Procurement principle

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Procurement principles come from materials management and are fundamental stipulations for (re-) procurement and stockpiling of production material. Typical general principles include stock procurement, individual procurement, and synchronous procurement. There are also other forms or mixtures of forms. The definition should serve the economic efficiency and simplify the decision-making and achieve a solution for the optimization problem of costs and availability ( service level ).

Stock procurement

When purchasing supplies, relatively large quantities are obtained and stored.

advantages

  • Ready to deliver at any time
  • No interruption in production
  • Exploitation of price advantages (high purchase quantity = better conditions)

disadvantage

  • High capital commitment
  • High interest and storage costs
  • Risk of obsolescence or deterioration in the quality of the products

Individual procurement

In the case of individual procurement, the required materials are only ordered when a specific order has been received, i.e. a need has arisen. This avoids stock-dependent capital commitment as well as interest and storage costs.

advantages

  • Short storage time
  • Low capital commitment

disadvantage

  • No immediate delivery and production readiness
  • High proportion of procurement costs (shipping, customs fees, etc.)
  • Great need for coordination

Procurement synchronized with sales or production

In the case of sales-synchronous procurement (also called production-synchronous procurement or immediate use without storage), goods are delivered as soon as possible before use.

The warehouse is limited to low safety stocks, which requires correct and continuously currently available stock and consumption quantities. Usually there are delivery contracts that involve high penalties if the deadlines are not met.

Examples of immediate use without a warehouse are just in time and just in sequence (both push principles) and Kanban (pull principle).

The disadvantage of the concept is that if there is a lack of material, any contractual penalties do not advance the work process. Transport capacities are also wasted.

See also: materials management , procurement logistics

literature

  • Theodor Nebl: Production Economy. Textbooks and handbooks in business administration, 6th edition, Oldenbourg Wissenschaftsverlag 2007. ISBN 3486584936 .