The concept of supply consists of the logistics function through which a company is provided with all the necessary material for its proper operation. The definition of procurement is also similar to terms such as supply or provisión.
Provisioning role
The provisioning function takes place from the need for a service or object that must be sought outside the company.
- Facilitate a constant flow of Supplies, materials and services necessary to guarantee the proper functioning of the entity.
- Maintain adequate quality standards.
- Keep investments in stocks and reduce losses from stocks to as low a level as possible.
- Acquire the precise goods and services at the lowest price.
- Obtain the procurement objectives by trying to costes administrative costs are as low as possible.
Provisioning steps
Provisioning consists of a series of steps, such as the following:
- Calculation of needs: aspect of the logistics approach. The supply needs involve everything that is needed for the operation of the company, in specific quantities for a specific period of time or to complete a project.
- Purchase: consists of clarifying the acquisitions of materials in the appropriate quantities and with the most appropriate price. For this you must have a budget. This activity seeks to preserve the continuity of supply, pay reasonable prices, search for sources of supplies, etc.
- Obtaining: this process begins with the order and has the purpose of helping to continue with the business activity, avoiding stoppages and delays.
- Storage: requires the location and custody of the different items in the warehouse. It fulfills the function of storing the articles from the moment they are received until they are delivered.
- Distribution: deals with meeting the needs of users, taking care of the delivery of the requested merchandise.
- Stock management: an adequate supply quantity must be guaranteed, also taking into account the security stock, but without exceeding the capacity of the installation.
To correctly manage the necessary supplies, it is necessary to carry out a supply plan where the strategy to be followed is defined to achieve everything necessary in the production process.
Provisioning plan
Tool to calculate safety stock