Proficient Procurement for Custom Machine Builders

Current Challenges Affecting Procurement Managers and How Total ETO Helps

Purchasing departments have their plates full. This is especially true for Custom Machine Builders that have just one employee handling procurement. Challenges can fluctuate easily along with economic trends. Currently, the top concerns many ETO purchasers are struggling with include a lack of data, limited labor, supply chain issues, and tracking parts.

1. Increasing Throughput Without Increasing Staff

The labor shortage has impacted almost every industry, globally. Among the worst hit sectors are manufacturing and supply chains. Adding to the problem is a skills gap; new technology is changing the way we design, build, and purchase. A report released by MHI.org and Deloitte found about 74% of professionals working in procurement and supply chain fields plan to increase their technology investments in the upcoming months. So, even when the labor shortage is under control, the skills gap may still be problematic.

Recruiting and retaining qualified workers will remain a priority for manufacturers for years to come. Fortunately, automating routine clerical tasks through Total ETO lets your current team complete more work in less time.

Reducing redundancies and double entries allows your organization to take on more projects without needing more staff. As Nate Hinks, former Director of Sales at Farason said, “Total ETO has streamlined our purchasing process and saved us the cost of one full-time purchasing agent”.

2. More Data is Needed for Better Decisions

Relying on the supply chain in recent years has been an emotional rollercoaster. A procurement ERP lets purchasing staff know where and when bottlenecks might occur. It’s also necessary to know what their impact will be and if there are any alternatives.

Knowledge is power. It’s the foundation for smart decision-making, particularly when it comes to supplier or inventory management. From delivery times to quality certificates, and all the logistics in between, maintaining a current database with all relevant information will create more efficient processes, reduce overall costs, and help drastically in a supply emergency.

Resilient procurement comes from knowledgeable staff and an ERP/MRP that will connect purchasing to engineering, manufacturing, and accounting. When your enterprise resource planning system shows you all the parts you’ve received and what you’re still waiting for in real-time, it allows managers to make better decisions and act quickly,

3. A BOM That’s Constantly Changing

At the start of a project, engineering works with the client to create a custom design. For most standard manufacturers, when the design is complete, the procurement team would receive a bill of materials. Unfortunately, this is not the case in Engineer To Order environments.

In ETO manufacturing, procurement may have already ordered all the items on the BOM, and then a week later, engineering releases a new BOM because the client requested changes to the design. Now, purchasing staff must figure out what’s new. It may be necessary to return a component, or change the quantity of a part, etc. Without an ERP for procurement, these changes can become messy and confusing and potentially delay the project.

4. Tracking Parts and Inventory Control

Parts have a way of going missing; whether they’re fabricated in-house or purchased from a supplier. For example, a custom weldment may need to be welded, sent out for a heat treatment, machined, painted/powder coated, and inspected. Shops can handle any one of these steps themselves or outsource it. Regardless, Total ETO helps with tracking these parts, so nothing is lost or forgotten.

Additionally, Total ETO tracks the costs of fabricating parts. This typically includes materials and labor. Having this data readily available helps your team fabricate parts more efficiently as well as quote future projects more accurately.

Or, as Automated Drive Systems discovered, Total ETO helps you create additional revenue from selling parts.

Generally, when it comes to tracking parts, complete visibility is valuable. Not only are you better able to track them, but you’re better able to guarantee quality. This is TOTALLY BETTER inventory control. With an ERP designed for procurement and engineering departments, such as Total ETO, you can ensure parts are inspected and know who completed the inspection. Manufacturing can also record and follow up on quality issues from the shop floor, from engineering, or for purchased parts with embedded non-conformance reports (NCRs).

You can also expedite all the parts you are waiting to receive and quickly revise delivery dates, so your team remains current. Furthermore, Total ETO lets you reserve inventory by project and see remaining availability. This makes it easier to plan ahead and avoid the downtime that seems inevitable when waiting for parts.

Total ETO Features that Procurement Managers LOVE

With a bill of materials that is always changing, the procurement department has a lot on its plate. That’s why Total ETO is designed to streamline a procurement manager’s duties, as much as possible.

• Improved Efficiency: Looking for the best PO system? With just a few clicks, you can easily issue and revise RFQs and POs through Total ETO. We’ve eliminated the need for redundant administration duties, even with multiple vendors. It’s also just as easy to add new purchase orders or make revisions as changes occur in real-time, including revised delivery dates.

• Increased Productivity: Automating and/or eliminating clerical work in procurement, engineering, and accounting means your organization can increase productivity without adding staff. Total ETO helps you better utilize your resources, including staff, to grow your business. Additionally, an ERP for procurement should provide reliable inventory control software as well. This alone will save you and your colleagues time every day.

• Inventory Management: Accounting can match AP invoices against your received goods by supplier, or purchase order. This helps ensure you have what you’ve paid for. Furthermore, our team can reserve inventory by project and see the remaining availability.

• Supplier Management: The relationship between your procurement team and your suppliers is an important one to nurture. Data organized by Total ETO can help improve visibility and transparency throughout your company. You can easily manage a growing supplier database, with key information from contact details to tax identification numbers.

• Flexibility: Buyers can cost out the BOM before purchases are made. This allows the team to order long-lead components in advance, while the engineers continue with the final design details. Moreover, you can also create external processes for internally fabricated parts, so they flow back to purchasing automatically. Integrators, Panel Shops, and OEMs value inventory management features like this.

• Improved Visibility and Communication: Procurement is simple with interconnected information from engineering, receiving, and the shop floor. Management can track the workflow of a project and see reporting metrics at all stages of a project. Such real-time information is empowering.

FAQs About ETO Procurement

1. How is procurement handled within Total ETO?

Total ETO provides a separate procurement screen listing all the parts required by engineering BOMs, shop requisitions, and parts and service orders. Therefore your purchasing staff gets to see the entire demand for any given part, as well as giving them the tools to group and arrange the parts in any order they need. There are many ‘automation tools’ in the application to assist purchasing agents with creating requests for quotes (RFQs), purchase orders (POs), inventory pulls, and other everyday tasks, minimizing their efforts and maximizing their results.

Benefits to you:

• Engineers are free to design and not be burdened by procurement.
• Purchasing has better control over issuing RFQs, POs, and reserving inventory.
• Increased efficiencies to maximize your business and profit without having to add purchasing staff.

2. Can I buy material directly to a job or do I have to buy everything to inventory first?

Total ETO allows your buyers to buy material directly to a job as any true Engineer To Order ERP system should allow. You can also use any available inventory first if you choose to. With Total ETO, you don’t need additional inventory control software because inventory management is built right in.

Benefits to you:

• No extra steps or changes to your business processes to suit the system.
• Purchasing has better control over required materials.

3. What expediting and purchase order tracking features are available?

A separate expediting screen is provided in Total ETO, which allows procurement to keep track of all items that have been ordered but not yet received. Additionally, Total ETO allows users to track supplier performance, identify delays before they become serious, and ensure that all required items are appropriately received by their promised delivery date.

Benefits to you:

• Purchasing can efficiently place and track orders ensuring materials are received on time.
• Staff has the ability to identify potential delivery problems with a central screen displaying all information on open purchase orders.
• The ability to easily track materials allows purchasing to expedite open orders.

 4. How does Total ETO manage my Bill of Materials?

Total ETO provides a separate engineering screen to manage entire Projects and individual jobs. A bill of materials (BOM) can be built in a hierarchy, rather than a flat BOM, and is displayed in a flexible graphical user interface. By displaying the BOM visually, designers have greater flexibility to break down assemblies and more easily manage changes to an assembly quantity or parts within the assembly.

Benefits to you:

• Total ETO was built by engineers for engineers and understands your need for a structured BOM.
• Fewer setbacks as engineers can logically break up complex machinery into a series of nested sub-assemblies.
• Designers and engineers are more efficient as a structured BOM provides them with a quick and organized means of finding materials and managing change requirements.

5. Can I order long lead items and partial assemblies during the design phase with Total ETO?

Total ETO allows engineers to release their BOM to procurement throughout the design process. Initially ordering long lead items and then eventually determining the overall BOM requirements, engineering can release individual items, entire assemblies, or completed BOMs to procurement once those items have been approved for purchase.

Benefits to you:

• Engineering maintains total control of their BOM.
• With an ERP for procurement, purchasing can start sourcing supplies ahead of time instead of waiting till the whole project design is complete.
• Designers have unparalleled control over the release of BOM items and assemblies to purchasing with Total ETO’s unique “hold and release” system.
• Color coded visual “tagging” gives the designers the ability to pre-release data with confidence and purchasing can then issue a PO.