The industrial sector is made up of various business lines. At the crossroads between the field and operational activities, the Procurement function plays a key role. Purchase processing, sourcing and supplier relationship management, inventory management: industrial buyers have a direct impact on the company’s production rate and performance. In recent years, they have grown into a strategic role. As they monitor expenses, they give the company the opportunity to improve its margins. Thanks to their deep knowledge of the market, they contribute to improving production and innovation, which is why end-to-end industrial procurement services matter.
Traditionally, the function is often associated with a more global ambition to reduce costs and improve the company’s margins. Its role is to combine reduced expenses and production line performance. To do this, industrial buyers will calculate the actual price of a function, by several means:
The Cost Price
It corresponds to all direct and indirect costs related to the manufacture and distribution of the product sold. The difference between turnover and cost matches the company’s profit. Also, costing is a key element in the performance calculation of an industry. End-to-end Industrial Procurement can influence this by analyzing certain suppliers (margin rates, manufacturing times, etc.) when negotiating contracts.
The Market Price
The point here is to compare the purchase price set by your own suppliers with that applied by the competition. To do this, buyers will be able to conduct market research.
Raw Material Indexes
The price of oil, steel, plastic, and rubber can have a significant impact on the cost price. Buyers have an effective way to prevent fluctuations in these prices from affecting the company’s business and finances. When negotiating supply contracts, buyers may request that an indexation clause be included. This means that below a given rate, variations in raw material prices cannot have an impact on the selling price of industrial suppliers.
For the same purpose of optimizing expenses, end-to-end Industrial Procurement teams also participate in inventory management. How much will be used by production? What are the sales forecasts? How much can I store without seeing my expenses go up? Operators must collaborate with the entire supply chain to determine the real needs of its players.
The team of engineers at Prismecs makes sure they excel and deliver the best industry solutions possible.
Every day, industrial teams around the globe use Prismecs’ complex systems to get the job done. Our team is home to interdisciplinary experts who collaborate to develop reliable, high-quality systems. We pride ourselves in identifying the challenge and using our ingenuity and expertise to solve it. By partnering with Prismecs, you get value that extends throughout the entire lifecycle of your systems.
Trustworthy. Timely. Cost-effective. Prismecs delivers on these promises while complying with the highest industrial standards. From the moment you share your problem, we hit the ground running to identify solutions—including alternatives that raise the benchmark for innovation. We model the system, design it and handle all integration and testing. In doing so, we redefine “turnkey” solutions.
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References:
https://www.mobility-work.com/blog/procurement-goals-challenges