Logistics procurement is a key stage in the supply chain. It is the starting point for the production and distribution of products. It is therefore interesting to know what this logistics procurement stage actually means for warehouses. In this article, we will explore its definition and importance. We will then identify how companies can optimise this process to improve efficiency.
Logistics procurement: definition
🔎 A quick reminder: the supply chain
Before getting to the heart of the matter, it's important to know what this technical term means. Also known as the Supply Chain, it refers to all the stages and processes involved in the production and distribution of products. In other words, this chain covers different activities: planning, procurement, production, logistics and distribution and customer service.
Logistics procurement refers to the activities and processes involved in obtaining the goods (or services) required for a company's operations. The aim is to ensure that the company has the stock it needs to operate.
This includes planning requirements, selecting suppliers, negotiating contracts and purchasing and delivering products. This stage is not just about buying at the lowest price. It is about getting the best value, considering quality, delivery and continuity of supply.
Procurement strategic goals
The main purpose of procurement is to ensure that the requisite resources are available at the right time, in the right place and at the right cost. This main target helps to maximise efficiency while minimising expenditure.
Among the various strategic goals that result from this, some are crucial for companies:
1️⃣ Reducing costs and increasing efficiency: minimising costs while ensuring the quality and availability of raw materials, for example.
2️⃣ Relationships with suppliers: establishing solid, long-term relationships helps to ensure the reliability and quality of supplies.
3️⃣ Risk management: identifying and managing supply-related risks helps to avoid potential interruptions in the supply chain.
The challenges of logistics procurement
Logistics procurement is faced with a number of challenges: price changes, risks of stock shortages, international regulations... To overcome these many challenges, companies can adopt different strategies, such as:
1️⃣ Diversification of supply sources: not being dependent on a single supplier or market reduces risk.
2️⃣ Use of advanced technologies: using our Satelix Logistics WMS optimises the supply chain by providing better visibility and stock management.
🔦 A concrete example:
Walmart, one of the leading American retailers, has optimised its supply chain by reducing the number of intermediate suppliers and by buying in large quantities. We call this economy of scale. What's more, they have also acquired a stock management system driven directly by suppliers. This enables them to always have products available.
Tomorrow’s procurement
As technology continues to evolve, logistics procurement is changing. The use of artificial intelligence and predictive analytics is becoming increasingly common. Companies can then forecast price trends, demand and other important factors to take into account.
In summary, logistics procurement is a fundamental element influencing the sustainability and success of companies. By understanding this stage and its objectives, it is possible not only to reduce costs, but also to improve responsiveness and competitiveness. Using a WMS can be a good way of optimising logistics supply. By reducing costs, but also by having a clear and precise view of stocks and by satisfying customers as effectively as possible.