While procurement and supply chain management are closely related, they are not one in the same. Procurement is defined as the process of acquiring goods and services that your company needs to fulfill its business model. This entails a variety of other services such as contract negotiation, financing and more. Supply chain management is every activity involved in putting products in the hands of consumers. It includes a variety of supply chain operations such as manufacturers, wholesalers, transportation providers and more. While these two functional groups are intended to work in conjunction, many times the supply chain as a whole suffers from a lack of procurement-SCM collaboration. SupplyChain247.com recently published an article detailing the six functional procurement areas that can be improved by considering supply chain issues. These areas include: demand planning, inventory planning, leadtime optimization, product lifecycle management, footprint design and capacity planning. Working with supply chain managers to improve these areas can result in notable supply chain improvements. The top five benefits business realize when procurement and supply chain managers work together are supply chain risk reductions, improved customer satisfaction, cost reductions, improved flexibility and improved supplier relationships. The most advanced and efficient supply chain utilize technology in order to improve collaboration between these groups. The most frequently used technology is electronic data interchange (EDI), automated data collection (ADC) and warehouse management software (WMS). These three technologies can improve communication and available inventory data to make the procurement-SCM relationship operate seamlessly. Make the most of your functional teams by giving them all of the tools they need to work together to meet a common goal. To learn more about the importance of the procurement-supply chain management relationship and how to improve it contact Datex experts today at marketing@datexcorp.com or 800.933.2839 ext 243.

1. TOP 5
BENEFITS:
PROCUREMENT
& SUPPLY CHAIN
COLLABORATION
BY: ANGELA CARVER

2. Supply Chain Management vs. Procurement
• While these two concepts are closely related, they are not one in the
same. In this blog post on AZCentral.com the differences are clearly
defined:
– “Procurement is the process of getting the goods and/or services your company
needs to fulfill its business model. Some of the tasks involved in procurement
include developing standards of quality, financing purchases, negotiating price,
buying goods, inventory control and disposal of waste products like packaging.”
– “The supply chain consists of everybody involved in getting your product in the
hands of a customer. It includes raw material gatherers, manufacturers,
transportation companies, wholesale warehouses, in-house staff, stock rooms
and the teenager at the register…”
• While these two groups are meant to work together, many supply
chains suffer from lack of procurement-SCM collaboration.
http://yourbusiness.azcentral.com/difference-supply-chain-vs-procurement-vs-sourcing-20772.html

3. Importance of Procurement
• As an integral part of the supply chain, your procurement team is
responsible for managing sourcing operations. Their main goal is to
maintain a constant flow of raw materials, avoiding inventory
shortages.
• When performing these sourcing activities it is critical for
procurement staff to consider the dynamics of your supply chain and
tailor contracts to meet your needs. This will help to increase the
flexibility of your supplier relationships in the future.

4. Closing the SCM-Procurement Gap
• *SupplyChain247.com published the article “Bridging the
Procurement-Supply Chain Divide: Six Factors That Make a
Difference” which identifies specific functional procurement areas
that can be improved by considering supply chain issues and
implications. These six areas include:
1. Demand Planning
2. Inventory Planning
3. Leadtime Optimization
4. Product Lifecycle Management
5. Footprint Design
6. Capacity Planning
• When put into practice these improvements can lead to significant
cost savings, operational improvements and increased customer
satisfaction.
*http://www.supplychain247.com/article/bridging_the_procurement_supply_chain_divide_six_factors/directworks

5. Procurement & Supply Chain Collaboration
Supply Chain Risk Reduction
• When procurement and SCM teams work together to source
materials supply chain risk can be greatlyreduced.
• With information on both demand levels and available inventory,
warehouse operators no longer have to worry about stocking extra
materials and the associated carrying costs.
• Storing these excess materials poses a risk because of the potential
for future product phase outs or inventory damage and expiration
that makes costly safety stock worthless.

6. Procurement & Supply Chain Collaboration
Improve Customer Satisfaction
• With both teams working together, materials can move from your
supplier through the supply chain at a faster and more efficient rate
than ever.
• This helps to fill customers orders correctly and on-time, improving
the overall customer experience. Being able to move inventory from
the sourcing stage through the supply chain quickly is even more
important for custom orders where one-off items may be needed, but
are not readily on-hand.

7. Procurement & Supply Chain Collaboration
Cost Reduction
• A strong partnership between inventory procurement and supply
chain operators also help to reduce supply chaincosts.
• Carrying costs, as mentioned previously, can be reduced by creating
an end-to-end view of available materials and item demand. This
holistic view will help your procurement team to manage stock using
a just-in-time (JIT) fulfillment strategy rather than being weighed
down by excess inventory and the associated carrying costs.
• This end-to-end view will also help to reduce late orderoccurrences
that can be costly due to rush shipping fees incurred by your
operations.

8. Procurement & Supply Chain Collaboration
Improved Flexibility
• True collaboration across the supply chain allows users to collect
and share operational data that is useful for decision making.
• With a complete view of all functional areas, supply chain operators
can make more informed business decisions quickly, allowing them
to adapt to changes. This flexibility helps your supply chain to attract
new customers and better serve existing clients.
• This is most often accomplished through the use of a central
database such as a warehouse management system. Here all data
can be accessed quickly via reports based on criteria of your
choosing.

9. Procurement & Supply Chain Collaboration
Improved Supplier Relationship
• Procurement professionals often act as the bridge between suppliers
and the rest of your supply chain. How they communicate can have a
significant impact on your relationship.
• If your procurement team is closely integrated into your supply chain
communication with the supplier can be simplified. Many SCM
businesses have implemented automated EDI to help with this.
• This makes processing orders, sending and receiving invoices and
other communications faster and more efficient, making working
together more convenient.

10. Conclusion
• Joining these two independent functional groups can help to
optimize your operations while providing you with cost savings,
improved customer and supplier relationships and a more complete
view of inventory data.
• The most advanced supply chains are using technology such as EDI,
automated data collection and WMS to connect your procurement
team to the remainder of your supply chain using a constant flow of
data.
• Make the most of your existing teams by working together.

11. Optimize Your Supply Chain Procurement
Get more information on how to make your supply
chain more successful with a strategic
procurement-SCM partnership
Learn How