Organization of Procurement

Different organizational units in your company are usually involved in the procurement of these resources. The procedures are often correspondingly heterogeneous. Procurement know-how is not bundled, and the relative purchasing power is fragmented within the company.

It is advisable to organize procurement via a channel and to crystallize a suitable procedure without foregoing the expertise from the specialist departments and the requirements of the users in the company.

Use the tools of quality management in purchasing as well. With a structured and well-documented purchasing process that stays within defined limits in terms of technical and financial specifications within the process landscape, many of the errors and malfunctions that occur almost by default can be identified in advance and consistently avoided.

One of the basics is that the purchasing team should be able to view the company’s inventory levels and work with these figures. By defining intervention limits such as warehouse minimums, i.e. a quantity of goods that must be on hand as a minimum, a great deal of routine activity can be eliminated, as recurring standard orders for consumables by specialist departments are no longer necessary. As an additional benefit, the purchasing department receives information about the quantity of similar goods in stock, which harbors savings potential. This approach ensures that only required goods are procured on a process-related basis.

But be careful not to save yourself to death. The costs of production downtimes due to unavailable input materials or components or missing contribution margins due to sales problems caused by unavailable goods can quickly far exceed the funds saved.

Also, a stock of raw materials or input materials that appears to be too large at first glance, and thus a capital commitment that is actually too large, can even make strategic sense in order to be able to elegantly absorb an expected shortage or price increase. These considerations also include the pre-production of semi-finished products in order to remain capable of production and delivery in the event of planned maintenance or foreseeable staff shortages, for example due to vacation.

In addition, if savings are made in purchasing without reflection, there is a risk that innovations will be prevented. This is because it tempts companies not to procure material for attractive new product variants with a different technical design before the stocks of semi-finished products and accessories for the previous version have been used up. This natural course of action of purchasing can ruin your strategy. In cases where a decision is made to rapidly change a model, make the clear follow-up decision to scrap existing semi-finished products and accessories and pay attention to the implementation.

In procurement, think not only about immediate costs, but also about follow-up costs, including the impact on our environment. Sustainable management pays off because it is valued by customers. You can have the ecological footprint of your company determined in a targeted manner and use the result in your PR work. To implement, you need leadership that calls for results on agreed-upon goals.


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