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Procurement: What is procurement, definition and procurement cycle [Complete Guide]

Today, it is essential to meet fast delivery times and to be able to respond quickly to our customers’ demands. In this respect, well-planned procurement allows us to forecast delivery times with precision. But what exactly does it consist of?

Procurement is a key process for companies involving the acquisition of goods and services. This practice is fundamental to ensure the proper functioning of the organization, and ranges from negotiation with suppliers to stock control.

What is procurement? Definition

Procurement refers to the set of activities and processes involved in the acquisition, storage and management of the resources necessary for the operation of a company or organization. This term covers the entire life cycle of products or services, from the planning and purchase of raw materials to the distribution and storage of final products.

In business, procurement involves the efficient management of resources and the supply chain to ensure that a company can meet its operational and production needs adequately and cost-effectively. This includes negotiating with suppliers, inventory management, logistics and process monitoring to ensure a continuous flow of goods or services.

Benefits of efficient supply management

Correct supply management allows companies to:

  • Reduce operating costs.
  • Improve the quality of products and services.
  • Optimize the supply chain.
  • Increase customer satisfaction levels.

The procurement cycle with a WMS

Warehouse Management System (WMS) procurement refers to the use of a technological platform designed to manage and optimize operations related to the storage and distribution of products in a company. A WMS is a key tool in the procurement process, as it automates and facilitates various activities, improving the efficiency and accuracy of logistics operations.

How is procurement integrated with a WMS?

1. Inventory recording

The WMS allows you to maintain a real-time record of inventory levels. This facilitates the identification of procurement needs by displaying up-to-date information on product inventories.

2. Procurement Order Generation

Based on inventory levels and established policies, the WMS can automatically generate procurement orders. These orders specify the products to be purchased, the quantities required and other relevant details.

3. Interaction with suppliers

Some WMSs are integrated with supplier management systems, allowing direct communication and electronic transmission of purchase orders. This integration streamlines the negotiation process and reduces the possibility of data entry errors.

4. Receiving and scanning of products

When products arrive at the warehouse, the WMS can be used to scan and record the receipt of goods. This automatically updates inventory levels and provides real-time information on product availability.

5. Efficient warehousing

The WMS can assist in assigning optimal storage locations for each product, which facilitates inventory management and improves efficiency by reducing search times.

6. Order tracking

WMS enables accurate real-time order tracking, including product location in the warehouse, order status, and estimated delivery dates.

7. Returns management

In the event of returns, the WMS can efficiently record and manage the return of products to the warehouse, automatically updating inventory levels and product availability.

8. Analysis and reporting

WMS provides analytical tools to evaluate the performance of the warehouse and procurement process. This includes identifying areas for improvement, optimizing routes and managing inventories more effectively.

Quality control in procurement: ensuring customer satisfaction

Quality control in the procurement process is essential to ensure excellence in the products and services offered to customers. Rigorous supervision of suppliers, verification of goods received and evaluation of customer satisfaction are key aspects to maintain high quality standards. To achieve this, it is advisable to implement the following practices in the procurement processes.  

  • Establish product inspection protocols to ensure compliance with the quality standards established by the company.
  • Conduct periodic audits of suppliers to verify compliance with quality requirements agreed in contracts.
  • Collect and analyze customer feedback to identify possible areas of improvement in the procurement process and ensure customer satisfaction.

Procurement is vital to efficient supply chain management. From the identification of needs to final delivery, each phase of the procurement cycle plays a critical role. Optimizing this process is essential to ensure the timely availability of resources, reduce costs and improve the quality of the products or services offered.

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