Procurement
Procurement
Procurement
Businesses are reinventing their operations to adapt to the new normal and steady the ship. For manufacturing and production units, procurement of raw materials and other essential goods is an integral part of their daily activities.
In the post-pandemic world, businesses witness a makeover, and logistics is one of the critical components. If you are a manufacturing business, learning about procurement nitty-gritty becomes binding.
The more informed you are about the processes, the better decision-making abilities you will possess. Continue reading to learn about procurement in detail.
What is Procurement?
Procurement is the complete spectrum of activities within an enterprise related to purchasing goods, services, and works. It is an essential part of supply chain management in businesses, typically pertaining to manufacturing and production.
Since your business operations require raw materials to manufacture the end product, acquiring these materials at pre-negotiated prices and conditions is called procurement. You must note that procurement happens when one business purchases goods from the other business on a large scale.
Key Principles of Procurement
The procurement team or department of your business should have the following principles as the bedrock of procurement activities:
- Value: While pricing remains the pivotal factor, you must also look for the quality of products or services and overall business experience while procuring.
- Fair Competition: Your business should maintain transparency in the procurement process. It will help you in two ways: one, you won’t fall into any legal troubles. Second, you can find a supplier that provides the best deal.
- Ethics: Ensure that your business does not get involved in unethical practices. It will harm your reputation and skew the vendor selection process. Thus, the overall procurement process will suffer.
- Keeping Records: Accountability becomes easy when you have complete records of the activities.
- Equity: You should follow this principle to present the existing and potential suppliers with a level playing field to thrive.
Components Of A Procurement Plan
Your procurement team needs to include the following components while devising a plan:
- People: Depending upon your business and purchase order size, you can build a procurement team capable of handling the complete procurement process. While small and medium enterprises (SMEs) can prefer a smaller group of people, big firms require dedicated personnel for each stage.
- Processes: Your business should maintain transparency in the procurement process to avoid any legal repercussions and fraud. A well-designed process from placing the order to the final receipt would help you keep track of activities at every stage.
- Records: A comprehensive record-keeping, including transactions, messages, and other mission-critical information, ensures accountability of both buyer and vendor at any stage of the process. Also, your procurement team can analyze the vendor’s performance and relative costs.
Procurement Models
The series of steps associated with procurement defines the procurement model. Your business should follow one of the three procurement models listed below:
- Local Procurement Model: In this model, making decisions is at the local or departmental level. No centralization of the process means no involvement of higher management. It adds agility to the model but risks overspending.
- Centralized Procurement Model: Central management has complete control over procurement processes. Businesses keep overall budget and expenditure in mind before making purchase decisions.
- Hybrid Model: A combination of local and centralized procurement models is called a hybrid model. It gives an edge over both models, as local departments enjoy autonomy under the central management.
Types Of Procurement
You can divide the procurement process into two types: Direct Procurement and Indirect Procurement. Let us understand them in detail.
Direct Procurement
The raw materials your business procures to manufacture the end product is direct procurement. Its input cost and efficiency determine the performance and profitability of your company. Any hindrance to its supply can hamper the manufacturing process.
Indirect Procurement
It refers to the procurement of services not linked with the manufacturing process directly but essential for daily activities. Maintenance services of equipment and office supplies are indirect costs borne by your company. Any challenges to indirect procurement can hamper business operations.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Packaging Design
Packaging Design
Packaging Design
What is Packaging Design?
There are many ways for a customer to distinguish your brand, and product packaging is on that list. From selecting product packaging to its design, everything resonates with the customer’s perception of your brand.
The product packaging you choose can establish your brand identity as it acts as a platform to present your products. Customers can look at it as the face of your entire organisation.
You need to brainstorm to develop the right kind of packaging to boost your sales and get an edge over competitors. Merchants have this tendency to overlook packaging; however, it can dent the overall shopping experience of customers.
To save you from those blips, we will cover all about packaging design here.
Things To Consider Before You Design
Conducting research is the key. When you are thinking of establishing your brand’s identity through product packaging design, you need to look beyond colour, shape, size, visuals, among others.
Here are four key points to consider:
- Your Target Audience: You need to put yourself in your audience’s shoes to find out what they would prefer in packaging design.
- Generate The Right Feeling: The way you approach your audience will come in handy with the design you want to develop. For example, skincare products will look good in natural, rustic packaging, but clinically-crafted products may not.
- Support Your Brand: If you have a logo, website, and brand name already garnering attention in the market, your packaging should blend with it.
- Competitor Analysis: You should keep an eye on your competitors. It would help if you understood what the industry trends are.
Types Of Packaging Design
On our website, we have listed three types of packaging design according to the products.
Primary Packaging
This form of packaging is in direct contact with the product. We also call it the Consumer Unit. The primary purpose of this packaging is to safeguard the product from damage, spoilage, and contamination.
Some of the key features of primary packaging are:
- It has direct contact with the product.
- It lets consumers handle products easily.
- It adds an appealing look to the products.
- It contains printed information about the product for consumers.
Examples: Polybags, VCI Bags, Mono Cartons, Food Trays, Vacuum-formed Trays, Paper Bags, Blister Packs, Glass Bottles
Secondary Packaging
It is the second layer of packaging that is outside the primary packaging. Essentially used to create a stock keeping unit or SKU, it groups a certain number of products. This packaging acts as a protective layer for the primary packaging. Also, secondary packaging makes the product easily identifiable in warehouses.
Here are its key features:
- It protects the primary packaging of products.
- It is customisable to give products an identity in warehouses.
- It acts as a shipping container in the e-commerce industry to deliver small shipments.
Examples: Seals & Barcodes, Woven Sacks, PP Flute Boxes, Plastic Crates, Air Cushions, Air Bubble Rolls, Angle Boards, Courier Bags
Tertiary Packaging
We refer to it as bulk or transit packaging to transport large SKUs from one point to another. For instance, if you want to shift units from production to the point of sale. Tertiary packaging makes transportation of heavy loads safe and secure.
Below are its key features:
- It is ideal for shifting heavy loads from one point to another.
- It enables easy handling of distribution units.
- It prevents any damage to SKUs.
- It also facilitates easy storage of goods.
Examples: Wooden Boxes, Corrugated Boxes, Fibreboard Drums, Stretch Films, Strap Rolls, Tapes, Labels & Stickers, Pallets
It is also important to note that packaging design should be environment-friendly to support sustainable development goals. Hence, it would be best if you looked for a packaging solution that ticks all the boxes.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Vendor Managed Inventory
Vendor Managed Inventory
Vendor Managed Inventory
What is Inventory Management?
Inventory management refers to streamlining the maintenance of inventory in all its aspects like ordering, maintaining stocks, handling, and distributing raw materials or finished goods. It can be the backbone of an organization to meet sales, marketing, and revenue generation goals. Oftentimes adopting an inventory management software can help drive improvements in IT software when the databases need to be connected across multiple teams to sync accounting and stocks together.
Good inventory management means that stocks are always maintained at the right levels at the right time. This involves the following components:
- Inventory Types – Businesses should always know exactly what they need.
- Forecasting – To predict demand-supply balance and be ready with stock.
- Purchase Order Management- In line with real-time needs and forecasting, orders must be placed with suppliers.
- Storage of Inventory– Knowing where the stocks are and where to dispatch from.
- Handling and Tracking– Involve processing sales, packing, shipping, and keeping track of additions, removals for order fulfilment and stock levels.
- Inventory Management System– Simplifies tracking and accounting so that analysis and business decisions can be made easily.
What is Vendor Managed Inventory?
In the Vendor Managed Inventory, the inventory management is done by the vendor or supplier for the buyer, the buyer usually being a manufacturer, SME, MSME, or any other customer type.
In traditional supply chain management, the buyer identifies the existing inventory level and determines the stocks of raw material, components, or finished goods that are needed as well as the timeframes for addition and subtraction. The buyer then places purchase orders with various suppliers to source the requisite materials. These suppliers will fulfil the orders and raise invoices with the buyer.
Vendor Managed Inventory takes this process out of the buyer’s hands by identifying the stock levels and the requisite inventory, and supplies everything as agreed upon, and only raises the invoice. The buyer need not concern themselves with managing the inventory and closing any demand-supply gaps. It’s all done by the vendor, often including the sustainable packaging requirements during procurement.
For inventory management by vendors to be successful, some important factors must be in place as follows:
- Very clear communication about the scope of the inventory management and buyer expectations in terms of stocks and timeframes.
- Modes of efficient exchange of information- whether to use apps to communicate needs in real-time or pre-determined needs maintained via sheets, etc.
- Escalation Matrix for when there are emergencies or immediate orders to fulfil.
- Agreed-upon procedures for periodic performance review
- A collaborative approach towards vendors and open information sharing.
The most famous examples of vendor managed inventory include giant retailers where hundreds of suppliers or vendors maintain inventories of their product within the massive warehouses. Closer home, many B2B companies like Moglix, favour vendor managed inventory due to its advantages.
Benefits of Vendor Managed Inventory
Vendor Managed Inventory (VMI) improves the supply chain’s efficiency and contributes to higher sales and faster inventory turnaround.
- VMI takes the trouble of maintaining stock and getting end customers what they need out of the buyer’s hands. The buyer can invest time and other resources in optimizing the sales and development growth aspects of the business.
- It reduces any chances of delay in restocking due to communication or logistics lag between the supplier’s provisions and the buyer’s order. The buyer can potentially never go out of stock if the system is designed well with good forecasting and analysis.
- Vendor Managed Inventory makes it possible for the vendors to gain valuable insights into the sales data and demand-supply. It improves the ability to forecast future requirements for big orders or projects.
- Buyers can cut down carrying, purchasing, and administrative costs by outsourcing inventory maintenance. The need to maintain safety stock and high inventory drops as do warehousing costs.
It can also cut down on the consumption of resources as vendors can be incentivized to adopt sustainable packaging practices at more achievable scales.
Vendor Managed Inventory for Sustainable Packaging
Maintaining large inventories comes with the drawback of packaging waste and pollution for manufacturing industries and FMCG sectors. Companies have historically tried to cut inventory management costs and have faced backlash in recent years due to environmental damage.
Moving to a Vendor Managed Inventory model can help with the global shift towards sustainable packaging for SMEs, MSMEs, and large companies alike. Sustainable packaging solutions providers like Moglix enable lesser consumption and more recycling while mediating vendor managed inventory. They can help procure goods from vendors that will undergo sustainable packaging and then storage at Moglix warehouses before shipping with their freight logistics partners. Contact Moglix for your procurement and sustainable packaging needs.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Vendor Management
Vendor Management
Vendor Management
What is Vendor Management?
A vendor is someone that provides goods and services to organizations. A large organization deals with hundreds if not thousands of vendors at a time. Organizations have to select the best vendors after scrutinizing the available options. They have to negotiate vendor contracts, evaluate performances, track supplies, manage relationships, and ensure timely payments. Vendor management is the process when companies do all these activities to manage their vendors effectively.
Benefits of Vendor Management
An organization that manages its vendors effectively and efficiently will enjoy the following benefits:
- Selecting the best vendors
Price shouldn’t be the key metric when selecting vendors. An organization that is serious about vendor management often selects vendors by a variety of metrics. Metrics such as reliability, reputation, turnaround time, etc. are as important as the price. Additionally, organizations must select packaging vendors that use sustainable packaging. Sustainable packaging is great for the environment. Furthermore, sustainable packaging enhances the quality of packages and brings down the cost. - Managing documentation
A large organization has tons of vendors for different geographical locations, raw materials, and so on. Even vendors that supply the same thing in the same place can have different contracts based on how their contracts were negotiated. Other than that, there are a variety of documents that need to be managed. As such, organizations should have a centralized system where all the documents of different vendors should be kept, and all the important information can be seen from the platform itself. - Performance management
To manage vendors effectively, their performances must be compared on Key Performance Indicators (KPI). A system where managers can see all the vendors’ performance on the KPIs would lead to an accurate assessment of vendors, increase efficiency, and improve the company’s performance.
Challenges
Managing vendors is not an easy task; here are the challenges an organization is likely to face:
- Selecting the best vendors for the job
Price shouldn’t be the key metric when selecting vendors. An organization that is serious about vendor management often selects vendors by a variety of metrics. Metrics such as reliability, reputation, turnaround time, etc. are as important as the price. Additionally, organizations must select packaging vendors that use sustainable packaging. Sustainable packaging is great for the environment. Furthermore, sustainable packaging enhances the quality of packages and brings down the cost. - Confusion between vendors
Without a good system in place, chaos can ensue. For example, relying on multiple packaging vendors can result in an increase in supply costs and quality issues. Additionally, through their system, organizations should ensure that their packaging vendors use sustainable packaging. With the increase in global warming, sustainable packaging is the way to go. Sustainable packaging can also bring costs down. - Managing contracts
Organizations enter into a wide range of contracts with different parties. With vendors, organizations often negotiate the terms in a long process and then sign the contract. As such, there are a lot of differences even among similar contracts. As such, a contract management system that helps in negotiating, managing, signing, and renewing contracts is a must these days. - Managing risks
Many things can go wrong when an organization is working with a wide range of vendors. Potential incidents such as breach of contract, a breach in compliance, security issues, to name a few can make things difficult for an organization. They should be able to monitor risks that can result in monetary and reputational loss.
Vendor Management Processes
The following are some vendor management processes:
- Setting up parameters
Organizations need to set up parameters on which vendors should be scrutinized. Vendors that provide products/services of a similar nature should be compared to the same parameters. Organizations should also have business goals in mind when selecting vendors. This will make it easier to gauge the performance of vendors later on. Organizations must have sustainable packaging as one of the parameters. Sustainable packaging is not only great for the environment, but it enhances the reputation of an organization. - Vendor Management Team
A vendor management team is a must for a large organization. This team should have the business acumen to select the most suitable vendors, negotiating contracts, assessing vendor performances, and ensuring timely payments. This team should be responsible for maintaining healthy relationships with all the vendors. - Vendor Database
A database for all information related to vendors will go a long way to improve an organization’s efficiency. Vendors should be categorized based on their type, function, or any other metric the company chooses. This will help in comparing the performances of vendors that serve similar functions. A centralized database will streamline data and provide key insights with the help of Artificial Intelligence.
Conclusion
Organizations are always trying to expand their business. As they grow, they have to deal with a wide range of vendors. To ensure that organizations stay efficient when dealing with vendors, an effective vendor management system is essential. The performance of vendors affects the business of an organization. You should design an apt vendor management process to ensure that your vendors provide value to the organization. For more information, fill the form attached in the footer or contact us.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Supply Chain Management
Supply Chain Management
Supply Chain Management
What is Supply Chain Management?
Supply Chain Management (SCM) is the management of the flow or supply of goods and services from the point of origin to the point of consumption.
SCM involves the movement and storage of goods from raw materials to finished goods. It is done by creating a network chain of a supplier from the manufacturing sites to the companies or the location of point of sale . These supplier’s networks and links are crucial in the SCM to supply goods and services effectively and economically. The economic supply benefits both manufacturers and retailers to reduce inventory costs.
Study shows that 57% of companies believe that SCM provides a competitive edge to their business. The end goal of SCM is to improve the quality and performance of supply. The convenience of this supply chain helps manufacturers in shipment of goods and services, as they can reduce or increase the limit of supply according to the demand.
How Supply Chain Management Works?
The supply chain is a reliable link of suppliers for the smooth flow of goods and services from production till shipment and distribution. Every product that reaches the market is the result of organised and planned efforts of supply chain management. Recent studies show that 65% of executives report changes in the supply process..
These are components that are crucial and responsible for the performance of supply in the SCM system.
- Planning
In the process of supplying goods and services planning is the most crucial stage. It is done before the beginning of the supply chain. While planning the entire supply process the SCM checks all the important factors like manpower required, the demand for product or service, profit, costing, etc. - Sourcing
In this process, SCM chooses the supplier for the supply of goods and services. It is essential to provide good resources to the suppliers for the quality and performance of the whole process. SCM works to maintain a good relationship between suppliers and manage the ordering, receiving, and payment process. - Manufacturing
In this process, SCM works to organise the raw materials and manufacturing of the product. All the required quality checks, the packaging process, and the delivery schedule are done in this stage. - Delivery and Logistics
SCM organizes all the orders and schedules the delivery in this stage. Dispatch of the products, receiving payments, and invoice generation is the key process while delivery. Transportation and logistics account for around 12% of the global GDP. - Returning
A supply network is created to pick the exchange or return products from the customers in this stage.
Importance Of Supply Chain Management
An effective supply chain network helps the organisation to create and maintain the standard and quality of supply for the customers. It helps the manufacturer and companies to cut down the cost of supply from the production to the delivery. With good supply partners and networks, companies can supply the goods and services globally to the International markets.
Supply Chain Management is important to solve the delivery and return/exchange related problems of the customers. It works constantly to improve the quality of service by identifying the potential problems and issues in the supply process. SCM software and analytical tools further organize the ordering and shipment process of products.
Key Features Of Supply Chain Management
There are certain factors in the SCM to make the supply process of the product more effective. These are some of the key features in SCM which is crucial to maintain the good reputation of the organisation.
- Connected :
Managing organised and unorganised data from social media and other internet platforms. - Collaborative
Collaborating with the supply partners to improve the supply performance by using a cloud-based commerce network. - Cyber aware
Protection of the SCM system from hackers and other cyber-related issues. - Comprehensive
All the data and insights are scaled in real-time to avoid future supply errors. 50% of professionals believe technology plays a crucial role in the supply chain industry.
Example Of Supply Chain Management
One of the classic examples of supply chain collaboration is Walmart and Procter & Gamble who started working together in the late 1980s. Retailers and manufacturers used to share limited information before these two companies started working. Because of its good influence and strategy, Walmart formalised the retail link system in the early 1990s.
Another good example of SCM is Walgreens Boots Alliance Inc. which worked effectively to transform its supply chain system in 2016. This company has one of the largest pharmacy chains in the United States.
CONCLUSION
SCM plays an important role to overcome all difficulties in the supply chain. It helps companies to find the solution to all the challenges in the process of supplying products from the production to the marketplace. The organisation needs to have a dependable supply chain network to provide better service to the customers.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Supplier Management
Supplier Management
Supplier Management
In today’s fast-paced world, supply chains are continually evolving into multifaceted dynamic models. To accommodate the heavily changing demands of customers, companies need a robust Supplier Management plan.
What is Supplier Management?
Supplier Management is seen as a supporting pillar of the supply chain function that deals with the end-to-end activities of suppliers. Competent suppliers are crucial for the growth of a business, whether a manufacturing unit or a food retail chain.
At some point, every business or organization purchases goods and services from vendors (suppliers) to reduce manufacturing setup costs. Thus, Supplier Management refers to strategically dealing with third-party suppliers who provide essential products and services for your business.
For example: Consider that you are running a car business, in which the exhaust pipe of a specific car model is imported from a third-party vendor in a different county. You have noticed that the quality of those exhaust pipes is steadily getting worse. In such a case, you can establish a Supplier Management office in that country to regularly interact with those vendors and visit their sites from time to time to ensure the reliability of the parts supplied to you.
Why is Supplier Management important?
As most organizations are expanding their businesses globally, the demand for an effective supply chain is increasing rapidly. Supplier Management also safeguards a company’s sales in the international and domestic markets. It makes the activity of purchasing from third-party suppliers more profitable.
A well-structured Supplier Management model is required to develop good relations with suppliers, while handling customer requirements properly, and communicating these requirements to the company’s vendors..
With an efficient Supplier Management, businesses can import low-cost, high-quality goods and services from other countries without changing the current organization structure. You do not need to build a pen factory when you can order them from a third-party supplier at a discount.
Now that we have established the importance of Supplier Management, let’s look at some benefits of Supplier Management.
- Cost Saving:
With a dedicated Supplier Management team, businesses can understand the supply chain process better and focus on improvements. Supplier Management teams can use SRM (Supplier Relationship Management) tools to continually evaluate the performance of each supplier.
They can ask for quotations of required goods and services from multiple suppliers. This will fuel competition among suppliers and help organizations secure the best deals.
- Reduces Price Volatility:
Suppliers usually develop a professional rapport with their clients and establish trust so that their clients continue to purchase from them everytime there is a requirement. . Therefore, for the sake of long-term business associations, suppliers do not increase the prices of their products frequently.
Companies can take advantage of fixed prices and make long-term contracts with suppliers. A business can thus adjust the prices as per market demand without any price fluctuations from the supplier’s end.
- Quality Improvement:
Supplier Management plays a key role in maintaining quality. With onsite Supplier Management teams, organizations can understand how different markets across the globe function. . Based on this knowledge, businesses can build strategic relations with local suppliers.
To acquire more business, suppliers provide the best products and services to their existing customers, and this ultimately improves the quality of the finished goods and services. Buyers and suppliers can also exchange ideas for continuous improvement.
Buyers can implement ERP tools to track their supplies. They can generate MIS for sales, customer feedback, price fluctuations, and monitor profit figures to get the most out of Supplier Management tools.
In conclusion, Supplier Management is essential for businesses that aim to expand rapidly while effectively handling their suppliers. Supplier Management is a practical approach to maintain profits and increase the efficiency of a business. With the help of Supplier Management tools, companies can coordinate well with their suppliers and ensure significant savings. The traditional ways of managing suppliers are now obsolete. Companies need to adopt well-organized systems like Supplier Management to make informed decisions when buying from third-party suppliers.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Purchase Order
Purchase Order
Purchase Order
What is a Purchase Order?
For the success of any company, tracking of inventory, ordering supplies and sellable goods is essential. For a well-organised purchasing process, it is important to look at the purchase order. But many companies fail to understand the importance of purchase order and their benefits. For packaging in purchases, it is better to use sustainable packaging as it is an eco-friendly process. We at Moglix believe in eco-friendly and earth-friendly packaging methods for our products.
Benefits of Purchase Order
Some of the benefits of using purchase orders are:
- Better accuracy in both financial and inventory management.
- Standardised budgeting as the funds must be made available before issuing a purchase order.
- Quick delivery because the purchase order schedules delivery as per the requirement of the buyer.
Elements of a Purchase Order
The purchase order contains the following information and companies’ name and the date of the purchase order. The elements are.
- Product’s name or specifications
- Exact Quantity of the product
- The Price of the product
- Any other additional terms like discounts etc.
Reasons Companies Use Purchase Order
Some of the common reasons concerning the use of purchase order by companies have been enumerated below:
1. Purchase Order Provides You Legal Protection
A purchase order is a legally binding agreement that binds both the parties, i.e. the buyer and the vendor. If anything goes wrong in the purchase, the purchase orders will help in proving it. To convert a purchase order into a legally binding document, it must be acknowledged by the vendor.
2.Tracking of Orders Becomes Easier
The PO helps you in maintaining a record for all the goods and services ordered by your company. It also keeps an account of your method of payment and the scheduled arrival time. The invoice numbers assist you in managing the invoices and also track your orders. By way of this document, you are well aware of your orders’ delivery time and date.
3.It Assists you During Auditing
Suppose your company gets audited, you will benefit through your purchase orders. You can provide the auditors with the document to cross-check with your invoices as well as slips. If you don’t have a purchase order, you have to go through a hard process of showing receipts, invoices and emails with the seller.
4.Eases the Communication Process with the Seller
Steps in Purchase Order
The steps in a purchase order for a buyer are as follows:
- The management notifies about a purchase to the purchasing department. It is also done by issuing a Requisition form for purchase.
- After getting approval of the department’s order, the purchase order is properly filled explaining the purchase details.
- The purchase order is sent to the vendor/seller to decide whether they will fulfil the order. If approved, it becomes a legally binding document.
- The purchaser then sends payment at the decided price and if not at an agreed date later on.
- Lastly, the seller delivers the order along with the invoice. The purchaser’s finance department then checks the invoice to ensure if both the documents have the same amount.
Purchase Order Format
To create a purchase order, you need to include the following information:
1.Header
Mention your company’s details, including your company name, date of the purchase order, address of the business and the order number.
2.Information Related to Vendor
Specify the original recipient of the purchase order. Here you need to mention the name of the vendor company, your contact name, and the vendor company’s business address.
3.Shipping Address
Mention the place where the order needs to be sent and the method of shipping like via air, road, shipping terms, and the expected delivery date.
4.Order Details
All the products mention the product’s code, a proper product description with name, specified price, and description.
5.Complete Summary
At the end of purchase order provide a subtotal of the amount by specifying the discounts, taxes, the total amount with the shipping costs.
Conclusion
Purchase order ensures easy tracking of goods. It also prevents fraud. What matters after approval of the purchase order is the safe delivery of the product. The product to be delivered properly needs good packaging. Hence, the best packaging method is sustainable packaging as it does not harm the environment and keeps the product safe.Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Sustainable Packaging
Sustainable Packaging
Sustainable Packaging
The Need for Sustainable Packaging
One of the most concerning issues about sustainability is how the world produces and consumes. The process has a ubiquitous presence of packaging. Choose any product from your daily life – 90% of them come wrapped in packaging, which is eventually discarded and thrown off as waste. With the outbreak of the pandemic, the buying trends have shifted even more online. Home delivery is the new norm. Erstwhile unpacked items like vegetables, fruits and eggs which could be bought from the local stores, are now being delivered in packages. Sustainable packaging has become a necessary condition for both businesses and consumers. It’s no longer a choice.
What is Sustainable Packaging?
In simple words, sustainable packaging is an archetype of packaging, the environmental footprint of which, goes down over time, preferably such that, in the long run, either the packaging decomposes without causing any loss to the environment or perennially retains its usability and thus, is not required to be dumped in the environment.
In a broader sense, sustainable packaging involves such packaging, the raw materials of which are sourced responsibly, designed effectively such that the packaging remains safe all over its life cycle, meets the needs and preferences of the market in terms of cost and quality, is manufactured using reusable and clean energy, and after its shelf life is over, can be efficiently recycled or broken down organically.
What are the criteria for sustainable packaging?
The basic criteria of sustainable packaging as laid down by the Sustainable Packaging Coalition, blends sustainability, ecological preservation and business objectives. They are as follows –
- The packaging should be beneficial, safe and healthy for individuals and communities throughout its life cycle.
- It should meet market criteria for performance and cost.
- It is sourced, manufactured, transported, and recycled using renewable energy.
- It optimises the use of renewable or recycled source materials.
- The packaging should be manufactured using clean production technologies and best practices.
- It should be made from materials healthy throughout the life cycle.
- The packaging should be physically designed to optimise materials and energy.
- It can be effectively recovered and utilised in biological and/or industrial closed-loop cycles.
What are the different ways of doing sustainable packaging?
Below is a prescriptive list, charting different ways, packaging could be made sustainable –
Packaging considering ingredients- One of the most common methods of sustainable packaging is to use 100% raw and natural, or 100% recycled and recyclable materials.
Packaging considering production process – Packaging can be made sustainable by reducing the production process, optimising the supply chain and minimising the carbon footprint, through transformation and innovation.
Based on the above two methods, sustainable packaging can be of following types:
Recyclable packaging – Using materials like cardboard and paper is environment friendly for they can be recycled to produce other items. They have surfaced as the major substitute for plastic packaging.
Reusable packaging – For more durable sustainable packaging, natural-poly fabric and reusable plastics can be used, which have a longer use life and also restrict brazen carbon footprint contribution of disposable plastics.
Reduced packaging – Reduce packaging implies directly reducing environment and carbon footprint. This can be done by engineering goods and products in such a fashion that they can be delivered without damage, with the least possible packaging.
What are the business benefits of sustainable packaging?
Although it appears to be environment-centric, sustainable packaging constitutes social and economic implications as well. Adopting sustainable packaging comes with a series of business benefits –
- More and more consumers are seeking to buy from environment-friendly and responsible businesses; it will not only retain but also expand the customer base, and hence sales.
- Using sustainable packaging improves the brand image of the business.
- Sustainable packaging renders a good experience to the customers as well, thereby contributing to customer satisfaction.
- By using recyclable and reusable materials, and by reducing packaging, a business can reduce costs.
- Sustainable packaging can save business significant storage and warehouse costs.
Conclusion
Clean and affordable energy, sustainable cities and communities, responsible consumption and production, climate action, protection of life on water and land are some of the 17 SDGs adopted by the UNDP, along with goals like zero poverty, no hunger, reduced inequality etcetera. These goals highly depended on each other. Issues like poverty, hunger and environmental degradation are mutually dependent and correlated. In the process of growth and development, we must adhere to sustainable means of production, distribution and consumption. In a lifestyle, where the goods we consume, without any exception, come in some or other form of packaging, for us to receive them in proper and usable condition, the packaging industry has a massive incidence. So, it must be viewed from the lens of sustainable development.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Strategic sourcing
Strategic sourcing
Strategic sourcing
What is Strategic Sourcing?
Strategic Sourcing is a method of sourcing that applies various strategies while sourcing different products and services. The investors in this increasing competition and the technological environment, are more focused on investing in supplier management and relationships.
The different types of strategic sourcing are Outsourcing, Low-cost Country sourcing, Global sourcing and crowdsourcing. Strategic sourcing boosts the quality and efficiency by building a strong and multiple supply base for an organisation. It is a joint process that permits an enterprise to align its purchasing power with the overall value proposition.
What are the Advantages of Strategic Sourcing for Buyers and Sellers?
Some of the benefits of strategic sourcing for buyers are:
1. Enhanced and Advanced Futuristic Guidelines
Businesses can collect data and make better choices by using strategic methods. This will help them achieve a successful outcome.
2. Proper Management of Supply Chain in Business
Strategic sourcing can help in improving relationships with multiple enterprises. The supply chain is adequately managed through a business that protects the relationships of the enterprise with all the related organisations.
3. A Systematic Organization
By way of strategic sourcing, businesses can focus more on long-term planning for business development. The business persons with the help of strategic sourcing will be able to focus more on the future challenges of the enterprise.
4. Removing Uncertainties from the Business
If there is a close relationship with the supplier, businesses can quickly identify and solve any potential issues.
Some of the benefits for the suppliers are:
5. Control the Costs with Proper Management:
Through strategic sourcing, the suppliers can sell a significant portion of their production. This will help them in better planning and also manage the long term visibility of cash flow.
6.Increased Stability
The strategic sourcing will lead to a collaboration of the suppliers. Choosing a single supplier instead of multiple suppliers will bring more stability in the daily operations of the enterprise.
What are the Best Practices for Strategic Sourcing?
The best practices that can be adopted for strategic sourcing are:
1. Using Electronic Tender and Auction Methods:
Through eTendering, the buyers can easily calculate and evaluate the distribution, creation and storage of tenders. Electronic tendering is very efficient in comparison to manually managing the tender.
2. Using software for Contract Management
The software for managing contracts helps in managing numerous contracts. If businesses fail to manage the supplier agreements using appropriate tools, it can reduce the prices and the service terms of the contract.
3. Track the Expenses and Savings
If an enterprise has a savings tracker solution, it will help to record your savings. You can easily forecast your value by evaluating the documents and reports in the tracker.
What is the Process for Strategic Sourcing?
The process of strategic sourcing has been divided into seven steps. The seven steps for strategic sourcing are as follows:
- Study the categories of products that are used by businesses. Also, have a look at the spending pattern of the businesses. Make a record of the process and even the involved departments.
- Create a strategy for sourcing based on the goals of the business.
- Prepare a portfolio of suppliers and their market.
- Define the proposal request and create templates for the same.
- Discuss with the selected suppliers.
- Integrate the suppliers into the existing process or add new vendors or outsource the providers.
- Keep a track on the performance metrics and then improvise the sourcing plan as per the need and analysis.
What is the Ultimate Outlook of the Process of Strategic Sourcing?
The ultimate outlook for the process of strategic sourcing are:
- Define all the Category and Arrange the Sections
- Analysis of the Supply Market
- Create a Proper Strategy
- Develop a Strategy for Sourcing
- Select Suppliers Through Negotiation
- Implementation and Integration of Policies
- Track the Results and Note Them
Conclusion
Many organisations are adopting strategic sourcing methods to establish a comprehensive approach to manage the requirements of sourcing. It helps in building a proactive approach to many supply chain disturbances. The business goals and its requirements are correctly aligned to the appropriate and right suppliers having significant capabilities. The enterprises improve their performance and also gain on a competitive front over their peers. Further, by obtaining automation technology for strategic sourcing, the business units get more empowered to manage their sourcing. It is integrating the blockchain in the supply chain to increase visibility and accuracy in many cases. Contact us for more details.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Procurement Transformation
Procurement Transformation
Procurement Transformation
Here is everything you need to know about Procurement Transformation
The world is going through a turbulent phase. Given the unwanted situation, the importance of efficient procurement for businesses has increased manifold. Because of this, procurement transformation, a relatively new-age concept, is gaining traction amongst small and big companies alike.
Procurement transformation is a hot topic for all organizations, and they are looking to rework their operations to optimize the value derived. It is not something that requires expertIse, but it is more of a mindset and requires dedication. The process is unique for every company and requires a different approach every time, but the underlying principles and best practices remain the same.
Similar to how the implementation varies from one organization to another, the scope differs too. Once you consider your benefits from a particular strategy and your objectives, you can then set out to decide the range of your endeavors.
It will help you and your team to demarcate the items to be covered and the requisite time frame to achieve the same. It would also help you assess the cost angle and forward the same to the higher management for approval.
The scope covers these –
- What forms the part of procurement transformation?
- What to exclude from your procurement transformation processes?
Definition of Procurement Transformation
Given the impetus on efficient procurement in the current scenario, it is imperative for companies to look for optimizing their tactics.
- Procurement transformation refers to a type of change management focusing on establishing long-term improvements for the organization’s procurement and supply management processes, activities, and relationships.
- Procurement transformation relies on applying various tools and techniques to impact areas such as extending, sustaining, and renewing cost control, launching and speeding up cost control, and several others.
The Three-Phase Procurement Transformation Process
Procurement transformation is not a one-off project that your workforce pulls off. It is instead a mindset to improve consistently and better your previous stats. Here is a three-phase procurement transformation most companies can follow –
1. Tactical
Top management of most organizations is of a view that procurement is a tactical process. So, they request their procurement team to juggle between manual processes continually. While it is right to an extent, the new-age procurement transformation imbibes a whole different approach.
- To initiate the transformation phase, the procurement department should first establish and understand its relationship with other business units. The next step is to bring them all together and speak a common language.
- You may need a consultant to make procurement the center of profits and attraction. It can then shift to a more strategic role where your workforce makes purchases based on a sound strategy. The switch will bear fruits over time and result in cost reduction, flexibility, and higher operational efficiency.
2. Operational
Once you have set up the tactical viewpoint, procurement transformation will have some leeway to explore and make changes. Even though your workforce understands its worth, trying to develop it from a tactical to an operational move will require time and patience.
- The management can benefit from the reputation it has created and opt for massive up-scaling. The top people can hire the right resources and give them the requisite power to ensure it spreads its wings and blossoms.
- A capable CPO will help it build and expand both internally and externally. Because of their name attached to the process, targeted transformations soon become a reality.
3. Strategic
Very few organizations can imbibe procurement transformation as the core of their business. These are those embracing strategic sourcing successfully. They understand that it is not a one-off thing and are committed to practicing it vehemently over time. Instead of seeing it as a separate process, it is more of an implicit practice that keeps them going.
- Strategic transformation can help them establish high tracking and reporting standards, helping other business units evolve.
- It also involves figuring out areas requiring immediate attention and those that can be excluded. It ensures a holistic approach and makes transformation a habit rather than a necessity.
Set on a Procurement Transformation Voyage With Moglix
Procurement transformation is about acting mature and looking beyond facts and figures. Instead of aiming for being the best-in-class, it envisages being better than what you were yesterday. It is more about making it a part of your culture in a way that you don’t even need to talk about it.
At Moglix, we help organizations set up procurement transformation and practice it conveniently.
Click here to contact our team of experts today!
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Back