What do you think of when you hear the word, “procurement”? We recently tackled this question as part of my Global Supply Chain Podcast – with the first of a four-part installment that debuted November 2.

Procurement management is really an intrinsic part of the end-to-end supply chain mega processes: plan, buy, make, move, store, sell. But, when many folks think of “procurement,” they automatically think of the buy process.

So, today, I want to show you how procurement actually plays a role in every link of the supply chain.

Here’s how it fits into each process:

Plan: Procurement in strategic sourcing has a huge impact on aspects of the planning process, including, supplier location, lead times, agility, and performance. It also allows these processes to fulfill their responsibilities to the overall supply chain.

Buy: Of course, the purchasing element of procurement is involved in the execution of the buying function, which travels from requisitioning, to purchase order, to order receipt, to PO fulfillment, and finally to settlement.

Make: In this link, procurement provides direct materials, indirect materials and packaging materials that are needed to make the product. This also includes supplier relationship management, with respect to these materials, as well as to the procurement of all outsourced manufacturing and service functions required.

Move: Procurement plays the role of strategically and tactically purchasing the transportation services that provide the movement between the links of the supply chain. By decoupling inbound transportation, the right buy decisions can be made, which will help to assure that the total delivered cost to the end user is optimized overall.

Store: Procurement strategically and tactically assures that the right insourcing and outsourcing decisions are made in the store function. Today, procurement plays the key role of rationalizing logistics service providers, with a significant impact on profitability and customer service.

Sell: Here, procurement is important in having the right products for sale at the right place and at the right time.

As you can see, procurement plays a larger role in the end-to-end supply chain than many realize, and it is important that we see how it flows through every link of the process.

You can find more information about supply chain procurement – as well as in profitable growth, margin improvement, and capital efficiency – by listening to our procurement podcasts at www.tompkinsinc.com/podcast.

Check back on the first and third Tuesdays of every month to hear new installments.

Go!Go!Go!

Jim

More Resources

Podcast: How Procurement Connects to Every Supply Chain Link

Article: Supplier Relationship Management: It Takes the 'Big R' to Win Global Sourcing Game