Elements of a Successful Material and Supply Chain Management Program: Part III: Procurement

June 1, 2021

In this series we are explaining the six tactical elements that make up a successful supply chain program and how, with better management of materials, it is possible to show significant cost reduction, enhanced delivery schedules and increase customer satisfaction. Part Three covers the procurement program.

Part III: Procurement

Successful network builds would not be possible without a procurement program: having the right inventory available at the right time. There are four key elements to managing your procurement program:

Coordination with the build schedule.

Being in close partnership with those who execute the build and those who scope out specific parts of the build is important because it helps you understand the pace of the build. With this knowledge you can anticipate demand, manage material lead-times, and better plan proper stocking levels.

Forecasting.

In other words, getting from what needs to be built and working backwards to what products are needed to make the build happen. There are several predictive forecasting approaches that can be used; however, it is important to understand how the build will be conducted, so that you can ensure you match the products required for each sequence of a build.

Determine your buying plan.

Understanding the lead-times of the OEMs and actively managing those lead-times is an important part of knowing when to place your orders to ensure you will have your material on time. Having a strong pulse on the OEM’s performance – adhering to their lead-times, or not – as well as the project’s build schedule’s volatility, are very important to help you adjust your inventory buffer and when you need to purchase.

Measuring performance.

Measuring performance in the procurement process is vital. By measuring the performance of your activities, as well as those of others involved in the supply chain process, you will understand if your processes are delivering the results that you want. When the project stays on schedule, the processes are working as intended. However, if the build is delayed, then the processes must be quickly adjusted to get back on track. Inventory on-hand and on-purchase needs to be tightly managed to minimize the capital required. This is why understanding the velocity and terms of the inventory are essential.

KGPCo has operated successful supply chain and material management programs for over four decades. Our strong supplier relationships, vast inventory and advanced nationwide distribution network means we can deliver when and where our customers need us.