OEM Parts Market Procurement Intelligence Report

The market for Engineering Products and Equipment and its sub-segments such as OEM Parts are at an interesting intersection. Procurement costs for OEM Parts are highly impacted by an increase in the costs associated with the value chain of OEM Parts, such as logistics, labor cost and energy. Additionally, outdated assets are also increasing the cost for suppliers.

Regulatory guidance on data protection and increasing concern over cybersecurity have increased the costs for suppliers as they incur additional spend on compliance and security. These additional costs have a potential to drive marginal increase in prices across the key geographies.

Suppliers are under an enhanced pressure to offer greater quality, options that suit unique requirements and overall experience of the customer stakeholders involved.

Trends like these and many others discussed in this report are necessitating a relook at the way OEM Parts is procured and the procurement cost saving opportunities that exist.

The report discusses in detail the best practices that have served well the category managers responsible for OEM Parts procurement.

For example, Buyers need to evaluate the in-depth expertise of suppliers in the OEM Parts industry. This can be assessed by considering factors such as the years of experience, number of resources that have multi-year experience of working in the same industry and at least 3 to 5 credentials for the supplier.

Buyers should engage with suppliers that have adopted a global delivery model as it reduces buyers' risk. In this model, any disaster/emergency at any operating facility of supplier will result in the work being transferred to a different facility, thereby ensuring continuity of the project and reduced risk for buyers. This model also provides buyers access to skilled labor from across the globe, thereby improving the quality of engineering products provided by the supplier.

Buyers should engage with suppliers that repurchase used products at fair market value. This assists buyers to dispose of used products in a convenient manner. Also, during such repurchases, suppliers provide credits to buyers for future purchases. This reduces overall procurement costs for buyers.

OEM Parts procurement managers also need to proactively identify and mitigate potential risks that can arise in the supply chain or contracts for OEM Parts procurement. Some examples include: