procurement management

Forecasting and procurement are at the heart of the supply chain. Companies need to manage their supplies as accurately as possible, in the face of an increasingly volatile and unpredictable market.

Supply chain management

Definition

Procurement as a business term means buying goods, whether for sale, for use in the manufacture of products, or for storage. A company's profitability largely depends on its supply management. On average, supplies account for half the cost of the merchandise offered for sale.

Different methods: empirical, just-in-time, kanban?

there are, of course, a number of different procurement methods, based on different management approaches. The empirical procurement method is based on historical sales data, analyzing sales to better understand purchasing behavior. The "just-in-time" or kanban (Japanese for "label") method, in which downstream suppliers order upstream suppliers, means that we only produce on demand. This means just-in-time production, which limits the volume of inventory, but also demands a high level of responsiveness. The aim is to size inventories as precisely as possible (no longer relying on safety stocks) so as to reduce costs. In fact, Kanban is better suited to the manufacture of mass-produced items, as opposed to the MRP (Material Requirement Planning) method of push-flow systems (the flow is pushed towards the customer), where production is based on anticipated demand, whereas the Just-in-Time method is based on a firm order, drawn up by the customer.

Supply chain points: factory, plant, warehouse

Next comes the management of supply chain "points": between factories and points of sale, there are a multitude of intermediate points such as central warehouses, overflow warehouses, regional depots, hubs, platforms, etc., of varying sizes depending on their function and location in the chain, and which need to be optimally managed to avoid generating extra costs.

Manufacturers use tried-and-tested supply management methods such as Kanban

Right-sizing inventories to reduce costs

The essential tools for a good Supply Chain

APS

Numerous tools are available to help you make the best possible supply calculations. In fact, APS (Advanced Planning System) is a software package which, thanks to its various parameters, can be used to optimize supplies. An APS helps to organize the supply chain so that it is constantly adapted to customer demand, by integrating a number of key functions (purchasing, production, storage, distribution, transport, etc.).
This data is also fed into the KPIs (Key Performance Indicators) which provide a clear picture of the current situation, and regular analysis of this data enables us to measure changes in performance.

WMS

The WMS (Warehouse Management System) enables you to analyze warehouse operations, flows and processes, and thus improve supply chain performance. Logistics KPIs are veritable dashboards based on relevant indicators, enabling you to quickly identify weaknesses and the causes of cost, lead-time or quality drift. The choice of these indicators is crucial, and depends on the sector studied, as well as the company's main objectives (meeting deadlines, reducing logistics costs, etc.).

Big data, the next revolution?

Finally, it's possible to make supply chains much more transparent, with better cost control, and therefore greater efficiency, with the help of Big Data, the next revolution in supply management. Generally speaking, Big Data refers to the multitude of structured and unstructured data to which companies and other organizations have access, as well as the advanced analytical processing tools that enable useful knowledge to be generated from this data. That's if you don't find yourself overwhelmed by a colossal amount of data that's impossible to analyze.

Logistics software helps anticipate out-of-stock situations.

In conclusion, the objective of efficient supply management lies in precise, responsive order management, with a view to reducing tied-up capital and boosting company margins. The analysis of indicators not only helps to determine whether the company is healthy, but also to compare itself with market standards and the indicators observed among competitors.

CategoryWMS