The value of purchasing management in supply chain

“Things have value only when people think they have value,” morick once said. “It is true that no matter how valuable a thing is, it is almost priceless if it is not recognized by the market and the public. This is more or less what our ancestors love to say: there is no market with price. Today we are talking about the same topic about value, but it’s only relatively subdivided, from supply chain to procurement management. What role does purchasing management play in the supply chain? In these roles, what important responsibilities does it shoulder? What benefits do these responsibilities bring to the enterprise? Maybe we can basically understand the value of purchasing management in the supply chain only if we understand this clue.

First, let’s look at the definition of purchasing in supply chain management of American Supply Association: a series of activities closely connected with production and inventory to identify, purchase, acquire and manage all the resources it needs or potentially needs in order to pursue and achieve its strategic objectives.

What is the definition of supply chain management? Supply chain management is to link all node enterprises such as suppliers, manufacturers, distributors, retailers and final consumers in a chain for optimization, so that the means of production can be turned into valuable products at the fastest speed in the production and distribution links, and finally reach the hands of consumers with consumption demand.

The value of purchasing management in supply chain can be roughly divided into three aspects: reducing cost, improving capital turnover and helping enterprises to innovate and operate. How to reduce costs? In the whole supply chain, suppliers can get the raw material inventory and their purchase information of production enterprises smoothly, reduce the purchase work; at the same time, enterprises are related to each other, reduce the transaction cost of brother link, and shorten the transaction cycle. Of course, there is also an important cost is inventory. The purchase management of supply chain is based on information sharing, shortage and replenishment, basically realizing zero inventory.

Procurement management in the supply chain is basically automated and intelligent. For example, we are familiar with SAP cloud ERP system to build an end-to-end digital supply chain, which is not only procurement management, but also realizes the comprehensive interconnection of the supply chain. To improve the accuracy of commodity prediction, not only the mutual benefit between enterprises, but also the customer satisfaction.

How to help enterprises innovate? The value in the supply chain goes back and forth, continuously creating value and wealth for the enterprises in the supply chain. In such a process, a visionary enterprise is not only to meet the current profits, but also to focus more attention and resources on a few core businesses that can maintain long-term competitive advantage, so as to upgrade its future competitiveness. The earliest Ge is a good example. It only keeps one or two of the industry’s businesses and sells or transforms the rest. Maybe this is what many enterprises should learn from.

After a brief review of the value of procurement management in the supply chain, we find that its value is very considerable, which can meet the needs of current cost reduction, speed up capital turnover, and achieve excellent operation based on the development of future innovation. In fact, all of these coincide with SAP’s management philosophy. Whether it’s enterprise management or supply chain management, or even detailed procurement management, meeting the needs of both the present and the future is always an important factor for enterprises to achieve sustainable development. However, in the era of technological change, digital transformation can be realized through cloud computing, big data, artificial intelligence and the Internet of things, accelerating the optimization of enterprises from local management to comprehensive management.

For a more comprehensive understanding, consult the acloudear — SAP partner.

This article "The value of purchasing management in supply chain" by AcloudEAR. We focus on business applications such as cloud ERP.

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