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The manufacturing industry continues to feel the strain of a saturated western market and competition from emerging markets, particularly those in Asia. As a result, leading companies have adopted new procurement strategies such as supplier collaboration, in an effort to cut costs. Our experience with shows that companies at all levels of the supply chain could collaborate more to reap the benefits of a global supply chain, and they should take a varied approach to sourcing different categories of parts.
This paper examines current challenges in direct material sourcing, such as increasing technological complexity, a strain on raw materials, and the need for better procurement risk management. It then outlines procurement best practices in general and for specific categories of goods, as well as discussing procurement risk management strategies.