5 ways the purchasing department can optimize the supply chain
As a buyer of indirect materials from large industries, the idea of optimizing a supply chain from start to finish may seem a little intangible, as all its integrated steps require the work and strategic vision of various areas. However, there are some actions that can be implemented in the purchasing department, so that process optimization is achieved. We have listed below some key points that should be noted to better manage your supply chain.
1. Promote integration
Intrinsic to the supply chain is the mutual dependence between its phases so that it can be successfully executed, with one of the biggest concerns with supply chain management being the lack of communication between the stages. It is true that the technology available today can facilitate this process, but the key to good chain management remains integration.
A supply chain management model should include ways to provide more information exchange between different stages and areas so that all perform better.
In the midst of the Digital Revolution, the best way to do this is by using integrated management software for sensors and other devices, so that data captured and transmitted in real time can be quickly distributed and processed in order to generate valuable information about possible risks, even before they happen, and projections of better solutions.
Having real-time information helps you to have a holistic view of the entire chain and the ability to act to remedy failures and leverage what is already good. For this to be possible, it is also necessary to have dashboards with key performance indicators (KPIs) and to monitor them closely, questioning and analyzing them.
To make better use of the annual budget and avoid delays in parts delivery, planning, linked to risk management designed to work in the current VUCA scenario, is essential. It is with well-structured and contextualized planning that it is possible to adapt and rethink processes.
Planning forecasts the demands for a given period based on the department’s purchase history. To forecast demand for December, go back a year, analyze the data, apply the growth or decrease comparisons, and you will have the expectation for the month.
In the same sense, it is essential to understand what is in stock, what needs to be replaced and in what quantity, to avoid deterioration of parts and subsequent waste. There are countless variables that affect the final cost of production. One of them is inventory control, which, if done well, can avoid high maintenance costs, excess purchases and higher personnel expenses than necessary.
When considering the company’s stock needs, the purchasing sector acts preventively, making purchases before the demand arises, based on some usage forecasts. In this way, urgent purchases are reduced, giving space to negotiate lower prices.
3. Be aligned
Establishing protocols and proper training of employees significantly reduces the chances of errors in submitting the purchase requisition. The requisition data is essential to proceed with the search for the ideal supplier and decide for the purchase, poorly computed or wrong information can lead to unnecessary purchases.
It is interesting to invest in ways to automate this stage of the purchasing cycle, reducing paperwork and making the activity of submitting an order more streamlined and simplified.
4. Strategic choice of suppliers
Always try to maintain a close relationship with your suppliers, as well as being transparent about your company’s needs and expectations, so that deliveries can match your standards and priorities for each purchase, whether price, delivery, or payment term.
In the event of unforeseen circumstances, it’s easier to resolve a problem with a partner you know well than to deal with someone you don’t know what to expect.
When selecting suppliers, it is a good tip to have a history of relationships with them and observe the performance of those who already have active service contracts. Knowing if they respond promptly to emails or delay deliveries are examples of key points so that your choice will not bring problems in the future.
Soluparts, based on its entire history of relationship with suppliers, has a ranking with the best in the market so that our customers do not have any problems with their purchases of indirect materials.
After checking the internal system and having established the need for a new supplier, it is important to analyze, in addition to their prices, support, and payment and delivery conditions, their reputation, and commitments to ethics and sustainability.
The assertive choice of the supplier increases the value of your supply chain, even reaching competitive advantages.
5. Have a suitable partner
To facilitate and speed up quotations, the suggestion is to partner with a company connected with the best suppliers around the world, capable of finding the best prices and conditions to meet your needs. This way, you can concentrate multiple orders in one place, making the process more organized.
Closing partnerships with this type of company is very valuable for your business, as it reduces the workload of the purchasing department, streamlines routines and allows the process to be conducted in a more coordinated manner, being an example of a win-win situation!
In addition, by optimizing routines, the team has more time to deal with other procedures, such as better organization of procedures, metrics, innovations, analysis and forecasts, which have a direct impact on the control of deliveries and deadlines for each supplier.
Why is the purchasing sector so strategic?
In an increasingly competitive world, companies need to act strategically, maximizing activities that directly affect productivity and business profitability. Each action is placed under a microscope to assess its viability and the return it can bring.
When it comes to cutting costs and reducing expenses, the effective management of the purchasing department, linked to the use of new technologies, can guarantee very positive results, whether by guaranteeing the best prices in the purchasing process or by improving the performance of the sector.
In addition, lower purchase prices directly impact the final price of the product, increasing the company’s competitive advantages. Therefore, the evaluation and negotiation strategy with suppliers must be in line with the organization’s objectives, so that it is possible to project profit margins and establish attainable goals.