Maximize Cost Savings Through Streamlined Logistics Procurement

Procurement logistics is a specialized logistics area that involves purchasing materials and supplies for manufacturing. It also covers storing, organizing, and transporting these supplies to where they are needed.  

Logistics and procurement teams are also responsible for product sourcing and selection and setting purchasing strategies to keep acquisition costs as low as possible.  

It’s a complex field. Procurement logistics staff juggle several balls at once. However, the overall aim is to keep a company competitive, profitable, and productive by ensuring a steady flow of supplies at the right time, in the right amount, and the required quality.  

• Procurement involves acquiring the goods and services a business needs. This includes supplier selection, negotiation, contract management, and maintaining supplier relationships. The goal is to get the best price, quality, and terms for the materials.

• Logistics covers the movement, storage, and distribution of those goods and services to support the company’s operations. The primary aim is to ensure materials and supplies are delivered to the right place, at the right time, and in the right condition.  

Logistics and procurement may be closely related aspects of supply chain management. However, as you can see, they are two distinct fields with their own responsibilities.  

Procurement logistics is vital to the supply chain, keeping the whole show on the road. It ensures the steady flow of supplies needed to meet production demands and prevents production delays and stockouts.  

When it comes to creating an effective, competitive process, top-performing procurement logistics teams know the importance of the following:  

Supplier management: Building solid relationships with reliable suppliers ensures consistent quality and timely deliveries.  

Flexible delivery: Flexibility in delivery helps keep your business agile and responsive to market changes and customer demand.  

High product quality: Another vital goal is ensuring high-quality standards. Rigorous supplier selection and quality control measures will enhance the overall quality of your company’s final product.  

Risk management: With an increasingly global supply chain, it’s more important than ever to identify and mitigate risks such as natural disasters, geopolitical issues, and supplier disruptions.  

Addressing these vital aspects in your supply chain management helps ensure your company is competitive.

As we’ve seen, logistics procurement is complex and involves many moving parts. Let’s explore the various elements in detail.  

Strategic sourcing is the bread and butter of procurement logistics. It involves identifying and acquiring the materials needed for production, setting the stage for production quality and efficiency. Poor decisions can lead to production delays, increase costs, or result in below-standard final products.

Supplier selection and management: Another critical task for procurement logistics teams is identifying and evaluating potential suppliers. You need to ensure they meet your quality, cost, and delivery standards.  

Purchasing goods and materials: Purchasing is more than just handing over the cash. It also requires strong negotiation skills, market knowledge, and perfect timing.  

Contract management:  Effective contract management is crucial to a smooth-running procurement cycle. It involves negotiating and overseeing supplier contracts, ensuring favorable terms, compliance, and risk mitigation.  

Inventory management: Monitor inventory levels carefully to avoid over- or understocking. Getting it right reduces the likelihood of interrupted production and increased costs.  

Transportation logistics: Delivering materials where they need to be at the right time is fundamental to procurement logistics. Optimizing transport routes and methods will ensure timely and cost-effective delivery. For example, Schneider Electric utilized Keelvar’s intelligent sourcing automation to enhance ocean freight efficiency. This approach allowed Schneider Electric to optimize its shipping routes, reduce costs, and improve delivery times. This helped Schneider Electric improve customer satisfaction and maintain its competitive edge in the market.

Keelvar’s user–friendly interface makes it easy for requesters to kick off automated sourcing events that meet your procurement team’s best practices

Supplier relationship management: This final element focuses on building and maintaining positive supplier relationships. It’s all about collaboration, mutual growth, and reliability. Strong relationships can even potentially lead to better terms. ​By regularly communicating with your suppliers and working together on problems, you build trust and improve the chances of getting favorable terms.​

Procurement logistics enhances the efficiency and effectiveness of supply chain management and contributes to overall business success. It does this by driving down costs, streamlining operations, boosting customer satisfaction, and promoting strong supplier relationships.  

Let’s take a closer look at each benefit.  

Cost Savings

Bulk purchasing arrangements in logistics procurement can lead to significant cost savings. Buying large quantities means companies can take advantage of lower per-unit costs and discounts.  

Competitive bidding can also achieve cost savings. Engaging with several suppliers in competitive tendering often results in better pricing and terms.  

Furthermore, efficient procurement logistics help you maintain optimal inventory levels. You’ll see reductions in holding costs while minimizing waste from overstocking or dead stock.  

More efficient transportation can also reduce costs. Effective logistics reduces transport costs through better route planning and load optimization.

Streamlined Processes

Automated logistics procurement reduces the admin burden and speeds up the process. Even better, it reduces the likelihood of errors creeping into the procurement cycle. Order processing, invoicing, and tracking are all processes ripe for automation.  

In addition, introducing standardized procedures for procurement logistics activities ensures consistency while simplifying operations.  

Seamless integration between procurement, inventory, and logistics systems also ensures smooth information flow and coordination. Many companies use vendor management systems or sourcing software like Keelvar to streamline and work more efficiently.

Improved Supplier Relationships

Another vital benefit is the impact on supplier relationships. Logistics procurement can help you build strong, collaborative partnerships with suppliers, improving trust and reliability.  

Moreover, procurement logistics supports more effective negotiation with suppliers, improving terms and prices. Regular evaluation of suppliers helps identify improvement areas and encourages suppliers to maintain high standards.  

Strong supplier relationships will also help you identify and mitigate risks, ensuring a more resilient supply chain.

Keelvar customer CJ Logistics America used our sourcing optimization to streamline their transport sourcing, substantially reducing lead times and enhancing supplier relationships. This strategic approach improved operational efficiency and cost savings while developing stronger relationships with suppliers.  

Customer Satisfaction

Improved customer satisfaction is perhaps the ultimate benefit as it drives sales and profits.  

Timely deliveries are one way that procurement logistics can contribute to customer satisfaction. Ensuring materials and products are available when needed leads to on-time production and delivery to end customers.  

Rigorous quality controls and using reliable suppliers ensure that only the best materials are used. This means that you produce high-quality end-products and consistently meet customer expectations.

Furthermore, a well-managed logistics procurement cycle can quickly adapt to changing consumer demands and market conditions. This ensures that you always meet customer demands and supercharges consumer satisfaction.  

​​For example, a major US retailer used Keelvar to adapt quickly to market changes and maintain a competitive edge. This approach helped them manage logistics more effectively during peak seasons, resulting in significant cost savings and enhanced customer satisfaction. ​​     ​

Keelvar is the only eSourcing tool that combines optimizations and automation capabilities in a user-friendly interface. Let us address the pressures so your logistics procurement team can do more with less. Here are some of the fantastic benefits our platform offers:  

Optimization and automation: Keelvar’s AI-powered automation and optimization feature streamlines procurement processes, reduces workloads, and improves decision-making.  

Cost savings: By optimizing sourcing decisions, Keelvar helps reduce costs and improves efficiency, leading to significant all-around savings.

Enhanced supplier relationships: Our software supports better supplier management, reducing risk and leading to more robust, reliable relationships.  

Scalability: Our tool is designed to efficiently handle large-scale, complex logistics procurement cycles, making it the perfect choice for companies of all sizes.  

Real-time adaptability: Keelvar adapts in real-time, responding to rate changes, carrier availability, and more, helping your business stay agile and responsive.  

‍

“Keelvar, at the click of a button, will tell you the best-case scenario based on everything that has come through in just a few seconds.”

—US tech company