Procurement and supply chain management plays a pivotal role in most organisations as it has a major influence on the overall costs and performance of a business.
The procurement process involves many factors, including;
- Determining company needs
- Strategically forecasting demand
- Planning purchases
- Conducting market research
- Evaluating and identifying potential suppliers
- Selecting suppliers with the best quality for the lowest cost
- Managing supplier relationships
- Defining standards and specifications
- Negotiating prices and terms
- Establishing payment details
- Developing contracts
- Making purchases
- Managing and controlling inventory
In manufacturing, direct procurement is the act of acquiring raw materials and goods for production. These purchases are generally made in large quantities, acquired from a pool of suppliers at the best possible cost, quality and reliability.
Supply chain disruption is the biggest threat to business procurement. The economy is ever changing and it is important for manufacturing companies to be ahead when it comes to risk management.
Although procurement has connected with various e-markets, procurement professionals must maintain strong relationships with suppliers, which includes establishing clear lines of communication and building trust.
Due to these growing e-markets for manufacturing procurement, mitigating risk is crucial to maintaining a supply of raw materials. As highlighted in the pandemic, a heavy reliability on offshore suppliers left Australian manufacturers unable to sustain their operations.
The Australian Government pointed to the crisis as proof of the need for local procurement.
“We can no longer rely on the supply chains that existed before the pandemic,” stated, Industry Minister Karen Andrews.
In areas such as transport and health, where the federal government provides funding, a collaborative national approach is crucial to ensuring Australia can sustain itself through onshore procurement.