Purchasing and logistics involves managing the movement of goods and services between seller and buyer. Starting from the purchase order and ending with the delivery of goods, a successful process has to include a number of steps. It is essential that the procurement and supply chain activities are managed effectively to ensure efficiency and profitability.
At the first stage of the purchasing and logistics process, the buyers and sellers need to establish terms and conditions of purchase. These should cover the buying price, payment and credit terms, product quality, warranty conditions and delivery timelines. Once the terms and conditions are agreed upon, the buyers can generate a purchase order (PO) for the goods or services that they need for their business.
Next, the goods need to be sourced from the most suitable supplier. The cost of the goods and services should be competitive, and the supplier needs to meet the specifications and standards established in the initial purchase agreement. At this stage, the buyers might also need to negotiate with a number of prospective suppliers so they can compare prices and services.
The next step in the purchasing and logistics process is the transportation of goods or services. In many cases, goods are sent by sea freight, air freight, road freight or rail freight. Depending on the type and quantity of goods that need to be sent, the buyers and sellers should select the most appropriate transportation option.
Another important step in the purchasing and logistics process is the tracking and monitoring of goods in transit. This is important to ensure that goods arrive on time and in the correct condition.
It is important to ensure that proper documentation accompanies shipped goods. The documentation needed for international purchases and deliveries usually includes a commercial invoice and a packing list, and may also include a certificate of origin, an insurance certificate and a bill of lading. These documents must be provided by the seller and must comply with the regulations of the destination country.
The buyers also need to ensure that goods cleared customs in the destination country. They need to make sure that customs duty, taxes and other related fees are paid and settled in accordance with the respective countrys regulations.
At the end of the purchasing and logistics process, the buyers need to check that goods or services have been delivered as expressed in the purchase agreement. This check covers factors such as quality, quantity, delivery time and place of delivery. If complaints arise, the buyers should have appropriate procedures in place to resolve them promptly and efficiently.
It is obvious that a successful procurement and logistics process requires careful planning and coordination from both buyers and sellers. When organizations manage their procurement and supply chain activities efficiently, it can lead to higher efficiency and increased profits. Indeed, the procurement and supply chain activities are an integral part of an organizations success.
