"He knows everything about polymers—so let him handle the purchase too."

Sound familiar? Walk into any manufacturing facility across India—from PVC pipe makers in Gujarat to automotive component manufacturers in Chennai—and you'll hear this logic echoed in boardrooms and production floors alike.

But here's the uncomfortable truth: Your most technically brilliant engineers might be bleeding your margins dry.

It's not their fault. It's ours—for assuming that technical mastery automatically translates to commercial wisdom. And this assumption is quietly eroding competitive advantages across thousands of manufacturing units nationwide.

The Silent Profit Leak on Your Factory Floor

Picture this: Your lead engineer has been working with PVC resins for 15 years. He can distinguish K-65 from K-67 grades blindfolded, knows the exact temperature profiles for optimal processing, and can troubleshoot extrusion issues that would stump most suppliers' technical teams.

Now hand him a procurement decision: Supplier A offers 45-day credit terms but has a 15% delivery variance. Supplier B demands advance payment but guarantees 100% on-time dispatch with 5% early payment discount.

What happens next reveals everything.

Most engineers default to what they know best—technical compatibility. They'll choose the supplier whose material "feels right" rather than the one whose commercial terms could improve cash flow by ₹50 lakhs annually.

According to a 2024 CII-BCG manufacturing study, companies lose an average of 3-7% in gross margins due to suboptimal procurement decisions—decisions often made by technically qualified but commercially untrained personnel.

The hidden costs compound:

• ₹12-15 lakhs annually in missed early payment discounts (for a mid-sized manufacturer)
• 12-17% higher inventory costs due to poor demand planning
• ₹8-20 lakhs in compliance penalties from vendor due diligence failures

But the real kicker? These losses are invisible on most P&L statements. They show up as "slightly higher raw material costs" or "working capital challenges"—never as what they truly are: procurement skill gaps.

Why Technical Brilliance Doesn't Equal Commercial Success

The root cause isn't incompetence—it's design.

Engineering minds are trained for precision, consistency, and technical optimization. They excel at binary decisions: Does this material meet specification? Yes or No. Will this process yield the desired output? Yes or No.

Commercial decisions live in gray zones.

Consider how engineers versus procurement professionals evaluate the same purchase:

The clash isn't just philosophical—it's mathematical. When technical decision-makers prioritise specification adherence over commercial optimisation, the cumulative impact can reduce EBITDA by 200-400 basis points annually.

Here's what makes it worse: Most manufacturing companies don't even realize this is happening. The costs get absorbed into "standard" procurement expenses, and the opportunities remain invisible.

The New Procurement Reality: It's Not 2010 Anymore

Raw material procurement has fundamentally changed in the last five years. What worked when oil was $50/barrel and GST was a distant possibility no longer applies.

Today's procurement requires navigating:

• Volatile commodity cycles with 20-35% price swings quarterly
• Complex GST compliance with vendor verification requirements
• Working capital pressures where payment terms directly impact profitability
• Supply chain disruptions requiring multi-vendor strategies
• Digital price transparency where real-time market intelligence matters

The manufacturing companies winning today aren't necessarily those with the best engineers—they're the ones who've professionalized their procurement function.

A 2023 Deloitte study found that manufacturers who separated technical evaluation from commercial procurement saw:

• 12-18% improvement in gross margins
• 25-30% reduction in procurement cycle times
• 40-50% fewer vendor-related compliance issues

But here's what's fascinating: The same study found that only 23% of Indian mid-market manufacturers have made this separation. The rest are still operating on the "engineer knows best" model.

What Forward-Thinking Manufacturers Are Actually Doing

The smartest manufacturing leaders aren't replacing their engineers—they're complementing them.

Strategy 1: Role Separation Engineers handle technical validation and specification compliance. Trained procurement professionals manage vendor negotiations, commercial terms, and risk assessment. Both collaborate, but each owns their expertise zone.

Strategy 2: Commercial Training for Technical Teams Progressive companies invest in procurement training for their technical staff. Not to make them procurement experts, but to help them understand the commercial implications of their technical decisions.

Strategy 3: Technology-Enabled Decision Making Platforms like JITSY bridge the technical-commercial divide by providing real-time price intelligence alongside technical specifications. Engineers can validate material suitability while simultaneously accessing market rates, supplier reliability scores, and commercial terms.

The result? Technical decisions informed by commercial reality, and commercial decisions grounded in technical feasibility.

But here's the most interesting part: Companies making this transition report that their engineers actually prefer the new model. They can focus on what they do best—technical problem-solving—without getting bogged down in credit terms negotiations or GST compliance.

Why This Matters Even More in 2025

The margin for procurement errors is shrinking rapidly.

Raw material costs now represent 60-70% of production costs for most manufacturers (up from 45-50% a decade ago). A 2-3% procurement optimization can improve bottom-line profitability by 15-20%.

Simultaneously, digital transparency is eliminating information asymmetries. Your competitors can access the same price intelligence, supplier networks, and market data. The competitive advantage lies in how quickly and effectively you can act on this information.

Companies still operating with engineer-led procurement are essentially competing with one hand tied behind their back. They're making technically sound but commercially suboptimal decisions in an environment where commercial optimization is the primary differentiator.

The question isn't whether this shift will happen in your industry—it's whether you'll lead it or lag behind it.

A Personal Note to Manufacturing Leaders

This isn't about questioning your engineers' capabilities. They're brilliant at what they do. But asking them to excel at both technical evaluation and commercial procurement is like asking your best batsman to also be your wicket-keeper—possible, but not optimal.

The manufacturing companies that will dominate the next decade are those that recognize this divide and bridge it intelligently. They're leveraging technology, training, and specialized expertise to optimize both technical performance and commercial outcomes.

Your engineers should be spending their time solving complex technical challenges, not negotiating payment terms or researching GST compliance for new vendors.

At JITSY, we see this transformation happening across our client base. Manufacturers who embrace the technical-commercial separation report not just better margins, but also happier technical teams and more predictable procurement outcomes.

The tools exist. The knowledge is available. The only question is: When will you make the shift?

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What's your experience been? Have you seen this technical-commercial divide in your organisation? How are you addressing it?

Ready to bridge the gap? Connect with us at JITSY to explore how technology can optimize both your technical and commercial procurement decisions. Visit www.jitsy.in or reach out directly.

Let's turn procurement from a cost centre into a competitive advantage.