warehouse distribution solutions

What is Procurement in Supply Chain

The term supply chain is one that often gets misunderstood at this current point in time, and that has a lot to do with people not fully knowing what it is supposed to entail. Some think that supply chain management is all about acquiring the raw materials necessary to produce chains that are used in variety of industrial settings, but that would be an erroneous assumption for the most part. In truth, supply chains have little to do with actual physical chains and more to do with the metaphorical chain that is created during the product manufacturing process.

One of the first steps that are taken by healthcare logistics companies that are ironing out an optimal supply chain is procurement. This is the process by which they acquire the base elements for their finished products. If we were to take the example of Apple, which is one of the few companies in the world that have a trillion dollar market cap, suffice it to say that their procurement phase involves buying lithium for their batteries and aluminum for their phone casings. They get their phone screens from Samsung, so they surprisingly don’t have to do any procurement for their screens at all.

In the case of other companies such as Walmart, procurement involves a completely different set of processes. They don’t manufacture anything since the company specializes in the world of retail, so there procurement is more associated with buying finished goods. Procurement for Apple is quite distinct to how it works for Walmart, and understanding these differences is a vital aspect of optimizing the smooth transfer of products from one place in the world to another one entirely.