ALIGNED PURCHASES, A STRATEGIC LINK IN THE SUPPLY CHAIN.

August 3rd, 2013

 

The purchasing area is of fundamental importance within the chain, since it links the phases of

sales planning and material requirements plan.

The importance of the fundamental purchasing area within the supply chain,

links the phases of sales planning and material requirements planning.

When talking about supply chain, most people will think of warehouses,

logistics, transportation and will usually have issues related to the

production planning or even consider sales topics; however, one of

The main themes in the integrated supply chain alignment is the area of

shopping.

Purchasing areas are commonly conceptualized as service sectors that

have the responsibility of censusing the market, guaranteeing the supply of materials in

time and form, obtaining the best market conditions, however, rarely

These areas are defined as one of the main links within the chain of

supply.

The conceptualization of the purchasing areas as a separate operation, or a link

that does not connect with the other links in the chain, not only delimits the generation of

value in the company, but also has a negative impact on other aspects of the

supply chain, for example, when seeking a reduction in price, one could accept a

volume discount, in which the extra volume could negatively impact the

inventories, distribution and storage costs or possibly it can generate

obsolete or expired. Or else; an incorrect consideration of the frequency

replacement of materials, by the purchasing area, could generate a

untimely placement of the purchase order which would generate line stoppages, increase

in production costs or even cause a lost sale due to lack of

availability of materials to make or pack.

INTEGRAL VISION IN THE BUSINESS PROCESS

Being the shopping area a link that should be completely fused to the

throughout the supply chain, this department must have the vision

complete by creating value, agreeing on cost reductions, and making inventory decisions.

It is therefore necessary to start from an integral vision of the supply chain, and thus

consider that purchasing is also co-responsible for answering key questions in

chain management, such as: how much material should be requested?, with what

frequency of replenishment should the supplies be ordered?, what is the delivery schedule

optimal by the supplier? What is the optimal inventory level that should be

maintain, both in the supplier's facilities and in its own warehouses, according to

internal parameters (for example material segmentation, capacity restrictions

of storage, frequency of replenishment required, etc.) and external (lots

minimum, delivery times, demand behavior, among others)?

In order to answer these questions, it is very important to consider all the

factors and those responsible frequently involved in the processes; the above

can represent an important effort if there are not at least three

Key aspects:

1) An integrated vision of the roles and responsibilities of each of the links in the

supply chain.

2) Implemented processes that achieve the alignment and integration of all the links

of the chain, as well as the linking of the key performance indicators that allow

an end-to-end vision that enables decision-making.

3) Visibility and reliability of key information, such as inventories (including

transits and material in process), open production orders, costs, sales orders

and master data (delivery times, minimum batches, inventory levels, etc.),

among others, which promote the detonation of actions throughout the supply chain and

timely decisions.

In conclusion, the purchasing area, which is the fundamental part of the supply chain

must be integrated into the key business processes, from the planning phase and

simulation to the execution phase. To do this, you must have a model of

Well-defined and implemented processes that include the fundamental pillars of

organization and technology, and that enables the person responsible for each link to focus

their efforts in generating value, taking into account the impact far and wide

of the company, aligned to the consensus vision in the day-to-day operation.

Sandra Aragonez and Armando Diaz*

* Supply Chain Manager and Managing Director responsible for Sourcing &

Accenture Procurement.

03 | 06 | 2013