Procurement & Supply Chain Optimization for the Machinery and Engineered Products

Strongly fluctuating order volumes, decreasing internal value creation depth, increasing competitive pressure and more complex interlocking of value creation structures put pressure on machine and plant manufacturers. With these demands, the importance of procurement has also grown steadily in recent years.

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Volatile initial situation and increasing competitive pressure

Machine and plant manufacturers are currently facing a number of challenges that are crucial for their profitability. Currently, they have to cope above all with strongly fluctuating order volumes; batch sizes are also becoming smaller and the processes are thus becoming considerably more complex. This complexity is further increased by the decreasing internal vertical range of manufacture and a more complex interlocking of the value-added structures.

Competition and cost pressures have also risen continuously in recent years, not least due to strong competition from companies in Asian countries, which now act as strong rivals in the field of innovation. Added to this are rising raw material prices and tight markets on the supplier side.

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Develop your procurement into a value driver

Companies from the mechanical and plant engineering sector live above all from their technical innovations and solutions. Therefore, engineering naturally has a high priority in the company. This is especially true for traditional, medium-sized companies. An efficient procurement organisation can also make a significant contribution to the company’s success and increase its overall resilience.

With our comprehensive industry expertise, we support your procurement to position itself as a value driver. In our projects, we work cross-functionally and use many technical approaches in addition to commercial levers for optimisation. In addition, we support you in the area of Indirect Spend, an area that experience shows is often neglected.

 

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Raw materials management in procurement

The long-term success of raw material procurement is not only dependent on the performance of your procurement department. It is subject to a large number of external influencing factors, the risks of which can only be countered through targeted measures.

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Navigating today’s volatile markets requires a dynamic and proactive approach to cost management. We develop tailored cost optimization programs, uncovering opportunities in direct spend and ensuring alignment with your strategic goals. From sourcing strategies to supplier negotiations, auctions, and global sourcing projects, we provide end-to-end support. Leveraging recognized indices, we identify optimal buying times and secure favorable raw material conditions.

Engineering excellence requires precision cost management. Using advanced methodologies such as target costing, linear performance pricing, and design-to-cost analysis, we optimize your cost structures. Our expertise extends to redesign, harmonization, and standardization projects, delivering significant value in mechanical and plant engineering by aligning technical levers with your strategic goals.

Indirect spend is a key area for driving operational efficiency. We help you establish optimal operating models, implement governance processes, and develop strategic category management. Utilizing proven methods like demand and tail-end management, we streamline indirect procurement and align it with your broader business objectives to deliver measurable results.

 

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Deciding between in-house production and outsourcing requires strategic clarity. With our extensive benchmark database and deep supplier market knowledge, we guide you through make-or-buy analyses. For outsourcing, we identify the ideal partners and support you from strategy development through contract finalization, ensuring alignment with your operational goals.

We support you in the digital analysis of your costs, the conversion to e-sourcing and the digitalisation of processes. In doing so, we identify the optimal tools for you and accompany the implementation process in your company. In addition to classic purchasing tools, we also provide cross-functional support with interfaces to engineering through the introduction of tools for the use of technical levers.

 

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In today’s volatile market, supply chain resilience is critical for sustaining operational continuity and competitiveness. We help you establish advanced risk management frameworks that proactively address supply chain vulnerabilities and reduce exposure to disruptions. By evaluating >nearshoring options, we enable supply chain diversification, minimize dependency on distant suppliers, and optimize cost efficiency. Our approach includes sustainable supplier evaluation processes and fostering innovative partnerships, ensuring stable supply chains while unlocking opportunities for innovation and working capital optimization.

 

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Liquidity and flexibility are essential for navigating market uncertainties. We analyze payment terms, inventory turnover, and other working capital metrics to uncover opportunities for optimization. By improving cash flow and operational efficiency, we help you build the resilience needed to thrive in volatile markets.

 

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Our machinery and engineering experts

Joseph Berns

System Leader G&A, Italy & China | Managing Director

office@kgmstrategy.com Contact

Lana Richman

Principal

lina.tilley@kgmstrategy.com Contact

Our machinery and engineering insights

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