Procurement essay-3

These case I am going to write and trying to explain from own perspective. The case including about procurement’s benefit  and related  main concepts such as how to manage in total costs and how to recognize it . Now day’s every firms carrying total cost, which is firm leading or starting doesn’t matter , all  want to  focusing save money, save time, reduce risk. If you can reduce each process’s cost that you can sell to customer by low price, low price is most completive main factor in every business.

The total cost’s depends procurement is process.  So what is the procurement? Buying goods or service from external providers and not only involves purchase process, it is mean is development of relationship between buyers and seller also most important index is quality and quantity checks.  I mentioned previous sentences  about “Costs” let’s  imagine in about risk such as If your distribution center or your supermarket stock out of raw materials, some of working part can shutdown..What will happen resulting in unexpected cost, downtime due to production stoppage increase operation costs and may result in a badly quality finished goods as promised to customers. One of core objectives of procurement is to ensure that a continuous supply of materials, also the minimum inventory investment possible and requires balancing the cost.  Idea of this meaning need materials arrive just at moment.

Other cannot be separated from procurement important context is Quality improvement:  If poor quality components and material are used then final product likely will not meet customer quality standards. Especially more important thing bad quality is increase hidden cost it is simple mean you need to buy again. Also inseparable concept is supplier development and how do that? It is beginning 1^st good supplier selection , only choose one good supplier it not good, we need more fund suppliers and building supplier relationships also supplier continuous improvement .

Important to develop close relationship with those suppliers in order to share information and resources to achieve better result. I want to explain three object in circle of purchase let’s imagine if manufacturer might share a production schedule with key suppliers, which in turn allows them to better meet the buyer is delivery requirement. Retailer might share point of sale information and promotional plans to help quantity requirement at specific time.  I want to take example. Let’s imagine if I working in huge or little is doesn’t matter , just working DC in my position is charge in procurement. I mentioned before any business companies a well organize to use successfully in procurement , that will bring economics benefits. How to do it the single-shot order ,get more benefit. We need to realized about supply upon order ( procurement ) from  raw-material, my explanation is first have to analyze either first we need to answer and decide below questions, such as how much is quantity , how any available goods in your  DC, also how to organize order in goods, when we should to order? Etc.

Now I trying to explain about how to calculate total cost in procurement of  management. 1^st saving cost , including  in costs related to keeping  inventory, insurances, tax, detritions, inventories damage and loosing costs. The those costs depends keeping costs inventory of type. 2^nd  Ordering cost , including in costs related to receiving,  invoices and others also costs transportation to the storage.  3^rd  cost of interruption is  most influence to total cost. it is become wrong calculate stock and demands all type of customers and partners.

            Good management is looking whole process and looking in future, creating plan step forward , next step. We need good organize the strategy. The achieve profit or lose it is all depends strategy.

            So What exactly is procurement and strategy?  Procurement ‘s all stages and all parties involved in fulfilling a customer request , procurement process internally includes product development, marketing, operations, distribution, finance, customer service, externally, it includes the suppliers, vendors, manufacturers, transportation, and distributors,  that exist to transform raw materials to final products and supply those products to customers.  Procurement Chain main  purpose is satisfying customer needs and also certain factor is maximizing the overall value  calculated  from a monetary point of view, refers to: the difference between what the final product is worth to the customer it is mean is price the customer is willing to pay and the effort, collectively, the procurement chain expends in filling the customer’s request the collective costs.

Therefore, procurement profitability would be: the difference between revenue generated from the customer and the overall cost across the entire Procurement chain. How about procurement strategy focusing efficient procurement and high flexibility and quality of being quick to respond producing a large assortment of products. The procurement strategy, which is integral to corporate strategy. A corporation’s corporate strategy and procurement strategy must fit with each other or otherwise, both will       fail. Procurement strategy can be summarized as a focus on Total cost  focus on purchase price procurement professionals recognize purchase price of material or I team remains important and service cost and life cycle cost also be considered.

Afterwards who is working in the supply chain department and  charging for procurement process, they are have to abilities purchase planning, specifications development, supplier research ability and selection , value analysis, financing, price negotiation, making the purchase, supply contract administration, inventory control and stores, and disposals and other related functions.  The process of procurement is often part of a company's strategy and important obligate in supply chain management. Also always have to analyze in purchase price and all hiding costs, it mean is charger have to look carefully to costs and prices related whole process.  The total cost is more important concept in procurement. Cost is influence and  decide in  bankrupts or brighten future.

A Simple mean is  business couldn’t to survive if it is total costs gross margin more than the profit it.