At its core, procurement in logistics refers to the sourcing of services that a company needs to receive necessary products and components, and deliver its products. Namely the process within the supply chain focusing on the logistics of receiving raw materials, replacement parts, and other necessary items for the manufacturing process to work.
It concerns the storing, organizing, and shipping of these materials to and from the warehouse. As such, a procurement logistics team is responsible for product sourcing, selection policies, terms and conditions, communication and purchasing strategies to assure the cost is kept as fair and as low as possible.
So, how can we at Prognos help you optimize your procurement and logistics activities?
The importance of performing a logistics cost analysis
Cost is an important aspect to consider not only in logistics but in all business decision making within an organization. A company usually has hundreds, maybe thousands of different costs associated with their activities. Where do you even begin?
In the end, not all of the costs are worth spending time on. They might be too small to matter in the bigger picture, or they are simply as optimized as they can be. For this reason alone, a company needs to perform a regular logistics cost analysis of its logistics procurement activities. The purpose of a logistics cost analysis is to identify savings opportunities and gather the necessary information to make informed and better spending decisions, increase efficiency, and gain leverage in negotiations.
We want to be clear that Prognos platforms are NOT capable of automating the process of creating a cost analysis concerning the procurement of logistics. We can however be an important part of your cost analysis activities where we’re able to support you in the following ways:
- Consultancy services: We offer end-to-end spend/cost analysis consulting services where we help you create a logistics cost analysis manually from scratch.
- Should-cost trackers: After you’ve performed a cost analysis and found out what areas need and can be improved, you can leverage our different tools to negotiate within those areas. The should-cost trackers allow you to track market price development and use the data to ensure the vendor price is fair over time within areas exposed to competition.
Just remember that the should-cost price is only a benchmark. By utilizing competitors to the specific carrier you can push it even lower, Prognos’ should-cost trackers optimize your procurement and logistics activities, helping you ensure the right price over time, thus allowing for longer collaborations with vendors.
Access vital data to get the most out of your suppliers with Prognos
Knowledge is power, and data is knowledge.
Which is essentially what we supply our clients with. We give you access to all the necessary cost data tailored according to your needs and situation to bring your purchasing and logistics activities to the next level., We enable you to act upon identified cost-saving opportunities for your procurement in logistics and get the upper hand in your vendor negotiations.
Our platforms gather data from multiple sources all over the world to give you up-to-date data in one place where you can access indices for raw materials, manufacturing costs, taxes & transportation costs, labor costs, and currencies:
- From our platform, Prognos Tailored, you can access interactive, continuously updated, reports where you can drill down in your materials, compare the prices to your cost development, export the graphs, or export the underlying data for further analysis. The reports are customized for you by Prognos, leaving you to focus on the negotiation strategy and not digging for the data. You also get access to several different features including should-cost trackers, selected indices, and country focus.
- With Prognos Online you get access to over 8 000 indices on raw materials, components, wages, and currencies in an interactive online tool capable of transforming the data to fit your needs for your procurement in logistics.
Get in touch with us today and learn more about what benefits our platforms provide in terms of procurement in logistics.
Frequently Asked Questions
What are the benefits of using Prognos’ procurement tool for the logistics industry?
Logistics is a complex, vast industry that involves numerous activities such as storing, organizing, purchasing, shipping, etc. The logistics industry is prone to risk and hence ensuring efficiency within processes is of utmost importance. Through Prognos, you will be offered numerous benefits to enhance your procurement in logistics, such as:
- Logistics cost analysis
- Should cost trackers
- Access to updated market data
What are some common problems in logistics procurement?
- Risk management
- Spend inefficiency
- Lack of cost management
- Data inaccuracy
- No transparency
Adopting logistics procurement software can help tackle common problems faced in procurement in the logistics industry and align your procurement strategy in the right direction.
What is procurement management?
Procurement management is the process of selecting the right products and services for a project. The process involves in-depth research and brainstorming about the product to project relevance, quality, long-term return on investment, payment, service delivery, and most importantly, risk mitigation.
Conducting a logistics cost analysis helps you select the most cost-efficient choices that optimizes your purchasing and logistics activities.
What does the procurement process look like?
The procurement process involves five steps:
- Step 1: Identify needs to find out what products and services you may need to continue your daily business
- Step 2: Evaluate suppliers to find the best option for your needs in terms of cost, reliability, and logistics.
- Step 3: Select the supplier that matches your needs and demands the best.
- Step 4: Negotiating with your suppliers on the terms and conditions of your contract or the acquisition of the products and/or services. If you aren’t able to compromise, select the next supplier on your shortlist to start the negotiation process once more until you are satisfied with the contract.
- Step 5: Once the terms have been agreed and the purchase order or contract is signed, the next step is the delivery of the products or services on the specifics which have been agreed upon.
What are the different main roles in procurement?
Procurement spans across a broad spectrum of tasks and responsibilities where the roles are often described as more general. The roles cover many aspects of the procurements function, from selecting vendors to negotiating contracts and purchasing products. The roles start a Procurement Assistant and progress into Procurement Manager and Procurement Director, and anything in between.
What does procurement mean in the supply chain?
Procurement in the supply chain includes all activities regarding the sourcing, obtaining, and paying for goods and/or services.
What are the types of procurement?
- Direct procurement includes all purchasing activities of products that directly contribute to your company’s end product, such as components of the end product or machinery building it.
- Indirect procurement includes all purchasing activities of products that do not directly impact the end product or bottom line, such as buying office supplies or the procurement of logistics, but support the day-to-day management of the business.
- Services procurement includes all purchasing activities of services, such as hiring staff or leasing software.