How Arkestro is Changing the Game for High-Tech Manufacturing Procurement

Over the past few decades, globalization, economic shifts, and an aging infrastructure have all taken their toll on the manufacturing industry. But now a combination of new technologies and government policies are changing the game.

In particular, high-tech manufacturing is fostering innovation and competitiveness at a global scale. Cities like Detroit and Pittsburgh, traditionally hailed as the hub of U.S. manufacturing, are giving way to new regions for rapid industry growth, including Indiana, Tennessee, and South Carolina.

So, what is high-tech manufacturing? And how does it differ from traditional manufacturing? 

In this article, we’ll discuss the modern definition of high-tech manufacturing and share key challenges the industry faces in 2024. Then, we’ll explain how Predictive Procurement Orchestration (PPO) helps manufacturers rise above these challenges, increasing productivity, accuracy, and even more.

What Is High Tech Manufacturing?

High-tech manufacturing refers to the use of cutting-edge technologies to produce products that require extreme precision and sophistication, such as semiconductors, capacitors, and fiber optic cables. High-tech manufacturing may also include the production of drugs and medicines through chemical processing.

Because technology evolves swiftly, some types of manufacturing that were once considered high-tech are now commonplace. For example, computer-aided design, once considered revolutionary, is now ubiquitous across most sectors. Likewise, robotics was initially used solely in automotive and aerospace industries but is now increasingly common across all types of manufacturing.

Today’s high-tech manufacturers leverage intricate, complex processes and state-of-the-art machinery to produce circuits, chips, and other components. High-tech manufacturing industries include:

• Aerospace: From satellites to rockets, aerospace and defense manufacturers leverage additive manufacturing, advanced composites, precision machining, and more to create reliable, durable products of the highest caliber.
• Automotive: Modern vehicles require high-tech processes like electrification and smart manufacturing to enhance efficiency, safety, and performance. Manufacturers also use digital twin technology, the Internet of Things (IoT), AI, and machine learning.
• Pharmaceuticals: In an industry with intense regulatory oversight, consistency and quality are key. Pharmaceutical companies rely on automation to eliminate errors, reduce contamination, and meet requirements.  
• Medical devices: Like the pharmaceutical industry, medical device manufacturing faces stringent regulatory requirements that require rigorous testing, validation, and documentation. Companies use advanced materials, micromachining, and lasering processes to ensure the highest level of accuracy.

What Are the Biggest Challenges in High-Tech Manufacturing Procurement?

High-tech manufacturers face unique challenges and an added layer of complexity, operating in highly controlled environments that require immense capital investment and specialized expertise.

Here are some of the top challenges of high-tech manufacturing in 2024.

Worker Shortages

The CHIPS and Science Act, aimed at lowering costs and accelerating manufacturing job growth in the U.S., has created 642,000 manufacturing jobs since 2021. Yet experts predict that half of these new jobs will go unfilled if STEM graduation rates continue at the current level.

This condition creates a critical worker shortage that is only exacerbated by a wider trend. As of 2024, 75% of employers lack the talent they need, with high-tech manufacturing and procurement teams seeing the highest levels of impact. According to Gartner, 52% of procurement leaders faced staffing shortages in 2021, and the problem continues today. An aging workforce only exacerbates the problem: the average global procurement manager is over 40, representing 72% of the industry’s workforce.

Long-Tail Spend

High-tech manufacturing equipment is incredibly costly, making long-tail spend an immense challenge for companies aiming to scale. This type of spend often lacks rigid cost control measures, meaning the potential for overspending is high.

Many manufacturers also struggle to get a clear view of long-tail spend, since it involves numerous transactions spread across various departments and suppliers. Managing these supplies can be time-consuming and complex, leading to inefficiencies and higher administrative costs.

Supply Chain Volatility

Supply chain challenges surged during the COVID-19 pandemic, and for high-tech industries, the problem continues in 2024. For example, the global semiconductor industry is expected to lose $67.4 billion in revenue this year due to an inability to meet an exponential increase in demand.

This shortage has created massive challenges in high-tech supply chains, slowing production across industries such as automotive, consumer electronics, telecommunications, and more.

Scaling Complexities

High-tech manufacturers face immense challenges when scaling, especially in light of the substantial capital investment and technological integration it requires. Managing costs and large volumes of data can be burdensome, and scaling production can lead to increased environmental and sustainability concerns. Procurement teams must balance the need for cost control with the requirements for quality and innovation, often negotiating more complex contracts and seeking volume discounts. Scaling also results in a broader geographic spread of suppliers, which can increase supply chain risks such as geopolitical instability, natural disasters, or logistical challenges.

Highly Technical Processes

High-tech manufacturing is both demanding and resource-intensive. Complex processes like 3D printing and CNC machining call for equally complex supplier networks and specialized components that must meet stringent quality and technical specifications. Even minor defects can lead to significant product failures and delays, meaning procurement teams must develop robust risk management strategies for supply chains. The high costs of advanced manufacturing processes put even more pressure on procurement teams to manage costs while maintaining quality. 

Leveraging Arkestro to Do More with Less 

Though the challenges of high-tech manufacturing are vast, Arkestro offers a unique solution to help enhance productivity, speed, and cost savings at scale. If you need to multiply your high-tech manufacturing procurement team without increasing headcount, Arkestro’s Predictive Procurement Orchestration (PPO) is just the ticket.

By harnessing the power of data science, game theory, and AI, PPO delivers insights that drive real action. It offers real-time recommendations and will act on your behalf to save you time, reduce business risk, and decrease costs so you can instantly find the ideal supplier at the right price.

The results? Better cost savings outcomes, faster spot purchasing and sourcing cycles , and more addressable spend with the same resources.

Let’s look at some of the top benefits of PPO for high-tech manufacturers.

Enhanced Speed and Scalability

With Arkestro, high-tech manufacturing procurement teams can exponentially improve sourcing cycle time. Arkestro customers see between 25-90% faster cycle times due to its automation, embedded behavioral science, and machine learning-based recommendations.

On average, Arkestro sourcing cycles are 46.5% faster than the American Productivity & Quality Center (APQC)’s quantified peer group average. By driving faster cycle times, procurement teams can increase their agility to align their costs with current market costs, even as market conditions are changing rapidly.

Productivity Gains

Faster cycle times allow for massive productivity gains across all areas of business. Demand forecasting and supplier performance management tools help teams amplify the impact of existing teams and do more with less. With the help of insights and analytics, teams can make data-driven decisions that lead to more strategic actions and better alignment with internal needs. 

One Arkestro customer completed a two-month process in just 11 days, including a holiday weekend. The event improved the team’s bandwidth by 4x so they could address more spend in a scalable way. It also enabled them to run more events and react appropriately to market changes, rather than waiting for annual sourcing events to update prices.

Rapid Cost Savings

Thanks to automated negotiations, Arkestro customers effortlessly tackle tail spend and achieve rapid cost savings. One company achieved 13% savings compared to previous spend, all while driving 90% faster cycle times. Likewise, another manufacturer saw 16.7% savings despite a forecast of 0% savings.

The Bottom Line

High-tech manufacturing involves intense market volatility, scaling complexity, and tail spend management challenges. This climate strains already overburdened procurement teams, taking the focus away from strategic, value-adding work.

Luckily, Arkestro offers a promising path forward, increasing competitiveness by allowing procurement teams to make better buying decisions, faster and at scale. Chat with us now to learn how Arkestro can help your high-tech manufacturing teams do more with less.