Spend time around procurement teams and you'll hear plenty of discussion about cost. Cost per unit. Material costs. Supplier quotations. Annual savings targets.  These metrics matter, as every business must remain competitive. Procurement teams play an essential role in delivering that outcome to their business. However, I sometimes wonder if our industries have become too focused on what something costs and not focused enough on what it delivers?

End customers rarely buy equipment because it was the cheapest option available. Whether they're a farmer purchasing a tractor, a contractor investing in construction equipment or a logistics business expanding a forklift fleet, they are evaluating something much broader than the initial purchase price. They are evaluating risk, productivity and whether the product will deliver the outcomes they really care about.

Hopefully we all recognise that customers don't buy engines, batteries, transmissions or hydraulic pumps in isolation, instead they buy the finished machine and the experience of owning and operating it. They care about if it will it be reliable and perform consistently; and will support be available when it is needed, now and into the future? These questions can influence machine orders, so maybe they should also help shape sourcing decisions?

The lowest component cost and the highest customer value are not always the same thing. On a spreadsheet the lowest purchase price may look like success, but is it really? What if durability is compromised, warranty claims increase, parts become difficult to source or uptime suffers? Those apparent savings can quickly disappear.

Agriculture provides a particularly good example of this. During peak periods, machines work within narrow weather windows where downtime can have immediate consequences for productivity and profitability. A farmer who loses a day during harvest is unlikely to care that the OEM saved a small percentage on a sourcing decision years earlier. They only care whether the machine is working and from their perspective, reliability is value.

This is why proven products often command a premium. An established track record often carries less risk than an alternative with limited field experience. Trust in a product, service, person or business is difficult to quantify, but it can be of enormous value to buyers. Should the same values be applied by OEMs when selecting components for their machines? Specifications and commercial competitiveness really matter, but so does trust in the validation, durability, support and consistent performance year after year.

Often a team selects an engine, another the transmission, while others focus on hydraulics, electronics or controls. Yet customers experience how the whole machine performs as a system. Perhaps the future lies less in sourcing individual products and more in developing integrated solutions, aligning with end-customer objectives.

An engine and transmission developed, calibrated and validated together may help optimise better fuel efficiency, smoother operation and higher productivity than two individually optimised components brought together at a later date. The goal is not integration for its own sake. It is integration that creates a measurable customer benefit.

Many end customers have no interest where the engine stops and the transmission starts. They care about fuel consumption. They care about productivity. They care about operator comfort. They care about getting the job done! Smooth performance, noise, vibration, visibility and ease of operation are what the operator experiences, but they are also very difficult to capture in a sourcing spreadsheet, yet they directly affect productivity and brand loyalty.

Maybe it's controversial, but I believe procurement should have a stronger connection to the end customer than most people realise. Not because procurement should stop focusing on cost, far from it; but rather because effective sourcing decisions balance cost with customer outcomes. Reducing cost is only valuable if the customer continues to receive the performance, reliability and support they expect.

At the end of the day, customers are not buying a procurement strategy. They are buying productivity. They are buying reliability. They are buying support. They are buying confidence that their investment will perform when the pressure is on, and this requires procurement to involve suppliers earlier and look beyond just the unit price. Suppliers can contribute extensive application knowledge, validation and system expertise to help reduce the development risk for OEMs and align with the end customers’ objectives. 

Treating suppliers only as a source of parts may leave significant value undiscovered. The important lesson is that procurement can learn a lot from the end customer and should also look more at integrated systems and solutions which can offer end users greater value than could ever be demonstrated on a spreadsheet.