Material procurement principle

Definition of the material procurement principle

In principle, the material can only be procured shortly before it is needed or at an early stage. Prompt procurement reduces the amount of capital tied up, but it can be risky and costly if smaller quantities can be procured less cheaply. Based on these considerations, the companies use the following principles for material procurement:

Procurement of supplies

the Procurement of supplieswhich is often found in industrial companies. Relatively large amounts of material are procured from her and put into stock. Possibly low procurement prices are offset by high storage and interest costs as well as a high capital commitment.

Individual procurement

the Individual procurementin which the materials are procured in the required quantity immediately before they are required. Low storage and interest costs as well as minimal capital commitment are offset by high procurement costs and the risk of missing or faulty delivery.

Production-synchronous procurement

the Production-synchronous procurement, which is a combination of inventory procurement and individual procurement. The procuring company concludes framework supply contracts for larger quantities of material, but only calls up the quantities immediately required. There is a direct relationship to the Just-in-time principle.

KANBAN systems

In addition to these procurement principles, companies are increasingly making use of the KANBANSystem. With this procedure, the departments procure material from the respective upstream department if the stock falls below a minimum level. The KANBAN card is the decisive data carrier between the production sites. The focus here is on minimizing material stocks and reducing throughput times.

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