Procurement in batch manufacturing is a strategic driver of efficiency, resilience, and profitability. Many manufacturers overlook true landed costs, mishandle freight, or expose supply chains to risks, leading to eroded margins and disrupted production. This playbook offers actionable strategies to master cost management, optimize freight, mitigate risks, strengthen supplier partnerships, and leverage technology.  

By implementing these practices, manufacturers can protect profitability and thrive in volatile markets. 

Freight is one of the most overlooked components of procurement, yet it can have a dramatic impact on profitability. When freight is treated as an afterthought and lumped into “miscellaneous” expenses, manufacturers lose visibility into true landed costs. This not only distorts pricing decisions but also makes it difficult to identify savings opportunities and optimize the supply chain. To maintain cost control and protect margins, freight must be tracked, analyzed, and managed with the same rigor as raw materials.

Strategies to Gain Control Over Freight Costs

• Integrate freight into TCO: Include freight, tariffs, and storage alongside material costs in total cost of ownership (TCO) analysis to gain a full picture of actual spend.

• Leverage supplier expertise: Ask suppliers for detailed freight breakdowns and cross-check their data with brokers or industry benchmarks to validate rates and spot discrepancies.

• Track cost trends: Monitor freight costs over time and compare supplier increases with market indexes such as FreightWaves to identify when renegotiation is needed.

• Optimize logistics: Explore tactics such as consolidating shipments, adjusting order volumes, or using third-party logistics providers to lower costs and reduce inefficiencies.

Manufacturers who bring freight into the cost management conversation consistently find opportunities to improve both margins and reliability. By validating supplier data, monitoring market shifts, and integrating freight into TCO, procurement teams can transform freight from a hidden expense into a controllable and strategic cost driver. This proactive approach not only reduces waste but also strengthens overall supply chain performance.

Accepting supplier price hikes without scrutiny leads to overpaying. Proactive cost management uncovers savings opportunities and aligns with business goals. A deep understanding of cost drivers is essential. Manufacturers can optimize expenses through strategic practices. 

Strategies for Effective Cost Management 

1. Should-cost analysis is a key tool for cost control. Deconstruct prices into raw materials, labor, freight, and overhead. Benchmark these against market data from sources like Bloomberg. This identifies savings opportunities. 
2. Maintain multiple supplier sources for critical materials. This enables monitoring of market trends and secures competitive pricing. It also reduces dependency on single vendors. Competitive pricing strengthens cost management efforts. 
3. Visit supplier facilities to understand production processes. Research cost drivers like commodity fluctuations or labor costs. This knowledge informs strategic sourcing decisions. It uncovers opportunities for cost-sharing or process improvements. 
4. Use procurement software to streamline data reconciliation. Standardize supplier contracts with clear terms for volume discounts. Include escalation clauses and service expectations in agreements. This ensures predictable pricing and operational efficiency. 

Risk management is one of the most important responsibilities in procurement. Disruptions such as tariffs, supplier bankruptcies, or overreliance on a single vendor can quickly halt production and drain profitability.

By focusing on high-impact categories that represent the largest spend or depend heavily on a single supplier, manufacturers can build resilience where it matters most. A structured framework not only protects against supply chain shocks but also ensures production continuity and cost stability.

Five-Step Risk Management Framework

• Identify Risks: Pinpoint vulnerabilities such as single-sourced materials, tariff exposure, or geographic concentration.

• Scenario Analysis: Develop contingency playbooks for potential disruptions like supplier delays or freight spikes.

• Diversify Suppliers: Qualify multiple vendors to reduce dependency and avoid single points of failure.

• Monitor Trends: Track commodity prices, regulatory changes, and global market signals to anticipate disruptions.

• Quantify Costs: Incorporate risks into total cost of ownership (TCO) by estimating the financial impact of overstocking, lost sales, or sudden price hikes.

Onboarding new suppliers is rarely a quick process. In many industries it can take up to two years due to regulatory approvals, testing, or quality validation. This makes proactive planning essential because waiting until a disruption occurs often leaves manufacturers without viable alternatives.

Market intelligence tools such as S&P Global or FreightWaves provide valuable insights into commodity prices and freight shifts. By monitoring these trends and adjusting sourcing strategies, procurement teams can anticipate risks before they escalate. Including disruption costs in TCO calculations gives leaders a realistic picture of financial exposure and supports stronger decision-making.

When executed well, risk management becomes a strategic shield. Instead of reacting to crises, manufacturers who build strong frameworks and invest early in supplier diversification can protect margins, maintain production flow, and strengthen resilience against market volatility.

Strong supplier relationships are more than just transactional; they are a foundation for cost savings, supply chain reliability, and long-term resilience. When manufacturers treat vendors as partners rather than interchangeable providers, it fosters collaboration and innovation.

This approach creates shared value, unlocks better terms, and ensures greater stability across the supply chain. In industries where disruptions are common, strong partnerships can make the difference between meeting production deadlines and falling behind competitors.

Ways to Build Stronger Supplier Partnerships:

1. Visit facilities: Learn about supplier processes, automation, and sourcing strategies to identify cost-sharing opportunities.

2. Set clear standards: Define delivery and quality expectations, then use quarterly business reviews to maintain accountability.

3. Leverage agility: Small manufacturers can highlight flexibility and reliability to secure preferential terms or test new products.

4. Encourage open dialogue: Ask about supplier challenges and goals, then align procurement strategies to build trust and shared value.

When approached strategically, supplier relationships become a competitive advantage rather than a cost center. By investing in transparency, accountability, and collaboration, manufacturers create partnerships that drive continuous improvement, support innovation, and strengthen resilience in the face of market volatility.

Technology is no longer a “nice to have” in procurement; it is the backbone of modern supply chain management. Relying on spreadsheets or paper-based systems to track purchase orders, reconcile freight, or manage supplier contracts leaves teams vulnerable to delays, data entry errors, and costly oversights. Every manual process steals time away from what procurement professionals do best: building strategy, negotiating value, and driving competitive advantage. Automation puts those priorities back at the center of procurement.

Procurement software centralizes critical data, from purchase orders and supplier records to contract terms and compliance requirements. By automating approvals and standardizing workflows, it reduces discrepancies while ensuring teams are always working from the latest information. Real-time dashboards take visibility further by tracking freight, supplier performance, and inventory status in one place so manufacturers can make proactive, data-driven decisions instead of reacting to problems after the fact.

When procurement systems are integrated with production schedules and material requirements planning (MRP), the impact multiplies. Stockouts and excess inventory become avoidable, freeing up working capital while ensuring the right materials are always available at the right time. This level of synchronization transforms procurement from a cost center into a growth driver.

Cloud-based platforms also deliver scalability that traditional methods cannot match. As manufacturers grow and their supplier networks expand, cloud procurement systems provide the flexibility to manage hundreds of suppliers without the need to scale headcount at the same pace. Automated alerts flag discrepancies in freight costs or contract compliance instantly, giving teams the chance to intervene before small issues escalate into expensive problems.

Once annual spend surpasses $10 million, manual processes are no longer just inefficient; they are unsustainable. Automation supports the complexity of managing dozens, even hundreds, of supplier relationships while maintaining the precision and accuracy needed in batch manufacturing. For forward-thinking manufacturers, technology transforms procurement into a true strategic driver of resilience, cost control, and profitability.

Procurement is about protecting margins and ensuring continuity. Mastering freight, cost management, risk frameworks, supplier partnerships, and technology builds resilience. These strategies empower manufacturers to navigate volatility. Start implementing this playbook for sustainable growth.

About the Author

Alex Koves is the Vice President of Process Manufacturing at CAI Software. With over 20 years of leadership in the batch process industry, Alex has guided hundreds of manufacturers through digital transformations from fragmented, spreadsheet‑driven workflows to fully integrated ERP environments. His dual role gives him a unique vantage: he oversees Mar‑Kov’s product vision and delivery while shaping CAI’s broader manufacturing solutions strategy. Known for his collaborative approach, Alex partners closely with customer teams to ensure implementations deliver measurable gains in compliance, throughput, and cost control.