How does procurement planning support the in-plant logistic operations?
Since, the production planning is done by top management, operations team has to make it work. For this, procurement planning of the material is a major step. Procurement planning aims to optimize material management within the plant. The procurement team needs to plan their material order quantity and order cycle, keeping in mind the space constraint present in the factory. The space constraint is often led by overstocking of material in unplanned space and scrap dump.
The best tool for this purpose is Economic Order Quantity (EOQ) and implementtation of Standard Operating Procedure (SOP). This will reduce the overstocking of materials which are not to e used in immediate future and help in avoiding stock out situations for immediately required materials. Once this plan is chalked out as per the best practices, the operations can be synced with optimal management of in-factory logistics.