5 Ways to Build Resiliency in Direct Materials Sourcing

Direct materials – the raw ingredients that become the building blocks of your finished products – are the lifeblood of your manufacturing process. When supply chain disruptions occur in direct materials sourcing, the consequences can ripple through your entire operation.

This means building resilience in your direct materials sourcing strategy is no longer optional, it's essential for business continuity.

This blog dives into five ways that you can shore up resilience for your direct materials sourcing process and safeguard your enterprise by ensuring supply continuity.

First, let’s take a look at the biggest threats to smooth operations in the direct materials supply chain:

Top Challenges in Direct Materials Sourcing

1. Limited Visibility:

Without clear visibility into your supply chain, you're flying blind. A lack of transparency regarding supplier inventory levels, production capacity, and potential disruptions can leave you vulnerable to sudden shortages or delays.

2. Communication Silos:

Internal silos between departments and poor collaboration with suppliers can create a breeding ground for inefficiencies. Disjointed information flow makes it difficult to anticipate challenges, coordinate responses, and adapt your sourcing strategy swiftly.

3. Process Labyrinth:

The complexities involved in direct materials sourcing can bog down operations. Streamlining procedures – from requisitioning to delivery – improves responsiveness and allows for quicker adjustments when disruptions arise.

4. Price Rollercoaster:

Volatile market conditions can wreak havoc on your budget. Direct exposure to price fluctuations without buffer stocks or hedging strategies can significantly impact your production costs and profitability.

5. Risk Unmanaged:

Failing to proactively identify and mitigate potential risks – from natural disasters to supplier insolvency – leaves you vulnerable. A robust risk management strategy helps you anticipate challenges and develop contingency plans.

How To Solve These Challenges

1. Inventory Visibility:

Gain real-time insights into your inventory levels across your supply chain with modern supply chain platforms that allow you to proactively identify potential shortages and take corrective action to avoid production delays.

2. Supplier Collaboration:

Break down communication silos. Cloud-based tools facilitate real-time information exchange with your suppliers and foster closer collaboration, allowing you to stay informed about potential disruptions at their end and develop contingency plans together.

3. Should-Cost Modeling:

Move beyond historical pricing data. Should-cost modeling considers all cost factors including raw materials, labor and overhead. This empowers you to anticipate potential price fluctuations and develop proactive sourcing strategies that minimize cost disruptions.

4. External Market Intelligence Insights:

Don't operate in a vacuum. Leverage external market intelligence tools to gain insights into global commodity prices, geopolitical risks, and industry trends. This proactive approach allows you to anticipate potential disruptions and adapt your sourcing strategy before they impact your business.

5. Low-code/No-code Platform:

Empower your team to adapt as processes change with a low-code/no-code platform that streamlines the development of custom applications for your direct materials sourcing needs. This allows your team to build solutions for real-time data analysis, risk management and communication workflows – all without extensive coding expertise – further enhancing your resilience to disruptions.

Building a Resilient Future

By fortifying your direct materials sourcing process with these tools, you can build a more resilient supply chain that can weather disruptions without derailing your business. Remember, a resilient supply chain translates to a competitive edge. Investing in visibility, collaboration, market intelligence and low-code tools safeguards your operations and paves the way for a more secure future.

Eager to improve your supply chain resilience before the next global-scale disruption? Download our white paper with Supply Management Insider, Rethinking Direct Materials Sourcing: The Tools You Need to Manage Costs, Risks and Sustainability.