The role of logistics coordination and optimization in procurement
When solving procurement management tasks, the main attention should be paid to reducing the total costs associated with this functionality. This is all the more important because the costs of managing purchases for various industries range from 40 to 60% in the structure of the cost price of production of the GP of developed countries1. The largest share in the costs associated with procurement, are: the actual price of MR, transportation costs and costs for inventory management MR (storage, cargo handling, storage, etc.).
Winning a firm from the rational management of purchases can be very significant. Given that the costs in this case are 40-60% of the proceeds from the sale of goods, successful procurement management solutions can give the effect of increasing the profitability (profitability) of the company, surpassing everything that can be obtained both through marketing and production. According to American experts, to increase the company's average profit by 100%:
- the sales volume must rise by 100%;
- the price of goods - increase by 15%;
- wages and salaries - to decrease by 25%;
- overhead should fall by 33%;
- the cost of procurement - to decrease by 8.5%.
Thus, for every percent of the reduction in procurement costs, 12% of profit growth falls. To reduce the components of procurement costs, we need targeted supply logistics solutions that include a set of activities, among which you can specify:
- improving the planning of requirements and the normalization of MP costs for the company's production units;
- elimination of losses from marriage (policy "zero defects") in production and loss of MR for delivery from suppliers;
- the maximum reduction in production waste and the effective use of secondary MR;
- an exception, if possible, intermediate storage of MR when delivering them from suppliers;
- delivery of MP from suppliers as much as possible shipments with maximum use of cargo capacity of vehicles and minimum tariffs
- minimization of inventory levels of MR at all levels of the warehouse system, etc.
In the linear-functional organizational structures of the company's management, procurement management (from supply logistics positions) should be formed from the prioritization and interaction of such divisions as finance, production, procurement, marketing, sales and logistics. In Fig. 6.2 specifies the local criteria that determine the policy of the functional departments of production and finance of an industrial company in these areas. In particular, for financial management, such criteria are: minimum costs for purchasing MR, minimum requirements for additional investments (for example, in warehousing, transport), minimum financial risks (related to a lack of income from deficit MR, credit relations, etc.). ), the maximum rate of turnover of capital invested in MR, etc.
The main requirements of production (operational) management are full satisfaction of planned orders in the nomenclature and volumes of MR deliveries, synchronization of terms of their delivery with the production schedule (for example, using the logistics technologies MRP and JIT ), high quality of original MP, absence of failures in deliveries, i.e. a set of requirements for the reliability of procurement and delivery of MR to the company's production units.
Fig. 6.2. Logistic coordination in purchasing management MR in an industrial firm
The logistics logistics tasks in procurement management are the coordination and coordination of financial, operational and other management requirements in the context of the company's overall logistics strategy related to material flow management. Optimization solutions for logistics management traditionally include minimizing the overall costs of managing purchases and inventories of MR, optimizing the delivery of MPs using the JIT concept, reducing logistics risks (from non-compliance with supply parameters) and choosing the best suppliers.
Logistics support for procurement management includes all types of operational logistics activities when delivering supplies that the consumer company performs either independently or with the involvement of counterparties. This concerns transportation, intermediate storage and storage, transshipment of goods from one mode of transport to another, customs clearance of goods purchased for import, etc. The functional of operational logistics activities, as well as inventory management of supplies, are discussed in detail in the relevant sections of the textbook.
Let's consider the questions concerning the entrance control which is carried out at acceptance of objects of supply and their input in a warehouse. Input control procedures are the subject of warehousing logistics.
Supply items after delivery to the consumer must pass acceptance (input) control to their compliance with the established level of quality. The results of the input control should be recorded in the information database on goods and suppliers for continuous monitoring of the quality of the purchased products. Items of supply that have passed the incoming inspection are sent for safekeeping, and for those who have not been inspected, the following options for actions of the procurement service can be implemented:
- return to the supplier at his expense for correction or replacement;
- MR can be fixed by the buyer, and costs for this are collected from the supplier;
- if non-input items can be used (although not strictly in accordance with the specification), the buyer can negotiate with the supplier the option of reducing their price.
The drawbacks of the inbound control are significant resource costs that do not add value to the end user, and also that some vendors generally prefer to rely on the inspection of their products by buyers.
Currently, due to the development of such logistic concepts and technologies of integrated supplier-consumer relationships as JIT, ECR, VMI, , the focus is on reducing or eliminating all control operations related to quality control purchased goods. For this, the supplier is responsible for the delivery of the product in accordance with the established specifications and informing the buyer of the quality control results (for example, in the form of a test certificate or one of the procedures provided for BS EN ISO 9004). In many industries, for example in the automotive sector, suppliers are required to have quality management systems to monitor the quality of the products shipped, to avoid deviations in the processes, timely corrective actions, if any, and to prevent the shipment of products that do not meet the standards and specifications.
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