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The role of strategic procurement in logistics management
Strategic procurement has the potential to dramatically improve the processes involved in logistics with its long-term approach. Here is how.
Logistics management refers to the full range of activities that are concerned with the movement of goods and services from their point of origin to their final destination. This includes transportation, inventory management, storage, packaging, and security.
Since procurement is also a process that involves the acquisition of goods and services for production, inventory, and sales, it is closely tied to logistics operations.
As such, strategic approaches to procurement also have the capability of improving the logistics management function of a company. Here is how.
The benefits of strategic procurement in logistics management
Some benefits you can expect to gain by implementing strategic procurement in your logistics management functions are:
Optimised freight costs
Strategic procurement approaches enable logistics managers to negotiate favourable terms with carriers, optimising shipping rates and routes. This reduces transportation costs which are a significant contributor to logistics expenses.
Efficient inventory management
As strategic procurement encourages strong relationships with suppliers, timely and accurate delivery of goods and services can be ensured, minimising stockouts and excess inventory, and enhancing the supply chain’s overall efficiency.
Resilient supply chain
Strategic procurement promotes diversifying the supply chain, which reduces the risk of disruptions in logistics operations. Enhancing supply chain resistance ensures the consistent flow of goods, especially during unexpected events.
Quality-controlled deliveries
Strategic procurement involves setting stringent standards for the goods and services procured by suppliers. This translates to a reliable and consistent flow of high-quality goods that meet the required expectations of the business.
Adaptive responses to market changes
As strategic procurement is a long-term concern, It equips the logistics arm of the business and can quickly adjust to the changing market conditions. This includes rapidly changing routes, transportation modes, and inventory levels.
Enhance your project management functions with strategic procurement consulting from Kronos Group
Well-established logistics management functions can improve customer experience, reduce operational costs, optimise route planning, boost profitability, and deliver greater productivity and efficiency.
To this end, Kronos Group’s expert group of procurement consultants offer extensive services to improve your strategic procurement approach.
Kronos Group’s procurement consulting services include:
- Procurement maturity assessment
- Procurement excellence
- Procurement training
- Procurement BPO
- Spend optimisation
If you are looking to utilise the benefits of strategic procurement in logistics management, Kronos Group is your trusted partner to ensure the best returns on your investment.
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FAQs
Procurement logistics involve activities related to acquiring goods and services such as centralised procurement, decentralised procurement, outsourced procurement, global procurement, and reverse procurement.
This refers to the process of acquiring the necessary goods and services for production, inventory, and sales in a business.
It is a critical aspect of supply chain management that ensures the availability of the right materials at the right times for the right prices.
Purchasing refers to the specific transactional aspect of acquiring goods and services, while procurement refers to the more strategic and all-encompassing function of managing the supply chain and supplier relationships.
Both aspects are vital to achieving effective and efficient logistics operations.
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