Commodity material procurement implementation of the basic steps include what

What are the basic steps involved in the implementation of commodity material procurement:

1. Purchasing

In most purchasing departments, for the main purchasing tasks every employee is obliged to participate in the following:

● Prepare and manage the purchasing process;

● Check the requirements;

● Select the supplier;

● Place the order;

●Arranging purchases and shipments;

●Analyzing and negotiating product prices;

●Executing plans and placing orders;

●Meeting with salespeople;

●Imploring compensation claims against suppliers;

●Learning about access to capital;

●Identifying engineering and product improvements;

●Improve and train other purchasing personnel;

●Maintain documentation of product and supplier information;

●Maintain documentation of supplier performance;

●Identify new sources of supply and establish standardized purchasing processes;

●Make production or purchasing decisions;

●Analyze raw materials and components;

●Analyze market trends;

●Monitor and monitor market conditions and trends;

●Monitor and review market conditions and trends;

●Monitor and review market conditions and trends;

● Analyze and forecast market trends;

● Train users appropriately in the purchasing process;

● Provide information on product design and improvement;

● Strengthen contract management and management of suppliers;

● Develop relationships and form strategic alliances with suppliers;

● Provide processes to cut costs;

●Identifying the use of more effective technology;

The use of new technology has separated purchasing from the task of developing strategy and executing it, and purchasing staff are spending more and more time and effort on improving and managing relationships with suppliers and internal customers.

2. Contracting

An essential function of purchasing is to enter into contracts with suppliers, which are designed to shorten time and save costs, and to serve as a basis for the purchasing department in placing orders, receiving, and paying for goods or services.

3. Raw Material Management

Raw material management is the management and organizational approach used within an organization to integrate the supply management function, which involves planning, acquiring, flowing, and distributing product materials from the raw material's original state to the final product state. Typical activities include purchasing, inventory management, receiving, warehousing, control of raw materials, production planning and control, transportation, and recycling.

Many purchasing departments have raw materials management partially or wholly as part of their responsibilities, which include determining the quantities of raw materials needed, defining relationships with internal customers, determining purchasing schedules, planning transportation stops, inspections, managing the transportation process, managing inventories, orange-checking inventories, and transferring disposal of obsolete items.

While the purchasing department plays a key role in planning, internal demand conditions are usually taken into account when determining stockpiles and issuing regulations. However, these requirements are sometimes found to be under the control of the engineering or quality assurance departments.

4. Supply Management

Supply management is a systematic management concept used by organizations to optimize material costs, quality, and service, and is further refined in the execution of a range of activities such as purchasing, transportation, warehousing, quality assurance of raw materials, inventory management, and distribution of raw materials, which are often planned in the same way as materials management is planned for raw materials throughout the organization. Planning, these activities are often not only in each department to complete, but from a global perspective.

5. Service Management

Procurement is about acquiring additional services, and the need to procure services is more complex than the need to procure raw materials. There is a need for continuous improvement in the development of procurement plans, identification of procurement sources and qualification verification, signing of contracts, and tracking operations.

6. Logistics or Supply Chain

Logistics is a series of processes to ensure that customer demand, the process includes a series of efficiency, cash flow, raw material storage, work-in-process inventory, finished goods inventory, sending site to the consumer site of the communication of information, such as planning, execution and control. From another perspective, logistics is a comprehensive description of materials management and distribution. Logistics is the control and planning of all activities which include the internal movement of essential goods as well as the external activities of the final product. The basic purpose of logistics is to enable the organization to achieve a certain level of service and to work as efficiently as possible under this premise, with the ultimate goal of enabling the entire enterprise to achieve its goals while maintaining the lowest total cost conditions and overall coordination of the various departments. Procurement is an important part of logistics, and more and more enterprises to procurement as an important task.

A supply chain is an organized set of supply activities that includes the activities of a range of firms that add value to a product, supply each other with materials, provide value-added activities in the production and processing of the product, and ultimately create products and services that are purchased by the final consumer. For a purchasing department, the concept of supply chain includes the identification and management of the supply chain that plays a particular role in the operation of the organization.

7. Licensing

Procurement often also has the function of negotiating and signing licensing contracts with suppliers for software, patents, technology and copyrights.

8. Commodity or Inventory Planning

Purchasing organizations also have the obligation to determine how much inventory the organization should hold, with the main areas of application being MRO inventory, wholesale or distribution, and retail.

9. Quality systems

Although purchasing is not normally directly related to quality systems, suppliers can be evaluated through quality systems. Therefore, techniques for evaluating incoming materials and services are also used in the purchasing process, especially the processes and criteria for acceptance testing.

10. Document Management

The purchasing department will set up special document systems for the needs due to the maintenance, withdrawal and destruction of office documents or contracts, correspondence, papers and other records. Purchasing also provides sales slips, details, insurance policies, contracts and other similar documents. The role of these documents is primarily to be used to forecast trends, show historical records, determine future goals, provide continuous data, and ensure that the reasonable needs to achieve organizational goals.

11. Risk

Risk management is the management of the potential risks that accompany higher returns. Front-end procurement management includes activities that go beyond traditional procurement management, such as reducing the number of suppliers, developing long-term alliances, completing early supply activities, and outsourcing beyond traditional procurement activities. This trend will increase the potential risks across the organization and the procurement department, for example, the establishment of long-term alliances will expose the business to the risk of uncompetitive pricing, out-of-stocks in the event that a supplier's equipment is damaged, or the possibility of lagging behind in the development of new technologies. If procurement manages these risks effectively, the organization as a whole will be highly profitable. If purchasing fails to control ahead of time (by simply minimizing risk with traditional controls), the overall profitability of the organization may be undermined.

Experienced purchasing professionals are able to prevent these risks in the early stages of purchasing, primarily through measures such as rigorous vetting procedures for supplier qualifications, clear cost allocations with partners, outsourcing of raw materials, and improved quality management systems. In addition, they narrow down the dangers in terms of activity time through a range of means such as the use of commodity cards and the adoption of systematic contracts.

12. Investment Recovery

Many organizations use a systematic way of concentrating organizational capacity on the management of surplus equipment and raw materials, as well as the recycling, sale, or disposal of waste materials, in a way that makes the best possible use of funds.