Procurement logistics

Procurement logistics is responsible for optimizing the order and receipt of all the elements that a company needs for its production.

Procurement logistics

In simpler words, supply logistics is about the company having the raw materials, materials, products and even machinery that it needs to produce. All this at the agreed cost, in the promised quality, in the place to be determined and on the agreed date.

Although they are different phases, it is usually confused with storage logistics. This is due to the fact that some companies include the provisioning and storage tasks in the same department.

This confusion may not really be a confusion. Since each company is different and can include the logistics of supply and storage within the same department. Their technical union will depend on the size of the company and the complexity involved in managing the supplies it receives.

Procurement logistics functions

At the end of the day what it does is take care that the supplies are in the right quality, date and place. The most important functions of supply logistics are:

Choose providers

It is essential to know what we need and what the different providers offer. In the service of these providers, quality, price, compliance with deadlines, etc. must be considered.

In each sector there are many different providers. Differences that are noted in many aspects such as quality, cost, delivery time, compensation in case of non-compliance in any of the above questions, etc.

Of course, we do not always have to choose the supplier that offers the highest quality, the cheapest, or the one that delivers the product to us first. Everything will depend on our needs.

Ensure that delivery times are met

Although a deadline has been agreed, unforeseen events often occur. Consequently, failure to deliver certain items on the agreed date can lead to losses for the company.

For example, if we need 1,000 bulbs for the production of our product and we are two days late, it is production time that we are losing. In addition, this production time can lead to our failure to comply with the delivery deadlines in the distribution of our products.

It is vitally important to effectively manage non-compliance with delivery deadlines. Even having a plan B in case there are unforeseen events so that if they do occur, losses are minimized.

Manage inventories

Managing inventories, especially when the number of orders increases, is essential. The inventory must not only collect what comes to us, it must also collect the order data.

Thanks to this data, we will be able to study the evolution of orders. If we order 100 rugs: how many arrive? Do they all arrive in good condition? Do they match what we expected?

Analyze the production needs of the company

Of course, if we estimate that to produce 10 cars we need 40 wheels, it makes no sense to ask for 200. The reality is much more complex than this. On many occasions, the amount of elements to transform a product are many and of very varied characteristics.

Consequently, there will be items whose order is greater (in case they are broken or arrive in poor condition) and others that are not. For example, if you are dealing with very fragile small items, it is better to order more than necessary in case they break. On the contrary, if it is something strong and robust whose probability of breaking is minimal, we will not buy so much more.

Study the trends of the items you buy

The world evolves very fast. What used to be produced with iron can now be produced with aluminum or carbon. What used to be produced with normal bulbs is now produced with LED lights.

Along these lines, it is essential that the procurement department is aware of what the competition is doing. In addition, of course, to study the market and see with what materials the same or better can be produced.

Ensure the quality of the provisions to be able to move to the storage phase

Another essential function is to ensure the quality of the items before being stored. There is no point in spending time storing materials or raw materials in poor condition.

What’s more, not only would time be wasted in storage, time would also be wasted in other phases of the production process. For example, if a useless material is stored and the worker uses it in production, the result will be a defective final product. The final consequence will be that the customer returns the product. Which means more costs for the company.