Do Logistics Solutions Hold the Key to Easier Procurement

Published : November 22, 2014

man-pointing-at-drawings-of-logisticsAs significant influences on the success of all businesses dealing with goods and services, procurement and logistics (and the solutions needed for each) are invariably interdependent on each other to support all stages of a supply chain's structure. But while errors and obstacles faced in sourcing materials may not have a direct impact on how you implement logistics solutions elsewhere in your business, the same cannot be said for how your logistics impact procurement.

Without exceptional solutions to logistical issues, procurement typically suffers inefficiencies that, while allowing the system to continue operating, does nothing to minimize costs, streamline security or develop core competencies to ensure continued viability of the business.

Creating Logistics Solutions: Where to Focus and How to Implement

Transparency, accountability and cost efficiency/effectiveness are primary principles reinforcing both logistics and competent procurement. By keeping documentation as accurate and accessible as possible, transparency strongly contributes to establishing reliable and vigorous business relationships with suppliers and buyers. Additionally, because accountability and efficiency directly impact operational fundamentals, benefits experienced by companies actively engaged in logistics solutions will effortlessly transfer to its customers.

Solutions to easier procurement through implementing logistic solutions include but are not limited to the following objectives:

  • Purchasing quality items and materials from dependable, affordable sources
  • Ensuring expedited delivery by working with efficient and capable suppliers
  • Continuously searching for and evaluating reliable supply sources for present and future reference
  • Identifying reputable supply sources through limited, multi-stage or open tender that address a company's needs
  • Obtaining professional (as opposed to internal) estimations and consistent monitoring of stock levels to economically address business needs, operational policies, priorities and goals and time needed to replenish (if applicable)
  • Establishing predictable, yet flexible, shipping schedules so that retailers' RADs (requested arrival dates) are met without difficulty and chargebacks are avoided
  • Improving labor planning and processing of goods by ensuring inbound schedules are just as predictable as shipping schedules
  • Minimizing dock congestion will reduce wait times, decreasing your company's carbon footprint and leading to a more efficient receiving system.

Collaborative Distribution Environments: An Innovative Logistic Solution to Streamline Procurement

Four defining characteristics of a collaborative distributive environment include:

1. Co-location of similar products in the inventory of warehouses run by neutral 3PLs to expedite shipping to similar retailers.

2. Maximized benefits of these distribution centers realized by changing how purchases are made. For example, buyers would no longer be able to order from hundreds of suppliers separately. Instead, retailers would have buyers utilize consolidated orders for inventory located in the same distribution centers.

3. Third-party logistics providers who process and ship orders out as one shipment, making sure to apportion transportation expenses based on a percent of each consolidated shipment (according to the weight of individual supplier's products)

4. Collaborative distribution that creates a win-win scenario for manufacturers, retailers and 3PLs by establishing a viable condition that connects like shippers for the advantages of shared savings and improved logistics.

Logistics Solutions and Cutting-Edge Technology

Remaining competitive globally now demands that companies assimilate technology into their supply chain management/logistic systems. In addition to enhancing transparency and accountability, logistical technology offers rigorous methods for evaluating production activity, anticipating and preventing system failures and modifying supporting supply chain components to guarantee delivery of superior products. When digital technology complements logistics solutions, all links in a supply chain can be simultaneously audited using an automated notification system.

Electronic invoicing and tracking, computerized shipping readouts and even supply chain apps designed for smart phone use are just a few high-tech logistic solutions available now that can facilitate procurement, help generate more ideas to further develop the concept of the collaborative distribution environment and improve the ability of 3PLs to provide services essential for any relevant company to remain competitive and successful in today's globalized business community.

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Topics: Supply Chain Logistics

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