Procurement and Supply Chain Collaboration

Benefits of Procurement

Procurement is the process of acquiring goods, raw materials, and services needed by the company to provide service to its customers. That said, the supply chain is charged with all activities that concern getting products and services to the final customer.

Every business has a procurement and supply chain department that should work together to ensure consumer satisfaction. However, this procurement – SCM collaboration often fails to happen in reality. This often leads to gaps in information and a less than efficient supply chain management.

But what happens when these two groups work together? Open communication lines between procurement and supply chain lead to a better understanding of both company and customer needs. Other benefits include:

Improve Customer Satisfaction

 There is little else that customers love more than efficient supply chain management – goods arrive on time, and orders are well put together. This service ranks high on a list of reasons why customers become return customers.

When the supply chain management is efficient, customers are satisfied. It’= is that simple.  Procurement-SCM collaboration cuts down the overall time taken to procure goods and pass them through the supply chain to the customer.

Cost Reduction

Companies lose a lot of money from deficiencies in the inventory. Over-stocking in particular and the extra cost of storing these goods can drain the company’s resources.

An end-to-end view of inventory availability and demand can change this. Instead of procuring so many goods, stocking in inventory, and waiting for orders, companies can adopt a just-in-time strategy to cut down on warehouse costs.

Improved Supplier Relationship

Procurement plays a huge role in the company’s ability to fulfill its business model. First, procurement is the middleman between the supplier and supply chain. The relationship they cultivate with the supplier will determine a lot of things. When companies approve this collaboration and work becomes seamless and easy between both groups, it spills over to the supplier.

Supply Chain Risk Reduction

Supply Chain Management enjoys a minimal risk when they work together with procurement management. When procurement management has information on demand and available stock in the store, inventory is easier to manage. The]is, in turn, reduce storage costs and problems associated with over-stocking.

Better Flexibility

Collaboration between procurement and supply chain management allows for a transparent sharing of data between both groups. While this helps reduce costs and improve consumers’ experience, it also makes for easy decision-making and efficiency.

With the information open to them, both groups can make the right decision without consulting the other.

To improve this Flexibility, companies should consider using a central database system to manage all warehouse resources.

Both procurement and supply chain management can work independently. However, the SCM is at its most efficient when they work together.