In the world of supply chain management (SCM), executive leaders consistently refer to terms like order fulfillment, procurement, logistics, and replenishment. While it may seem like some of these concepts mean the same thing, they are actually all incredibly different. In fact, each of these terms serves its own unique purpose for modern supply chain logistics. As a supply chain employee yourself, you need to know the various differences in this essential terminology. This way, you can rise in your position, access new opportunities, and maximize your earning potential. Plus, you’ll be able to challenge yourself with a continuous learning curve. Read on to learn about the difference between order fulfillment vs procurement and more.
First and foremost, you need to know what the business order fulfillment process looks like. In the most basic sense, order fulfillment involves the end-to-end process from completing sales transactions to product delivery. It outlines the response procedures supply chains employ when a customer order is placed. These operations are one of the most essential, fundamental obligations for product-based businesses. To streamline these processes, many companies rely on enterprise resource planning (ERP) software. These tools help coordinate operations amongst different departments, suppliers, and partners. Surely, order fulfillment is a common term in the business supply chain world.
Goods And Services Procurement
Next, you need to clearly understand the procurement process. Procurement encompasses every aspect of obtaining the resources needed for companies to maintain day-to-day operations. Procurement involves submitting purchase requests, selecting vendors, and negotiating prices. During this process, you also need to inspect delivered goods, approve invoices, and coordinate payment transactions. The primary goals of procurement are to support operational requirements, optimize the supply base, and nurture strong relationships with vendors and other essential groups. Certainly, familiarize yourself with the process for goods and services procurement.
Replenishment is another term that commonly gets thrown around in the discussion of procurement vs fulfillment. In short, replenishment is the process of reordering goods, services, or raw materials that have been previously purchased. Organizations often seek replenishment to meet customer demand and support their day-to-day operations. If your business manufactures clothing, you would likely need to regularly replenish materials like cotton, linen, polyester, and nylon. Food-based businesses, on the other hand, replenish ingredients like salt, pepper, flour, and sugar. Indeed, product replenishment is another term to understand in supply chain positions.
Of course, you also need to have a clear understanding of supply chain logistics. Logistics is the detailed, process-oriented, and complex management of different facilities, personnel, vendors, suppliers, and manufacturers. It can be summarized as the coordination of the flow of products between the point of origin and consumption. The overreaching goal of logistics is to accommodate customer demands in the most effective, timely, and affordable manner. Absolutely, get to know more about the operational process for supply chain logistics.
If you don’t already, you should also know about the term “supply chain.” A supply chain can be defined as the network of companies, vendors, resources, activities, personnel, and technologies needed to manufacture and sell a product. Typically, modern supply chains encompass everything from raw materials procurement – all the way to shipping to end consumers. The overall goal of supply chains is to accommodate demand, inspire customer value, and facilitate financial success. Definitely, you should clearly understand the end-to-end operations of modern-day supply chains.
There are a number of key differences between order fulfillment, procurement, logistics, and various other successful supply chain management processes. First and foremost, you should clearly understand the end-to-end procedure for order fulfillment. You should also understand how it differs from procurement. Additionally, familiarize yourself with inventory replenishment. More, you should have a clear, internalized definition of operational logistics. Plus, it helps to solidify your understanding of supply chains. Follow the points above to learn about the difference between order fulfillment vs procurement and more.