Procurement and Engineering: Skipping the Marriage Counselor and Prolonging the Honeymoon (Part 1)

Over on Procurement Leaders blog, my friend Paul Teague recently touched on a great subject that I think is worth examining in even more detail: the importance of engineering and procurement collaboration. Yet Paul suggests that despite their importance, "Many procurement professionals don't like engineers. They think of them as obstacles to implementation of sourcing strategy." Of course the corollary to this, as Paul also points out, is that engineers also typically don't like procurement-types either. In his post, which is a quick and essential read, Paul then jumps to name companies that he believes are encouraging the type of procurement/engineering collaboration required. Yet I believe it's worth taking a step back for a minute to examine the reasons that procurement and engineering often don't get along before proposing solutions, which is precisely what I'll attempt to do in this multi-part post on the topic.

First, let's tackle the roots of the procurement/engineering disconnect. In my experience with direct materials sourcing, there's often a huge disconnect in the vested outcomes of procurement and engineering groups from procurement and supply chain activities. Procurement, when it involves itself deeply in direct materials matters -- which is historically the exception rather than the norm, though this is changing in many companies -- is typically focused on what you'd think procurement should be focused on: cost.

But good procurement groups are also focus as much on total cost for direct spend, factoring into account quality (e.g., PPMs, escapes, on-time delivery, overall supplier performance, etc.). More recently, procurement teams have begun to tackle areas like supply risk management for direct material vendors, including but not limited to supplier financial viability, supply chain traceability, standards adherence/compliance monitoring, etc. Still, it's the rare case that engineers are fully aware of the charter and focus of procurement's efforts outside of just beating down suppliers on price (at their potential expense, should something go wrong if suppliers cut corners to maintain what's left of their margins).

From an engineering perspective, I'd argue that suppliers are secondary to the part of the component actually being sourced. "Don't mess with my print/specification" should be the engineer's refrain here. "And if you have trouble reading it, what are you doing with it in the first place?" is the under-the-tongue follow-up. One company I know of that was sourcing a lead resistance wire in an application where lead was no longer needed (and in fact had gotten themselves into a sole-source or nearly sole-source situation because of a specification that was something like thirty years old). When the executive team and procurement department suggested an alternative, there was actually engineering push back because of the uncertainty of changing the specification.

Of course it's possible to counter this type of behavior and actually win over engineering in the first place. But by the time you've gone to an engineering group to get their blessing -- or consult their opinion -- on a particular area, you will have already lost if there's not a broader program in place to build a closer working relationship between the two organizations. Stay tuned as we investigate the best ways of going about this.

Jason Busch

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