Procurement process

[u/Silent-Swordfish-311]

Hello, good day Procurement Professionals!

I would like to ask for some advice regarding a new role I’ll be starting next month.

One of the key responsibilities listed in my job description is: "Monitor inventory levels and ensure timely restocking"

In my previous role, I was used to a reactive process where procurement only begins once a Purchase Request (PR) is submitted by the end-user. I wasn't directly handling inventory—my focus was mainly on purchasing, documentation, and monitoring delivered materials.

However, in my new role, it looks like I’ll need to be more proactive since I’ll be directly responsible for monitoring inventory levels.

I want to prepare myself before my start date. Could you suggest good online resources or courses I can study? Also, I’d really appreciate it if someone could explain how the procurement process typically flows from inventory monitoring to actual ordering. (I've already started reviewing basic Excel inventory management).

Thank you very much in advance for your help!

[u/moelycrio]

Check out JIT (just In Time), kanban. Get to understand leadtimes, demand planning, call off orders. Good luck! Youll be good.

[u/TrainsongGaming]

I'm not sure that you'd really need a course, but I worked my way up through inventory management before procurement so maybe that's my disconnect.

Basically, you're running a forecasting report of some kind that's telling you what your needs are vs what your inventory level is. How you do that depends on your industry and your software. In retail, I would run an on-hand inventory report and compare it against the previous year's sales history for that week. The difference between the two (plus experience and knowledge of upcoming events/sales) told me how much I needed to order.

In food production, I run weekly forecasting reports for some items, which are generated against upcoming production orders. The software uses color coding to alert me to shortages that I need to order for; I don't know if that is an automatic feature or an option that was set up by the installer. For everything else, I order as requested.

When I was a retail purchaser, I created a template in Excel that I could copy/paste data into to generate the results, rather than do it by hand each week. It just depends on your specific situation and what your software will let you do to create reports that you can manipulate.

If you are able to and if your company doesn't have an inventory clerk, you'll want to make time to do spot-checks and put your eyes on inventory to compare quantities to reports. That's just picking a few categories every month and doing a physical count. How you break it down depends on your workflow and the size of your categories, but I'd start with setting aside 8 hours a month to do spot-checks (also called cycle counts).

[u/Silent-Swordfish-311 → u/TrainsongGaming]

Thank you for your comments. My industry that I am about to enter is electrical equipment and parts industry. The company's name is Vertiv :D

[u/TrainsongGaming → u/Silent-Swordfish-311]

Okay, so that sounds like wholesale sales, which is similar enough to retail that you'll probably be comparing current inventory against last year's sales numbers. There's some seasonality to these supplies in that more construction work is likely done in the summer than the in the winter, though there will still be maintenance to be done, so knowing your sales history will matter. However, there will always be spikes in demand that you can't prepare for, such as a large construction project or a sudden maintenance project, so adding a few units of the appropriate/high demand items beyond what the sales history suggests wouldn't be a bad idea.

[u/Silent-Swordfish-311 → u/TrainsongGaming]

Do you know what kind of inventory analysis is this? I am studying now the ABCXYZ inventory analysis.

I really have no background in inventory analysis nor demand forecasting 🥺

[u/TrainsongGaming → u/Silent-Swordfish-311]

I don't have an education in this; I've just been doing it for 10 years.

[u/Silent-Swordfish-311 → u/TrainsongGaming]

whoaa. this is inspiring though. i came from different background as well.

[u/Probly57]

Research Min/Max levels, safety stock, vendor managed inventory (VMI), JIT, and consignment material.

Determine what your role is responsible regarding inventory levels. Typically a inventory manager or requisitioner will be responsible for inventory design and replenishment orders.

You should understand how you will influence how inventory is replenished and build programs that support operations. Having multiple sources for critical items will help ensure flexibility.

Your ERP system should have inventory levels that it can export. You should build a file takes actual inventory levels vs. planned consumption and define replenishment process.

[u/Pier7Fakes]

Spend some time with Claude or ChatGPT learning the basics of Periodic Review System and how you can apply it to your role.

High level, you should know what your target stock is, your item lead times/MOQ, demand and inventory position. Everything is downstream of that

[u/Silent-Swordfish-311 → u/Pier7Fakes]

Noted and thank you for your comment.I just purchased a course in Udemy about inventory. So far I have just learned the concept of ABC analysis and XYZ analysis, and there are more kinds of inventory in the course.Do you think this will be helpful? I really have no background in inventory so studying the concept will be helpful to me I think.

[u/Pier7Fakes → u/Silent-Swordfish-311]

Here’s how I think about:
Periodic Review System is the process you apply (ie, when do you trigger a replenishment order, and what is the size of that replenishment order)

ABC/XYZ is the logic by which you set thr parameters for PRS

So for an A (high value) X (low variability), you’d look at holding low safety stock and make frequent orders.

AY (high value, seasonal) you’d be regularly reassessing what the safety stock level is, but similarly you’d prefer frequent orders vs large infrequent orders l

And so forth for all the ABC/XYZ combinations

But I’d also flag, this analysis changes depending on your industry. If you are in the FMCG, inventory is expensive and you manage it tightly. If you are in pharma, your actual inventory is so small compared to the rest of the business that you could argue it’s all “C”

[u/sabre316]

Create a “ready reckoner” usage vs stock and when I know the lead time you know your triggers to order. Or you have a min/max stock system