Outsourcing certain aspects of your manufacturing or acquiring semi-finished or fully finished materials from external vendors can uncover hidden profits that will boost your bottom line.
Take, for instance, large manufacturing corporations that have established systems where their contract manufacturers procure raw materials through them, rather than directly from suppliers. By leveraging their high procurement volumes, these corporations negotiate better prices with component suppliers, reaping profits from their raw materials.
Understanding the process reveals its potential value, but implementing it requires change management throughout the entire supply chain. Coordination and orchestration between subcontractors and component suppliers are vital to ensure timely delivery and optimal pricing. Additionally, the manufacturer assumes responsibility for the perishability or obsolescence of exclusive-design or exclusive-nature materials.
This process involves two billing stages: one from the manufacturer to the subcontractor and another from the component supplier to the manufacturer. The margin between these prices remains the manufacturer's hidden profit, salvaging what would otherwise be lost between subcontractor and supplier.
Forecasting accuracy serves as a key driver in this process. Effective communication of accurate forecasts and current inventory positions between subcontractors and manufacturers enables efficient procurement of raw materials.
Managing raw material procurement on behalf of the subcontractor demands a common platform that provides visibility to all parties involved. Manufacturers should have access to the subcontractor's current inventory position to plan raw material procurement accordingly. Likewise, suppliers must notify manufacturers of direct shipments to subcontractors, enabling the necessary accounting transactions to be carried out seamlessly.
Carefully managing the return of defective material by subcontractors directly to suppliers is crucial, as it entails significant accounting implications. At TPSynergy.com, we offer a comprehensive platform that effectively handles the entire raw material procurement process, providing visibility to all parties involved. Explore our website, www.tpsynergy.com, for detailed information and a free product trial, and revolutionize your procurement operations today.
By optimizing this well-structured process, manufacturing operations can unlock hidden profits, streamline supply chains, and drive growth.
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