Machine Shop Services Market Procurement Intelligence Report

Business practices within Machine Shop Services market are heavily influenced by changing trends across the category as well as within the broader Operation of Industrial Facilities market. As market presence of companies become global, there is a growing preference towards service providers who can provide services seamlessly across the globe and have excellent understanding of local regulations and culture.

Several macro level trends such as slowing economic growth, trade conflicts, rising wages and technological disruptions have put pressure on managers to reduce their spend on Machine Shop Services without affecting the performance.

Suppliers have historically gained handsome margin-on-margin by sub-contracting a part of their work to another contractor. However, Buyers are now delving deep into the business models of suppliers and negotiating hard to avoid further sub-contracting. In cases where it is imperative to sub-contract, category managers are employing should-cost models to keep supplier margins on sub-contracting to the minimal.

As a result, category managers need to closely monitor the Machine Shop Services procurement trends and identify changes required in their procurement environment for the category.

Sometimes, procurement functions are unable to timely alter their practices while responding to market conditions. Industry experts acknowledge that periodically reviewing procurement best practices and adopting learnings from across procurement categories can help procurement teams respond to market needs in a more agile way. This report combines our experience of other categories with Machine Shop Services procurement insights and hand picks best practices that can work for category managers delving in this market.

For example, Buyers should set a baseline against which the performance of suppliers can be benchmarked along with setting measurable/quantifiable KPIs. Defined KPIs provides suppliers with clarity on the scope. Besides setting standards for operations, pricing, and performance, KPIs must provide tangible goals in terms of the quality of solutions.

Buyers must clearly define clauses pertaining to the ownership of sub-contracting services that are not a part of their preferred suppliers' portfolios. This will ensure consistency in the services of sub-contracted firms as well as protection of confidential data.

Buyers require industry-specific services to effectively operate their production facilities. Thus, they should opt for service providers that can offer customization and bring in years of experience in serving the needs of that industry.

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