In the field ofindustrial purchasing, it is essential to understand that the design phase plays a crucial role in cost control. As Jean-Claude Lefebvre, a purchasing specialist at the consultancy Solving, put it in a quotation dating from 1994: “The best purchase is the one you do not make”. This idea highlights a fundamental principle: the best way to reduce costs in a project is to anticipate them from the product design stage. Indeed, around 90% of a product’s cost is determined at this stage, which underlines the importance of optimising every aspect of this key phase.
But how, in concrete terms, can costs be reduced from the design stage and the efficiency of industrial purchasing be maximised? Here are some proven strategies for achieving this.
1. Simplifying the Design
The first step towards cost reduction in industrial purchasing is to simplify the design of the product. All too often, companies add superfluous elements to their designs, leading to higher costs in terms of materials, manufacturing and assembly. An overly complex design can not only increase expenditure but also create additional risks, such as production errors or assembly defects.
By contrast, a simplified design minimises these risks while reducing the cost of the materials used. By eliminating unnecessary elements and adopting a cleaner design, companies reduce production times, improve process efficiency and optimise overall product quality. A well-thought-out design is not merely functional; it is also economical and easy to manufacture.
2. Rationalising Components
Another key strategy for controlling the costs associated withindustrial purchasing is component rationalisation. By carefully selecting the components used in a product and reducing their number, companies can achieve substantial savings. This approach simplifies inventory management and reduces storage costs. With fewer different parts to manage, the company lowers the risks associated with inventory management, particularly overstocking or stock-outs.
Furthermore, rationalising components makes it possible to benefit from economies of scale. When a company buys larger quantities of the same component, it can often negotiate better prices with its suppliers. This contributes not only to lower unit costs but also to simpler procurement processes, which become more predictable and more efficient.
3. Standardising Materials
there standardisation of materials is another effective technique for optimising industrial purchasing. Choosing standardised materials rather than rare or specific ones generates significant savings. Standardised materials are often more readily available and more competitively priced, as they are produced in large quantities by many suppliers.
This standardisation does more than reduce raw material costs. It also facilitates the management of production processes, since standardised materials are often more compatible with one another and require less customisation or adjustment. By reducing discrepancies between components, companies minimise the risk of errors and costly surprises, which can considerably improve overall production efficiency.
4. Avoiding Over-Engineering
A common trap in industrial product design is what is known asover engineering or over-specification. This is the practice of adding non-essential features or characteristics to a product with the aim of improving its quality or performance. While this approach may seem attractive at first sight, it often leads to costs that are disproportionate to the actual benefits delivered.
Over-engineering can also result in products that are more complex to manufacture, more expensive to maintain and less competitive in the market because of their higher price. To avoid these pitfalls, it is crucial to strike the right balance between quality, functionality and cost. The aim is not to sacrifice quality, but rather to optimise the design so that it meets the customer’s needs exactly, without adding unnecessary features.
5. Choosing Suppliers in Industrial Purchasing
The choice of suppliers is another decisive factor in optimising industrial purchasing. Selecting the right partners provides access to quality components, at competitive prices and within the required lead times. However, supplier quality is not measured solely by the cost of materials. It is also important to consider criteria such as reliability, flexibility and the supplier’s ability to meet specific requirements.
To this end, it is often wise to develop long-term relationships with strategic suppliers. These partnerships not only secure more favourable terms but also provide better access to market innovations and technical advice. Companies that work closely with their suppliers can thus optimise every step of the supply chain, from purchasing raw materials to delivering the finished product.
6. Inventory Management in Industrial Purchasing
Within the framework ofindustrial purchasing, inventory management plays a key role in cost control. Too much stock means high storage costs, while too little stock can lead to costly production stoppages. Striking the right balance is essential to minimise costs while ensuring continuous, efficient production.
By optimising inventory management, companies can improve their flexibility and their responsiveness in the face of fluctuations in demand. Implementing effective inventory management systems, based on technologies such as ERP (Enterprise Resource Planning) or automated stock management systems, reduces the costs associated with surpluses and prevents stock-outs.
Conclusion: Cost Control Through Industrial Purchasing
Controlling costs from the design phase is a key success factor for any company engaged in a process of industrial digitalisation. Simplifying the design, rationalising components, standardising materials, avoiding over-engineering and choosing suppliers wisely are all strategies that can help reduce costs while improving overall production efficiency.
The role ofindustrial purchasing is not limited to negotiating raw material prices. It is a strategic process that must be integrated from the earliest design stages to maximise savings and guarantee the company’s competitiveness. To achieve this, it is essential to adopt a proactive approach, based on continuous optimisation and process improvement.
At SXE-Consulting, we support companies in implementing effective industrial purchasing strategies, helping them design cost-optimised products while meeting market requirements. With our expertise, we help you navigate the complexities of industrial purchasing, streamline your processes and improve your profitability in an ever more competitive environment. Contact us.
Xavier Schuster
Consultant chez SXE Consulting. Cabinet de conseil industriel base au Luxembourg, 25 ans d'experience en excellence operationnelle.
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