Procurement logistics

Procurement logistics
See also
Material stream Supply logistics subsystem Distribution logistics subsystem Logistics Types of supply Resource plan Strategy wheel Optimization of transport Distribution expense

Procurement logistics is responsible for delivering materials, raw materials, semi-finished products or goods from suppliers to the company's supply warehouse or directly to the processing locations. The main purpose of the procurement subsystem is to effectively and economically satisfy the material needs of the company.Procurement logistics is the complete procurement process that includes:

• bids, terndering,
• price negotiation,
• assuring proper quantity,
• assuring proper specification,
• shipping,
• delivery.

Among the basic sourcing tasks, it also distinguishes maintaining the availability of goods in the long-term, as well as searching for new suppliers whose offers meet the recipient's requirements to a greater extent. Such tasks are characteristic of marketing activities and used primarily primarily on the market, they also apply in the field of supply.

The main objective of procurement logistics it to obtain materials or services according to specification at the best possible cost within needs and constraints of the company. It is important to state that price is on the second place, after meeting the specification.

Functions procurement logistics

The basic tasks of supply logistics include:

• delivery control
• optimization of procurement costs
• cooperation with suppliers
• cooperation with other organizational units in the company
• collection and storage of goods and materials
• synchronization of the delivery process
• satisfying material needs

Criteria for selecting suppliers

• Price and discounts,
• "Quality and Safety,
• Delivery
• Service
• Social Responsibility
• Convenience / Simplicity
• Risk
• Agility"
• Forms of sale,
• Possibility of storage at the supplier,
• The way of handling a complaint,
• Distance from the supplier's production facility

Steps of a strategic procurement process

It requires input from all departments and functional areas for an organization. Organizations should set up a strategic procurement team. This team sets the overall direction for procurement, aligned with the business strategy. The team will then use the data from the strategic procurement process to develop and implement a strategic procurement plan. Here are the 7 steps that lead to a successful procurement process. Original article:

• Step 1: Conduct an internal needs analysis
• Step 2: Conduct an assessment of the supplier's market
• Step 3: Collect supplier information
• Step 4: Develop a sourcing/outsourcing strategy
• Step 5: Implement the sourcing strategy
• Step 6: Negotiate with suppliers and select the winning bid
• Step 7: Implement a transition plan or contractual supply chain improvements.

Material flow phases

In the company's procurement logistics, the following phases can be distinguished in the flow of materials:

• inflow - most often it involves transport, it includes in its scope delivery of materials to the enterprise that will be needed in production and all other goods necessary for efficient economic functioning
• collection and storage - it covers the receipt of goods brought by the supplier and its storage in supply warehouses. In addition, this phase applies to all storage and handling activities related to the collection and storage of goods
• organization of material flow - means activities related to the flow of materials from warehouses, in which they were stored in the production hall, and more precisely to the first production station in which these materials will be used.

References

• Blood-Rojas C. (2017)The 7 steps of a strategic procurement process
• Charles D. (2010) 8 Supplier Selection Criteria & The SHoCC "PurchTips" 209
• Christopher M. (2016)Logistics & Supply Chain Management Financial Times, UK
• Robey S. (2015) What is Procurement and Logistics Management?
• Uusitalo, J. (2005) A framework for CTL method-based wood procurement logistics. International Journal of Forest Engineering, 16(2), 37-46.
• 5Functions of supply chain management "Supply Chain Management for Dummies Cheat Sheet" 987-1

Footnotes

Author: Natalia Borowiec