcing is not always the best result. Wise procurement considers overall value, including delivery dependability and compliance, to avoid quality slips, which would damage first-time-right performance.
What Makes Procurement “Smart” in Case of First-Time-Right Production?
Smart procurement integrates technology, data, and teamwork to make sourcing more trustworthy. Its success lies in several essential attributes:
1. Data-Driven Decision Making
Intelligent automotive procurement doesn’t rely on instinct or historical practice but leverages advanced analytics to measure supplier performance, market trends, and quality benchmarks. This presents key findings to decision-makers, which increases accuracy and decreases overall risk.
2. Predictive Analytics
Machine learning platforms analyze past records and market trends to identify probable issues in advance. From a potential shortage of raw materials, delayed delivery, or quality variation, these predictions enable manufacturers to respond before problems derail production schedules.
3. Real-Time Monitoring
Digital dashboards and IoT sensors give companies visibility into what suppliers are actually doing in real time. Everything from shipments to deliveries to inspections is tracked in real time, problems are caught early, and they’re fixed fast.
4. Automated Processes
Amenities such as order processing, contract administration, or regular communication with the suppliers may be automated. This leaves procurement departments free to devote more time to building more collaborative relationships and more strategic priorities.
5. Integrated Platforms
The actual power of smart procurement is in connectivity. If procurement systems integrate smoothly with production planning, quality control, and finance, the payoff is a smooth workflow that enables first-time-right manufacturing in each phase.
Challenges in Implementing Smart Procurement
1. Technology Infrastructure Needs
Organizations have to spend on advanced digital platforms, data management systems, and integration features for enabling smart procurement programs. Such deployments involve heavy capital expenditure, large-scale training initiatives, and wide-ranging change management initiatives. Firms tend to face legacies of system integration issues, data migration issues, and multimodal process integration issues.
2. Supplier Capability and Readiness Gaps
Most suppliers do not have the technology infrastructure and digital capacities to compete in smart procurement ecosystems efficiently. This capacity gap creates roadblocks in information exchange, lowers visibility in supplier operations, and makes it difficult to monitor performance. Organizations have to spend time and money on supplier development programs to close these capability gaps.
3. Data Security and Privacy Concerns
High-end procurement systems handle confidential information such as pricing details, vendor capabilities, and strategic realization plans, needing upmarket security procedures. Firms are required to have full-fledged cybersecurity programs, formal data sharing agreements, and regulatory compliance with several privacy laws. The integrated environment of these systems makes them more susceptible to security intrusions and data theft.
4. Teams’ Skill Gaps
Procurement practitioners must make the shift from transaction-based to data backed decision-making. Institutions grapple with retraining employees, overhauling longstanding processes, and creating cultures that embrace analytic decision-making rather than intuitive decisions.
Best Practices for Automotive Companies
Automotive companies interested in putting in place smart procurement practices for FTR manufacturing must pay attention to developing holistic frameworks that bring together technology, processes, and people suitably.
1. Set solid performance metrics that support alignment of procurement functions with FTR goals.
2. Form cross-functional teams with procurement, quality control, production planning, and engineering to promote an integrated supplier selection and management approach.
3. Invest in sophisticated analytics capabilities that deal with handling supplier data, market insights, and performance metrics.
4. Create thorough risk management strategies that outline potential supply chain risks.
5. Develop long-term strategic alliances with certified suppliers.
6. Train teams to review data and make predictive choices.
7. Pilot new procurement technology before widespread deployment.
Are you looking for procurement processes that enable your plant to achieve first-time-right results?
Moglix Business provides end-to-end B2B procurement solutions tailored for automobile manufacturers looking to attain First-Time-Right production excellence. Our technology-driven platform allows you to connect with qualified suppliers, have real-time performance monitoring, and simplify procurement processes to aid your quality targets. Join us in creating robust supply chains that ensure consistent performance and bring operational excellence to your production operations.
Building India’s Future: How Infrastructure Leaders Use Digital Raw Materials Catalogs
Building India’s Future: How Infrastructure Leaders Use Digital Raw Materials Catalogs
Today’s India is running and building faster than ever before. For instance, take highways & airports; they shorten your travel time, roadways that connect you to even small villages, and solar parks that power your home; the development is visible everywhere.
Behind every road and metro line is a factor that determines how smoothly work goes forward, like the availability of raw materials and the ease with which these materials can be sourced. All these materials- cement, steel, aggregates, wiring, and a long list of other components have to be ordered, traced, and available in the right quantities when they are needed.
Traditionally, this process has been slow, fragmented, and susceptible to redundancy. Every agency or contractor has its own list of suppliers and materials. When there are hundreds of projects going on at the same time, you get confusion, delays, and cost overruns.
But today, Infrastructure leaders are turning to a solution that is as powerful as it is poorly understood: digital raw materials catalogs. These catalogs bring order to procurement, allowing projects to move faster while making fewer mistakes and providing more transparency.
In this blog, we’ll explore how Infrastructure leaders are utilizing digital catalogs to manage their raw materials. So, without any delay, let’s get started.
What is a Digital Raw Materials Catalog?
A catalog is simply a structured list of items and suppliers. But in a digital form, it becomes a database that lists not only raw materials but also details like:
- Specifications suited to different applications
- Supplier certifications and delivery capabilities
- Current prices and stock levels
- Compliance with regulatory and environmental standards
A digital catalog is different from a paper catalog or a spreadsheet because it is alive. It updates constantly, showing real-time information, and is easy to find.
Think of it as a matchmaking engine for infrastructure. On one side, you have the demand, housing projects, railways, and energy parks. On the other hand, there are thousands of suppliers. The catalog connects them, making sure the right materials reach each project when needed.
Let’s understand it with an example. A site engineer working in Rajasthan who needs heat-resistant concrete doesn’t just see “concrete” listed. The catalog filters options by grade, supplier reliability, and delivery timelines, helping the engineer make the right choice quickly and confidently.
Why Infrastructure Leaders Are Turning to Digital Catalogs
Digital catalogs have nothing to do with chasing tech trends. It is an answer to very real problems that Infrastructure leaders cannot solve at scale.
Faster Procurement
When infrastructure leaders need to order a piece of equipment for a project, they can go to a catalog and search for it like Amazon or Google, seeing what’s been approved. The purchasing cycles then go down from weeks/months in some cases. With the work window there, the procurement team could not try to stall things out. A digital catalogue makes it easy for teams to quickly locate approved material and suppliers in minutes instead of hours or even days.
Consistency Across Projects
Large projects often operate in several locations. Without standardized sourcing, one site may use the correct grade of steel while another opts for a cheaper substitute. This creates quality issues that surface later. Digital catalogs ensure every site draws from the same approved list of suppliers and specifications.
Cost Control Under Pressure
The digital catalogs eliminate duplication and foster bulk buying, which overall reduces additional costs. Real-time pricing also ensures that budgets are based on the current market – not a legacy estimate.
Best Practices for Digital Raw Materials Catalog Implementation
Shifting to a digital catalog is not just about digitizing a supplier list. To get real value, infrastructure leaders follow certain practices:
Create Sector-Specific Modules
Rather than a single humongous catalog, it is more desirable to develop smaller modules for each of the sectors: transport, energy, housing, and industrial projects.
Integrate with Procurement Tools
A digital catalog works best when it is not isolated. By integrating it with e-auctions, vendor management platforms, and demand planning tools, it can offer a bigger picture of procurement requirements and supplier performance.
Keep the Catalog Dynamic
Infrastructure needs are constantly changing. New technologies like green cement, smart sensors, or EV charging units must be added as they appear in the market. A static catalog will quickly lose relevance.
Embed Supplier Performance Data
Procurement teams must not only view what materials are on hand, but also how effectively suppliers have performed in the past. Delivery timelines, quality consistency, and history of compliance should be integrated into the catalog.
Keep improving continuously
Monitor usage of the catalog. Identify missing categories, confusing workflows, or gaps. Use the feedback to refine over time.
The Impact of Digital Catalogs
The benefits of digital raw materials catalogs are no longer just ideas on paper. They are already visible in large projects across sectors.
Take the example of a metro expansion project in Mumbai. Before digital catalogs, various contractors would often place similar materials individually, occasionally at variable prices. In some instances, even the specifications were slightly different, resulting in inconsistencies that resulted in slower approvals and contributed to delays.
Once a digital catalog was implemented, suppliers and specifications were consolidated into one system. Teams could compare prices all in one location, ensure compliance in an instant, and order in bulk with certainty. Procurement was quicker, costs were more controlled, and materials used were more consistent among all contractors.
Corresponding upgrades are noticed on highways, residences, and renewable energy initiatives. Materials bear tags with specifications and certifications, and procurement departments have access to real-time price changes and select the most effective supplier. For renewable initiatives, catalogs guarantee that solar panels or turbines are sourced from approved suppliers, eliminating the risk of equipment malfunction and enhancing long-term sustainability.
Although these improvements can seem small at the level of an individual project, at the level of the National Infrastructure Pipeline, the difference is huge. When thousands of projects run in parallel, even small efficiencies in procurement can mean large savings in time, effort, and resources.
Conclusion
India’s infrastructure growth depends on more than just funds and blueprints; it depends on how efficiently resources are sourced and supplied. Delays caused by poor procurement can stall even the most ambitious projects.
Digital raw materials catalogs are proving to be one of the most effective tools for bringing structure, speed, and reliability to this critical function. More importantly, they help infrastructure leaders align with the country’s vision of building fast, building smart, and building sustainably.
At Moglix Business, we help infrastructure leaders design, build, and manage digital raw materials catalogs that simplify procurement for large-scale projects. From structuring classification systems and cleaning supplier data to integrating with e-procurement and demand planning tools, we create solutions tailored to the scale of India’s development.
If your organization is looking to bring speed, accuracy, and responsibility to procurement, partner with Moglix. Together, we can make sure every rupee invested in India’s infrastructure goes further, building the future.
Sub-Sector Matchmaking: Cataloging Strategies for NIP’s Diverse Infrastructure Projects
Sub-Sector Matchmaking: Cataloging Strategies for NIP’s Diverse Infrastructure Projects
India’s National Infrastructure Pipeline (NIP) is one of the most progressive infrastructural development programs globally. It’s a projected investment of ₹111 lakh crore (approximately $1.5 trillion) during the 2020-2025 five-year period. This is a massive step that includes multiple sectors- highways, railways, urban development, renewable energy, and more.
However, the sheer diversity of these projects comes with its own set of challenges, which is efficiently matching the specialized suppliers, materials, and services across the different infrastructure demands.
Sub-sector matchmaking and strategic cataloging are one such solution that can connect the right sources with the right projects at the right time.
The companies that master these sub-sector matchmaking can unlock multiple revenue streams, while those companies that are stuck with single-sector thinking will miss significant opportunities.
In this blog, let’s explore some of the sub-sector matchmaking and cataloging strategies for NIP’s diverse infrastructure projects.
Why Cataloging Matters for NIP Projects
Cataloging is often considered a back-office function. But in reality, for NIP projects, cataloging is a strategic enabler. Here’s how:
- Attracts Investors:
A well-cataloged database will provide better visibility for NIP projects. By allowing domestic and foreign investors to access up-to-date project information and make informed choices.
- Monitors & Evaluates Project:
Cataloging provides the base for a digital platform, which serves as a monitoring tool for govt. ministries to track your project implementation and actual progress against initial costs.
- Enhances Project Preparation:
Cataloging also helps to identify technically achievable and financially possible projects. This ensures better project preparation for ministries and departments associated with the NIP.
- Promotes Transparency and Accountability:
With a cataloged NIP database, you can promote transparency by making information easily accessible to stakeholders. This will help in holding departments accountable for project progress and outcomes.
- Eliminates Duplication:
With thousands of projects running in parallel, duplication of procurement efforts can inflate costs. Cataloging avoids redundancy.
- Facilitates Efficient Financing:
By offering detailed project-level information in the catalog, you can enable efficient financing and ensure that the investors have access to the data needed.
Why doesn’t traditional cataloging work anymore?
Most procurement teams maintain their supplier database like a phone book, alphabetically by company name or product category. This approach worked well when the projects were straightforward. But when the diversification occurred, this traditional cataloging approach lagged.
Procurement managers started facing these challenges today:
- In the Railway industry, electrification steel requires different certifications than urban bridge construction steel.
- Airport runway cement needed higher strength specifications than residential housing cement.
- While 70% of NIP investments flowed to 17 major states, projections span the entire country.
- Small suppliers excelled at community projects but were unable to handle mega-infrastructure, while large manufacturers may be inefficient for regional work.
Best Practices for Cataloging NIP Projects
Here are some of the best practices you can use for cataloging NIP projects:
Smart Product Grouping: Instead of organizing catalogs by product type, organize them by application compatibility. Create product families that work across related sub-sectors.
For example, heavy infrastructure materials like steel, concrete, and aggregates work well for highways, railways, and ports with minor specification adjustments.
Regional Mapping: Geography matters more than most realize. Map product capabilities by geographic regions and transportation corridors.
Create a Centralized, Multi-Layered Catalog
Each sub-sector should be broken down into categories and sub-categories. For example, “Transport” → “Roads” → “Bitumen,” with specifications and approved suppliers tagged to each.
Embed Traceability Features
Include supplier certifications, ESG compliance, and carbon footprint data in the catalog. This ensures procurement supports sustainability targets.
Utilize Digital Tools
Cloud-based cataloging systems powered by AI can detect mismatches, suggest alternate suppliers, and track usage patterns. Integration with e-auctions and demand planning tools also adds agility.
Enable Continuous Updates
Infrastructure needs are always changing. Catalogs should be dynamic, regularly updated to include new materials, standards, and technologies such as smart sensors or green cement.
Encourage Collaborative Cataloging
Instead of each ministry building its own catalog, shared repositories can prevent silos. This collective approach improves efficiency and ensures consistency.
Technology Solutions for Complex Matching
Modern cataloging demands modern tools. A manual spreadsheet will not be able to handle NIP’s complexity. So, here are some solutions for complex matching:
AI-Driven Compatibility Analysis: Today, AI tools can analyze project requirements in advance and automatically identify products with relevant capabilities.
Real-Time Inventory Integration: Procurement teams can connect inventory management systems directly with project planning tools. This will ensure that material availability aligns with construction schedules across multiple parallel projects.
Mobile Project Management: It often happens that site managers need access to the catalogs from remote construction locations. Mobile-first systems enable quick decision-making without delays for office approval.
Quality Management Across Diverse Projects
For businesses, maintaining quality standards across multiple sub-sectors requires systematic approaches, which include:
Developing quality standards that perform well across related sub-sectors while maintaining sector-specific compliance. This reduces complexity for suppliers serving multiple infrastructure types without compromising safety or performance.
Monitoring supplier performance across different project types systematically. Strong performance in one sub-sector often indicates potential success in related areas.
The Bottom Line
With effective sub-sector matchmaking, businesses can transform procurement from a challenge into a strategic advantage.
After mastering this approach, businesses not only can lower their procurement costs but can also speed up their project timelines, improve quality, and create strong supply chains that will help them drive India’s infrastructure growth.
At Moglix Business, we help organizations unlock the potential of cataloging for large-scale infrastructure projects. From building classification frameworks to integrating with procurement platforms, our solutions ensure that NIP projects run on efficiency, transparency, and resilience.
How Can OEMs Benefit from e-Procurement in UAE
How Can OEMs Benefit from e-Procurement in UAE
e-procurement in UAE is not an isolated scenario; today’s world is running on digital wheels. Every industry is employing its digital skills to reap improved performance. The opportunities are immense.
However, despite continuous evolution, OEMs are slow to adapt to digital tools and techniques. It is because of the over-reliance on traditional skills and methods. As a result, the cycle from indirect procurement to the final delivery to customers, consumes 80% of the time of sourcing teams.
Cutting corners has become the pandemic-enforced trend to maximize profits in a business. At this time, digitalization in the supply chain can be a worthy step. It offers multiple advantages and underlines significant growth in the figures. To best understand its influence, let us unearth some key benefits.
Solving the Challenges in Supply Chain
The world is still recovering from the impacts of the COVID-19 pandemic. If we talk about the manufacturing sector, the virus has piled up on the challenges it was already facing. The COVID-19 induced lockdown dealt a heavy blow to the UAE economy, with businesses, and their supply chain all bearing the brunt. The International Monetary Fund (IMF) projected a 6.6% contraction in the GDP last year. It was mainly due to the impact of COVID-19 on key performance sectors and the fall in oil prices.
Sourcing the raw materials took the backseat, which resulted in a dip in manufactured products. Subsequently, the supplies to the end-users also got hampered. The dampening of business activities posed several challenges for the businesses to overcome.
To resolve the challenges, making a move in the right direction is imminent. With digitalization, businesses can adhere to the COVID-19 guidelines while conducting their business activities. Digital supply chain solutions are the most basic and foremost available methods to revive the lull operational activity.
Aligning with the Economic Growth
The UAE government announced a financial stimulus package to the tune of AED 100 Billion, among other measures to dilute the impact of the lockdown. However, the revival is not as instantaneous as the losses.
The IMF painted a brighter picture of the UAE’s economic recovery with a 3.1% growth, better than its 1.3% projection in October 2020. The positive outlook is a result of the combined efforts of the country and its citizens. OEMs can expedite their transition from traditional competencies to modern ones like adoption of a P2P software solution and supply chain digitization initiatives. Procurement automation, also known as P2P automation is integral to OEMs in UAE to stay on the course to recovery.
Taking a Step Towards Procurement 4.0
Since we live in Industry 4.0 era, we can find the production chain going ostensibly digital in its entirety. The ability to get a bird’s-eye view of your complete production link hands a better chance to minimize losses and maximize productivity. Businesses can acquire the necessary information on their logistics, such as the position of trucks, containers, and even pallets. All this at the click of a button.
To promote digital supply chain transformation, the UAE government is already taking steps under its Smart Government initiative to become a paperless government by 2021. The government is inviting the bid for tenders via electronic mode to facilitate a seamless procure-to-pay solution. Through this, suppliers can monitor their purchase orders and also submit digital invoices. This e-Procurement solution aims at digitizing and automating the complete process.
As digitalization is inevitable, OEMs must deploy it in their operational activities to make progress. e-procurement will enable easy management of complex supply chain processes. It will also allow businesses to use their people’s talent in other critical areas that require human involvement.
Experiencing Improved Decision-Making
Data is the key to gaining visibility into the supply chain. It is enabling digital supply chain solutions to divulge critical information to improve your decision-making capabilities and optimize business growth. With procurement automation in place, businesses can effectively monitor key performance indicators. On its basis, they can identify the improvement areas.
Cost-optimization is a must during this period of economic rebound. P2P automation offers this across the whole supply chain management processes. Digitalization’s other advantages are transparency, more visibility, a safe and neat collection of data, and cost-efficiency. All in all, businesses can streamline their processes and manage them effectively.
The Now and the Next for CPOs of OEMs in UAE
Digital supply chain transformation in the UAE is imminent, as the economy branches out to new-age non-oil verticals. However, it should not be in parts. For OEMs in the UAE to benefit from the adoption of e-procurement, CPOs have to take a unified view of the different but interlinked silos of the supply chain. Therefore, CPOs in UAE need to replace multiple solutions for different procurement functions with an integrated procurement automation system and consolidate supplier base management functions into one centralized control tower.
CPOs and the E-Commerce Boom in Indirect Material Sourcing
CPOs and the E-Commerce Boom in Indirect Material Sourcing
Indirect material sourcing has long been riddled with uncontrolled expenditure, non-compliance, and counterfeit products. Traditionally, these risks have made CPOs of large enterprises opt for a direct approach when dealing with suppliers.
With rising costs, potentially unregulated products, and the COVID19 pandemic-led supply chain disruptions in the UAE, a CPO’s job is becoming increasingly stressful. It is especially true for CPOs of large manufacturing enterprises across the Middle-East and North Africa (MENA) geographies where the pandemic has impacted 60% of freight capacity and multimodal logistics.
Integrated Solutions for Procurement
With the e-commerce boom taking over B2B marketplaces, CPOs are welcoming procurement automation solutions with open arms. These new generation P2P software solutions offer scalability, reliability, and risk assessment — all under the same roof.
Besides providing attribute-rich catalogs of pre-vetted, high-quality vendors of indirect materials, these B2B e-commerce solutions offer a dynamic range of functions. Some of these functions are customization, user-friendly interfaces and search options, real-time pricing, and industry benchmark comparisons. With their AI and ML capabilities, these systems can even generate analytics on KPIs such as price spread and per-category spend.
Benefits of E-Commerce for CPOs
B2B e-commerce offers a series of features that are beneficial across the p2p procurement process. They have multiple payment options available in AED, language translation assistance to Arabic, and easy refunds & return policies.
They also offer filtration of vendors based on their proximity to the manufacturing unit, quick logistics, and competitive shipping rates throughout the emirates. Let’s take a look at some of the key benefits e-commerce systems offer to CPOs.
Agility
B2B e-commerce solutions give enterprises quick and easy access to a robust e-catalog of indirect materials, akin to a B2C e-commerce experience. The products and services are structured and itemized based on several attributes and filtered by a configurable list of business rules. This includes but is not limited to compliances, ratings & reviews, technical specs, availability, and shipping rates. These automated systems have rapid TATs across the p2p pathway and endow the CPOs with greater transparency and market awareness channels to make better decisions.
For instance, the global procurement head of an automotive OEM has said that e-commerce adoption for indirect material sourcing has increased their price competitiveness. “It has expanded our knowledge,” he explained, adding that their enterprise is now planning to digitize their direct material sourcing as well.
Cost Savings
Typically, enterprises spend 15% to 30% of their revenue on indirect material sourcing. It is usually valid for enterprises with fragmented spending structures and limited internal resources for procurements. The human capital spent on the traditional procurement process is perhaps the highest. CPOs spend countless hours in monotonous transactional activities that leave them with little to no time for any value-addition work to the enterprise.
However, with digital procurement automation solutions, operational costs in UAE can be reduced up to 40%. More importantly, they offload CPOs with hours of repetitive work. It unlocks critical free time for CPOs to spend on supply chain management and optimization of the p2p procurement process.
Technology Integration
For large manufacturing enterprises, the integration of an e-commerce marketplace with their existing ERP is the deciding feature of pre-investment. By entangling itself with the enterprise’s p2p procurement process, the e-commerce solution automatizes and simplifies a vital link of the digital supply chain. It enables the system to intelligently monitor inventory, issue purchase orders, execute payments, track deliveries, and receive stock. It also minimizes the hassles of negotiations, contract management, and price comparisons.
Some of the advanced digital procurement systems offered by digital supply chain solutions enterprises can seamlessly integrate with ERPs like SAP, Jagger, and Oracle. These systems successfully streamline the accounting, reporting, and controlling of the procurement process, thus building end-to-end supply chain visibility.
Data Cleaning & Management
A global market study indicates that almost 63% of the items listed in a conventional procurement catalog have incomplete or duplicate information. However, with digital supply chain solutions, CPOs can assess their MRO master data quality using the system’s native AI and ML capabilities. These data analytics tools can also learn user behavior over time and generate optimized results that promote operational excellence.
Reports on purchase, fulfillment data, including buying history, spend limits, and wish lists, make it convenient for procurement teams to increase their work efficiency.
What CPOs Need to Know
With increasing demand, the scale of high-quality suppliers of indirect materials is rapidly growing on B2B e-commerce solutions. Some experts predict that by the end of 2021, 60% of the large enterprises will be using digital procurement methods for indirect material sourcing. It is also aligned with the government’s vision to digitize UAE’s economy in the coming years.
With a rationalized and automated procurement solution in place, the role of the CPO is shifting from being a negotiator to that of a creator. The present-day CPO discovers new marketplaces, innovates new procurement strategies, and collaborates with suppliers. The CPO also draws new digital blueprints for quick approvals and reviews, and smoothens the enterprise’s upstream supply chain operations.
Add to cart: Digital Procurement for B2B is the New Normal
Add to cart: Digital Procurement for B2B is the New Normal
Digital procurement for B2B is on the cusp of a significant transformation. Supply chain disruptions through the pandemic are causing CPOs to look at B2B procurement in a new light. While the KRAs of quality, cost, and delivery continue to be relevant, there is an increasing demand for spend analysis, transparency, data, supplier reliability, and risk management. In the near future enterprises will get a more personalized customer experience similar to what individuals get from B2C e-commerce.
What is Digital Procurement for B2B?
Digital procurement for B2B migrates enterprises from ad-hoc and offline buying to a digitized source-to-pay platform. It replicates the customer experience of a B2C e-commerce marketplace.
Like a B2C e-commerce marketplace, a B2B online marketplace offers a catalog of line items spread across product categories. Users can browse through the catalog to compare suppliers, brands, and products. They can compare costs, volume discounts, expected time of arrival (ETA), and inventory availability to place orders.
However, B2B e-commerce offers several advantages, and therefore enterprises have been drawn to it for a long time now.
Reasons for Adopting Digital Procurement Before the Pandemic
The following reasons had been driving enterprises’ adoption of digital procurement before the pandemic:
- Faster Delivery: Agility is a significant challenge in enterprise procurement. B2B online marketplaces offer quicker and cheaper delivery than their offline counterparts and are an enabler of value.
- Cost Control and Compliance: Cost efficiency is a critical KPI for procurement teams. B2B e-commerce platforms enable inter-supplier comparisons and thus augment ease of spending control and compliance.
- Scale: In manufacturing, order sizes surpass the scope of a piece-meal approach and is critical to procurement officers. B2B marketplaces can fulfill large scale industrial purchase orders.
- Quality: The quality of industrial supplies determines the quality of industrial output. B2B marketplaces deploy internal quality control procedures that foster trust creation for enterprises.
Reasons for Upswing in Digital Procurement Through the Pandemic
While online shopping benefits in the B2B segment were visible long back, the pandemic has fastened the move towards digital procurement.
- Risk Management: Supply chain disruptions have been a significant challenge for enterprises. B2B marketplaces have responded with better data analytics, cloud computing, and the internet of things capabilities to augment supplier visibility.
- Reliability: B2B marketplaces with diverse and inclusive supplier ecosystems are less prone to supply chain disruptions than their offline counterparts.
- Safety: The pandemic has pushed the need for ensuring people’s health and safety. The online workflow supports collaboration across the supply chain and is safer than offline models of procurement.
Integrated Solutions: B2B procurement platforms allow enterprises to track, control, negotiate with suppliers, and report from a single platform. It will enable industrial buyers to get a B2C-like customer experience.
How Will Digital Procurement Make Life Easier for CPOs in the Future?
B2B marketplaces have seen a large scale adoption for some time now. Before the pandemic, the procurement officer’s responsibilities were those of negotiation and compliance. Beyond the pandemic, these responsibilities are likely to give way to supplier relationship building and risk management.
B2B procurement automation will soon upgrade to include artificial intelligence and machine learning capabilities. This will lead to a more personalized customer experience, share product recommendations, and set reminders to prevent inventory stock-out situations.
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