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The purchase process in import and distribution companies

The purchase process in a distribution company is subject to the influence of factors of extremely varied nature. I tried to present some of the most important in this material

Acquisition policy in a distribution company is subject to the influence of factors of extremely varied nature. The most common are:

AVAILABLE CAPITAL FACTORS generates two approaches:

1.Safety stocks
A safety company benefiting of financing generally adopts a policy of reserving large enough stocks so that they can transform the immediate availability of goods in a differentiated market. In this situation the company accepts the possible loss related to immobilization of capital costs of storage, depreciation moral goods or possible end thereof, if necessary.
This policy is effective especially in cases in which the business operates in a highly competitive field, in which is very difficult to come up with other reasons: price, quality etc.. In this case, services are crucial, and the response time and degree of protection orders are highly valued by potential customers.

2. Duration of purchasing process
In lack of sufficient capital available, companies are forced to adjust policy based on stock cash flow. The result is the need to supply a stream sufficiently flexible and precise, so limit the loss of sales due to lack of stock.
Also, the purchasing department will be the mediator between the vendors desire to have products available in permanent and reserve managers required to have stocks with low speed rotation, especially in the conditions in which the product expires or morally devalues rapidly. To operate this policy should be doubled by a logistics infrastructure well set up, and / or partnerships with companies, which reduced time to ensure delivery.


1. Work points manage supplies independently
You can consider as advantages the following: high flexibility, shorter time of supply in certain situations. Quality of supply in the correct version depends decisively on the professionalism of staff involved. Due to geographical dispersion, making the selection criteria is considered difficult to control. There are also problems related to the nomenclatures of products and implementation of coherent strategy at national level. The market tendency is to avoid this type of supply, especially in conditions in which the organization grows.

2. Work points get supplies from central warehouses
In this variant, the advantages are : specialized personnel responsible for the possibility of negotiating advantage in the higher orders of (cumulative), control over relationships with suppliers, transport optimization, inventory control through redistributive policy, unitary price, the budget cost control, etc. nomenclatures. In this version there are situations in which flexibility can be lost from the previous point, but the problem can be easily avoided, instead of receiving all other benefits.

3. Mix of the first two (it is not usual in practice)

This factor is found in the distribution department of supply and is the only factor to compensate for the negative influences related to the remaining factors mentioned.

Order is issued and estimated by the work points
This version is only possible if the persons designated to evaluate the necessary supplies have the necessary experience necessary training and are able to take responsibility for the result. Also, to avoid allocating the functions of the department or local sales manager, they can not have an objective perspective, being tempted to overestimate, or underestimate the demand.
It is possible that the existence of a large number of points makes these conditions hard to meet. Also, good communication at the territorial level is needed, to inform work points on promotional campaigns designed at the central level so that they are taken into account in issuing the orders.

A centralized department to coordinate supply
It is assumed that the above criteria are already met. He is autonomous and has its own point of view, independent of external influences. As a team and not one person in each work, while accumulating more know-how, and in case of rotation of personnel, the group takes any shocks. The disadvantage is related to the fact that it is difficult to put in place a system of effective communication and inter-balanced level, there is the possibility of omission of certain information. Also be received in time demands exceptional existing at a point of working, which may be provided by the center.

Is decisive regarding the possibility of applying in practice the strategy of supply agreed. A good logistics base dimensional coupled system with a strong lead to reduced time of execution, reduced operational costs, eliminate losses and independent from the rotation of personnel.Lately, following the appearance specialist logistics operators is taken into calculating the outsourcing of such operations.

An integrated system of ERP, which operates in real time and implements algorithms that are specific to supply, doubled by a reporting system advanced poets make the difference between a pleasant and efficient work and a very tiring, tense and no satisfaction.

Depending on market opportunity in the sense desired the company can adopt two strategies for supply:

Supply to target sales – the company influence the market.
It is the dream of any department of supply. After setting budgets and setting sales targets (of course based on thorough analysis in advance), you can construct a coherent policy of stocks based on the idea that they already know needs supplied. Still need attention to the objectives laid down in communication and time deviations occurred.
and deposit operations, so as to ensure minimum turnaround time on requests for supplies.

Supply analysis based on historical data – the company will market this event sales target is a guide, no guarantee that any will be met. Consequently it is the responsibility of ensuring the supply of stock corresponding actual demand. Terms such as time series, trend, promotions, Christmas, New Year or Easter, out-of-stock information in real time, good relationship with suppliers, the period of replenishment, efficient transportation, orders for training must be known close to perfection in order to respond effectively to market changes. Risks are high and the liability significant.

There are generally two phases of the commands launch:

a. Depending on market opportunity, the company can adopt two strategies for supply:
Training requirements supplied on the basis of the above. Needs are estimated based on a set of parameters specific to the type of product. Here is some examples:

For products with high-speed rotation, must take into consideration the following parameters: VMZ corrected with the losses due to lack of stock, trend, maximum stock, minimum stock, stock warning order, during the delivery of goods in criticism, promotions in progress, goods in transit, stock reservation, target etc..

Slow-moving products with high value or capricious application
In this case the supply is based on the tracking status of customer orders. Products found in confirmed customer orders that can not be met from stock and has not issued an order to supply clusters on various criteria (manufacturers, brands, classification, properties, etc.) and to correct any safety stock .

Products range from small, dependent on season, etc.
In general the commands this kind of products are launched long before and is based on the opinions of experts in the field. It is a supply of high risk and which require detailed knowledge of market and industry trends.

b. Distribution supplied the necessary orders to suppliers on the basis of pre-or after communication with them.

If the products have a single supplier, then things are clear.
If there is a set of possible suppliers, then they are subjected to a process of evaluation. A supplier is evaluated by: the terms of trade offered, duration of supply, minimum order quantity imposed, a minimum order value supplier of packaging suppliers units, history, relationships. It may also be taken into account and aim to optimize transportation costs by creating supply routes geographically closer to suppliers.