The usual supply chain process involves handling a wide range of aspects. Two of the most common include procurement logistics and procurement management. In this guide, we’ll look at what these are and how they fit within your supply chain, as well as the reasons why it’s important they work together seamlessly.
What Is Procurement Logistics?
At its core, procurement logistics is the sourcing of materials needed to manufacture products. In other words, this part of the supply chain focuses on purchasing raw materials, replacement parts, auxiliary supplies, operating supplies and other items needed for the manufacturing process to work.
Procurement logistics doesn’t just deal with the purchasing of materials, however. It also handles storing, organizing and shipping these materials to and from the warehouse. The procurement logistics team is also responsible for product sourcing and selection policies, terms and conditions, communication and purchasing strategies to help keep the cost of acquisition as low as possible.
What Is Procurement Management?
Procurement management is the umbrella that encompasses all of the processes involved in managing the incoming materials needed for manufacturing. Some of these processes include obtaining bids from, and negotiating and creating contracts with, third-party logistics providers. It also includes hiring employees, including drivers, marketing and business professionals.
How Do Procurement and Logistics Management Work Together?
The flow of procurement logistics needs to remain open and uncongested because if the purchasing process becomes inhibited, it could interrupt production efficiency in manufacturing centers and affect product storage in warehouses. The resulting delays can cause potential problems for both distributors and customers alike.
It is essential for procurement and logistics management to coexist and work together seamlessly to ensure that manufacturing costs do not exceed a company’s budget expectations. This is not necessarily easy because some companies lack the personnel needed to run these individual processes. Many small companies choose to work with a third-party logistics provider to help manage all the resources necessary to create a smooth-running and successful supply chain.
Prologis’s experienced team can help you improve your company’s procurement logistics and management processes to make your supply chain operate more efficiently. Learn how Prologis can improve your industrial real estate property management.