Procurement of components is a key consideration within the electronics manufacturing market and one that presents real challenges. The growing complexity of global supply chains, and disruption within them, means procurement professionals in this space are having to find ways of mitigating risk, to keep production moving.
Some of the contributing factors to the challenges facing procurement in this space include unpredictable lead times and rising material costs, amid fluctuating demand. The pressure to keep costs down and protect continuity of supply is greater than ever.
The state of play in procurement was covered in depth in the recently launched RS 2026 Indirect Procurement Report ‘Uncertainty Driving Efficiency’, based on survey results from 448 procurement professionals across the UK and Ireland. The report is the result of the ninth annual survey conducted by RS in partnership with The Chartered Institute of Procurement & Supply (CIPS). Here, we delve into some of the key findings of the report, and outline the strategies being offered to help procurement professionals overcome the challenges.
Inflation and higher costs top business pressures alongside supply chain risk
Inflation and higher costs are hitting almost every sector and remain a pressing concern for procurement teams, cited in RS’ report as the biggest challenge facing them over the next 12 months. Managing risk to supply chain, disruption, and political uncertainty were factors ranking almost as high. For those in the electronics manufacturing industry, supply chain disruption is significantly worsened by geopolitical developments and poses a real threat to production continuity.
Procurement, therefore, is becoming less of a back-office function and more of a front line of business resilience. Rather than focusing on cost, a renewed focus on supplier strategy is required to safeguard supply and, according to the report, this means organisations are reviewing supply chains and renegotiating contracts.
Near-shoring options are also being increasingly explored to reduce exposure to external factors. RS’ report found that almost one in five (19%) organisations is actively taking steps to near-shore suppliers. For electronics manufacturers who may need to access products quickly due to increased demand, this is a wise move. Rapidly shifting consumer preferences and short product lifecycles make accurate demand prediction more challenging, so any strategies procurement can levy that will secure supply are crucial.
The re-emergence of tariffs is adding to trade friction, driving procurement teams to review supply chain and supplier location. Some 65% of respondents said they are doing this, and 57% said they are renegotiating existing contracts. It’s clear a proactive approach to mitigating impact is in effect.
Supplier consolidation is one way procurement teams can relieve some of the pressure. Half of the survey’s respondents claim they are consolidating suppliers, and 46% said they are driving value through supplier partnerships.
Seeking value from Environmental, Social, and Governance (ESG) can relieve complexity of supplier management
While electronics manufacturers face increasing pressure to comply with environmental regulations and ethical sourcing requirements – all adding complexity to supplier management – RS’ report highlights a growing focus on demonstrable value from ESG. The way in which organisations approach ESG is shifting within procurement strategies. Environmental and ethical procurement remains prominent, but professionals are placing the emphasis on initiatives that yield measurable operational and financial returns.
The reality of ongoing cost pressures is reflected in the drop in willingness to pay a premium for sustainable products. According to RS’ report, this has fallen over the past two years: only 53% of MRO respondents said they would pay more, compared with 62% in 2025 and 82% in 2024.
Electronics manufacturers are facing pressure to reduce the impact of waste and electronic waste, and adopt circular economy methods as well as focus on product durability and recycling capabilities. New, stricter environmental regulations like the EU’s Ecodesign for Sustainable Products Regulation (ESPR) and the impending Digital Product Passport (DPP) are forcing manufacturers to provide transparency on product lifecycles. This is no doubt a real ESG driver, and RS’ report highlights procurement teams across multiple sectors are increasingly reframing sustainability in terms of total cost of ownership, durability, repairability, and lifecycle performance.
A shift to supplier consolidation will help yield cost savings
The ‘Uncertainty Driving Efficiency’ report highlighted the deliberate consolidation of supplier bases as a clear trend, with organisations choosing to work with fewer suppliers. This helps reduce business process costs for orders, streamlining administrative processes, and potentially offering more leverage when it comes to product pricing.
Digitisation also continues to play an important role as automated workflows, catalogue buying and guided purchasing are speeding up purchasing processes, negating manual burden and driving down the average cost to process an order, which, according to RS’ report, has fallen.
The report does, however, highlight a persistent gap in visibility with 38% of respondents not being aware what is their internal cost to process an order. This affects not only the ability to assess true value across suppliers, but also to build robust business cases for further automation. This can lead to procurement teams putting the focus back on unit price at the expense of total cost.
Other benefits of supplier consolidation include reducing risk of buying counterfeit goods. Working with fewer and more trusted supply partners can negate this. Product obsolescence is an issue for electronics manufacturers and working closely with suppliers to manage risk, and gain access to expert product knowledge to find alternatives in good time, can relieve this headache.
In summary, although the forces shaping the landscape for electronics manufacturers are not easing, procurement professionals are well placed to help balance cost, risk and purpose, putting procurement at the heart of business resilience.
The ‘Uncertainty Driving Efficiency’ report was conducted by RS in partnership with CIPS. The procurement professionals surveyed are from a wide variety of sectors like discrete manufacturing, process manufacturing, energy, and facilities and intralogistics.
The full 2026 Indirect Procurement report can be downloaded here.
This article originally appeared in the March/April issue of Procurement Pro
