Strategic Purchasing and Warehouse Automation

Why is the Purchasing Activity Becoming More Important to Global Firms?

Over the past three decades, increasing global competition has caused a dramatic increase in the outsourcing of materials. Firms are demanding the best value for all components used in finished products. Parts that were produced in-house as a matter of corporate policy are now being purchased from suppliers around the world. For a typical manufacturing firm, the share of finished product cost that is represented by purchased parts (as opposed to in-house) can range from 40-60%. As a result, purchasing is becoming a key success factor, and the current movement towards even greater international trade will only increase its importance.

What are the Tasks and Goals of Purchasing?

Purchasing Tasks:

• Supplier selection
• Quality management
• Forward buying
• Interaction with other corporate departments
• Goal of purchasing

Advantages and Disadvantages of a Manual Warehouse

Manual handling systems require a great deal of labor and tend to work best where there is very high or very low demand for the goods within. It can be extremely costly if local wages are high.

Advantages and Disadvantages of an Automated Warehouse

Automated warehouses attempt to improve productivity and efficiency by mechanizing labor-intensive storage activities. It's a way of eliminating human labor and making the jobs of the remaining workers more productive and safer.

Variables to Consider for Warehouse Automation

It must have accurate data at every stage of the process, and it must be available to all operations within the warehouse and to the supply chain as well. Customers are now demanding real-time tracking of goods that can only be provided with ADC technology.

Marketing Package vs. Logistics Package

Marketing cares about packaging because of the role it plays in capturing and retaining customers. Logistics is concerned with packaging that will protect the product and make it easier to handle.

Potential Conflict Between Marketing and Logistics in Packaging

Marketing, for example, wants an inner package that supports the product, appeals to the target customer, and conveys an appropriate message about the firm and what it stands for.

Tradeoffs Between Packaging and Other Logistics Components

Packaging costs increase directly with the level of protection desired. Losses from damaged goods fall as the amount spent on packaging increases. Also, the less expensive modes of transport require better packaging because goods are more susceptible to damage.