What Are Procurement Logistics?

Purchasing logistics refers to the procurement, purchase and transportation, warehousing, inventory management, material management and supply management of all production materials including raw materials, and is also called raw material procurement logistics. It is a relatively independent subsystem in the production logistics system, and has close relations with various departments of production enterprises such as production systems and financial systems, as well as external resource markets and transportation departments. Purchasing logistics is to continuously organize the logistics activities of the supply of raw materials, parts, fuels, and auxiliary materials in order to ensure the production rhythm. This kind of activities plays a role in guaranteeing the normal and efficient production of enterprises. It is very difficult for an enterprise to purchase logistics not only to achieve the goal of ensuring supply, but also to organize procurement logistics activities under the constraints of low cost, low consumption, and high reliability.

Purchasing logistics

(Raw material procurement logistics)

Modern logistics is based on a non-scarce commodity market

Purchasing logistics has different priorities in different organizations.

Purchasing in manufacturing companies

There are three ways of organizing procurement logistics for enterprises: The first is to commission social sales companies to purchase on their behalf

Agency of social sales companies

Main content: Enterprises as users

The new service methods in the field of procurement logistics mainly include the following two.

I. Enterprise Logistics Information System

The electronic informationization of procurement logistics and integration with other systems into the enterprise logistics information system has become an inevitable development. Not only the procurement logistics, but the electronic informationization of the entire logistics system is the modern logistics of enterprises.

After selecting and evaluating suppliers, they should establish separate files for them to facilitate the classified management of suppliers.

A key point in the selection and evaluation of suppliers is the requirement for stable quality. Suppliers must be selected according to the requirements of the enterprise, which involves the cooperation between the supplier and the enterprise. Therefore, from the perspective of enterprise operation, the most important thing for procurement logistics is the quality of suppliers. Not only product quality, but also supplier service quality,

Be sure to purchase what is urgently needed at the moment, and purchase should have an order before purchasing, otherwise the purchase is

There are a lot of cost saving opportunities in the logistics of raw materials procurement. These opportunities may take some time for us to explore, but they can bring a lot of cost savings and shorten the lead time for raw material procurement. Some leading electronics manufacturers are working closely with transportation providers to take advantage of the latter's comprehensive services for more efficient logistics operations. The following 6 aspects are the main points in raw material logistics management.

Determine the raw material transportation

Some suppliers like to include the cost of shipping raw materials in the price of their products. Special care needs to be taken with this approach, as they may require minimum order quantities and may result in increased costs.

Change the freight prepayment to freight

That is, when your company takes over the product shipping or carrier's shipping rates, you pay the supplier. If the shipper controls the freight rate, it is considered prepaid. With some effort comparing these two different payment methods, you will find opportunities to cut costs and improve control. "Free shipping" is a deceptive statement, because there are always costs incurred in transporting products, and free shipping signs can bring danger and neglect some necessary factors.

Work closely with your purchasing team to set expectations. Use the power of the purchasing team to negotiate with suppliers to find the best way to transport raw materials.

Improve visibility of raw material transportation

A key factor in achieving efficient raw material transportation is insight into suppliers to track and control inventory movements. Many carriers can provide real-time information about goods in transit. Control your raw material logistics to make raw materials transportation more visible, so you can efficiently allocate yard personnel and timely know when key raw materials arrive.

Reduce costs with transportation scale

Combining inbound, outbound, and return shipping together can increase your bargaining power and result in higher overall shipping cost discounts. Ensure that your transporter can provide you with discounts on raw material transportation, and include the transportation cost savings at the raw material procurement end into the entire company's reward system. Consider establishing a dedicated platform to record the number of services provided by each logistics service provider in order to maximize your total discount.

Develop a supplier management plan

This plan not only needs to define supplier expectations, but also provides a way to evaluate and feedback on supplier performance, which is one of the most effective ways to ensure consistency and reliability of the raw material transportation process. In addition, the plan needs to include a route guide, which includes packing box labels, packing lists, bill of lading guides, designated carriers and penalties for non-compliance.

Developing supplier relationships

The most overlooked factor in raw material logistics management is the relationship with raw material suppliers and transporters. Some vendors try to manage this relationship through written contracts and performance indicators. Although these are important, close relationships with suppliers and transporters can often streamline the resolution process when you encounter problems. Many ideas for improving processes come from cooperation rather than strict enforcement of agreements.

Enterprises mastering these 6 points can bring a lot of cost savings.