Individual procurement

The individual procurement in case of need belongs to the procurement logistics and is in addition to the

Supply policy , the
production-synchronous delivery ( just-in-time production ) and the
Production synchronized with delivery

a main procurement strategy.

This procurement policy largely excludes storage. If necessary, the procured goods are ordered and delivered directly to production.

This type of material procurement is widely used in individual (e.g. shipbuilding) and small series production (e.g. exclusive watches).

Explanations

The prerequisite for using this procurement strategy is that there are a sufficient number of suppliers with a corresponding range of products on the market. Since this is the case in most cases, the delivery and requirement structures are the same, which makes fast delivery possible. The delivered goods are sent directly to production without prior storage.

By eliminating the warehouse, substantial costs can be saved ( capital commitment costs, warehouse infrastructure costs, etc.). However, it should be noted that the relatively small procurement quantities result in a higher cost price and thus offset some of the savings. It is important to note here that most of the areas in which this policy applies have a non-dominant material cost component.

Due to the company's low market power , which is caused by the small order quantities, the main focus must be placed on procurement market research. It is essential to know which suppliers are offering which products on the market at which conditions. This is the only way to avoid waiting times.

Usually the individually procured goods are special requests. As part of this acquisition, it is therefore usually too long deployment times, which could adversely affect the level of service affects the company. On the part of materials management , it must be ensured that the special requests of internal users are kept as low as possible.

In order to fully exploit the cost-cutting potential, long payment terms should be agreed, as the time of procurement and the time of payment by the customer are far apart.

scope of application

If necessary, individual procurement is very often used in the area of individual and small series production. Although it does not cover all policy areas of materials management (materials management, suppliers and consumers), it is a very effective tool in the area of procurement strategies.

advantages

low storage costs
low capital commitment
Supplier autonomy
less effort
always up to date
clear
lower space costs

disadvantage

no immediate readiness for delivery and production (failures etc.)
low level of service (only applies in ideal cases)
frequent changes of supplier
intensive market research
more frequent orders
Product more expensive (per piece)
Price fluctuations

This disadvantage arises, among other things, if the company has to reckon with poor conditions and long order times from the supplier.

Individual procurement

contents

Explanations

scope of application

advantages

disadvantage

further reading