Procurement is a more difficult job that one would imagine

Here’s a teaser statement.

If a company decides that to purchase a mechanical part you can simply contact a foreign manufacturer (Chinese, for example) because the quality/price ratio of the product is better than that of an Italian supplier, shouldn’t it also consider all aspects that such a choice involves, including the risks?

The scenario – as you can imagine – is that of the pandemic, which started in China (with lockdowns, blockage of transportation of goods and so on) and spread, one after another, to all countries across the globe.

When everything was still more or less closed in China, many friends – workers and owners of mechanical workshops – told me how many the requests they were receiving from customers who, up until then, had always purchased their goods in China, but now, for obvious reasons, they were forced to procure the goods differently to prevent their production lines from decelerating or even coming to a halt.

A more than logical decision that, if I was in their shoes, I would probably have taken the same. What seems to me to be rather less logical or, at least, rather disrespectful of the work of others, is to expect (and in some cases even demand) the alternative supplier (in this case from Italy) to “rush” to solve the problem of the customer who, once everything goes back to normal, will more than likely go back to purchasing from China. Am I wrong?

I am certain that, with everything that is happening at the moment, everyone will be reconsidering their supply chains, taking into account the pros and cons of choosing suppliers from countries so far away.

In this regard, I remember the choice made last year by one of our customers, who – in order to avoid possible stoppages on its production lines – had adopted the policy of purchasing the most strategic production components from two different suppliers in two different geographic locations, I’m not saying on the opposite side of the world, but sufficiently distant to avert a long series of risks.

A choice that, even then, seemed rather far-sighted. Today more than ever, especially if we consider that China is the factory of the world and that, in one way or another, articles or simply materials are shipped almost exclusively from there (think, for example, of the amount of cobalt used in the production of batteries, special steels, or the permanent magnets used in electric micromotors).

It could be interesting, for instance, to come to an agreement with an importer to manage a minimum stock of goods at one of its warehouses in Italy, so as to be able to cope with any delays caused by strikes or transport issues. This operation would naturally entail a certain amount of costs, but – in my opinion – it should be given careful consideration.

So, in the light of what is happening in these months, here is my question.

is it worth saving money on a product that perhaps only costs a few euros, but with the risk of stopping production and therefore the delivery of equipment or machinery that are worth tens if not hundreds of thousands of euros?

I think and I hope that this health emergency can in some way be useful to achieving a more professional and comprehensive assessment of the increasingly difficult job of procurement.