Procurement plays an important role in preparing for demand. It involves planning for right quantity of raw materials required for meeting the demand of finished goods. Although it seems quiet predictable to procure right quantity of materials through technologies like Big Data for several industries like consumer products, automotive industry, retail etc, it is more difficult in food processing industry. Therefore, it is resulting in lost sales or excessive inventory.
As we discussed in class, we can make purchasing as cheap as possible by meeting the economies of scale resulting to minimized cost, selecting a standard vendor and getting best quality, and having contracts to get good lead times. With data driven intelligence it would be easy to optimize all the factors like cost, quality and time, considering market is not influenced by uncontrollable variables like weather.
Weather is the major barrier in planning for purchasing for raw material in food processing industry as monsoon affects the production of crops and thus as availability for raw material purchasing. This results in burden from procurement standpoint with excessive pricing. Therefore procurement of raw materials in food processing industry has become one of the major business issue in decision making with regards to materials requirement and planning. The effect is then again cascaded to sales through lost sales, and lack of intelligence to prepare for the consumer demand. With emerging technology, I believe this issue will be addressed by providing proper intelligence to plan for procurement and thus by effectively meeting consumer demands.