Procurement is not Procurement
How are manufacturers different than distributors? Let’s talk about procurement.
Buyers in a manufacturing environment typically synchronize their activities with the MRP system. The MRP planning horizons may take into account how many items are to be manufactured and what the Bills of Material contain. Some companies augment this process with kanban techniques. Whatever the mechanism, the system monitors a manufacturing process and sends buying signals based on how the process is flowing. Buyers are typically organized by product line. Their objective is to keep the manufacturing process flowing smoothly (at the lowest possible cost, of course).
In distribution environment, planning applications are simpler, since there are no Bills of Material. Buyers are typically organized by vendor rather than product. Like their manufacturing counterparts, they need to meet a range of urgent needs. They also try to optimize their order to get the best price and/or delivery terms from the vendor. That often means buying by the truckload. The procurement system not only has to tell buyers when it’s time to buy, it also has to help them assemble a truckload order.
Why do we care? Because we serve both manufacturers and distributors and we have different procurement systems to serve the needs of each. Some ERP vendors will tell you that procurement is procurement and any old software will do. They’re the vendors who believe that ERP is a commodity and only price matters. We think differently. If you’d like a system that can be set up to adapt to your needs (rather than vice-versa), give us a call.
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