Procurement drivers help purchase materials and components at the lowest total inbound cost
• Limited number of deeper relationships with suppliers
• Life cycle considerations
– E.g. material purchase, reclamation, and disposal of unused materials
• Debundling of value-added services leading to new structural relationships with suppliers
• Seasonality of selected supplies
• Opportunities to purchase at reduced prices
• Rapid accommodation of manufacturing spikes
• Facilities placing more emphasis on sorting and sequencing materials
Manufacturing drivers help consolidate finished product for outbound customer shipment
• Provide customers full-line product assortment on a single invoice at truckload transportation rates
• Choice of manufacturing strategy is primary driver
– Make to plan (MTP)
• Requires substantial demand facing warehousing
– Make to order (MTO)
• Requires supply facing support, but little demand warehousing
– Assemble to order (ATO)
• Requires some demand warehousing as product and components may be assembled to a degree using postponement principle