Demand

Demand Notification

Process from Submission to Order

The entire process from demand request to order involves several steps, ensuring effective resource planning, cost control, and transparency within the company.

Entry and Submission of the Demand Request

The team (Requirement Owner) creates a demand request when materials, products, or services are needed. The request includes all necessary details, such as:

Procurement Specifications
Reference to a Project ("Reference No.")
Desired Delivery Date
Additional Information and Tasks (which can be added under "Notes")

Once completed, the demand request is submitted to procurement for further review.

Review by Procurement

The procurement team reviews the submitted demand request with respect to pricing and market availability. The following points are also considered:

Order Lead Time

The order lead time is the period between placing an order for an item or service and the planned delivery date. It includes the processing time for the order, the supplier's delivery time, and any additional time required for customs processing or transportation. Adhering to the order lead time is crucial to ensure that materials or products are available on time, especially for time-sensitive projects or production schedules.

Payment

The payment terms specify the exact date by which payment for an order must be completed. These terms can be defined by previously agreed-upon conditions, such as 30 days from the invoice date or immediate payment upon delivery. Payment terms are important for managing the company's cash flow and avoiding potential payment defaults or late fees. Timely payment also strengthens relationships with suppliers and may secure better terms for future orders.

Costs

The total cost includes all expenses associated with procuring an item or service, such as:

- Item Cost: The base price of the item without additional charges.
- Shipping and Transportation Costs: Costs incurred for delivery, including packaging, freight, and possibly insurance.
- Customs Duties and Taxes: Any import duties, VAT, or other country-specific fees.
- Storage Costs: Costs associated with storing stock items, if applicable.

Depending on operational requirements, additional costs may include:

- - Administrative Costs: Internal costs associated with processing the order (e.g., procurement staff time, administration).
  - By capturing the total costs, companies can better understand their actual procurement expenses and make informed decisions about cost optimization.

Following this review, it is determined whether the item is a stock item, which will be handled through a central order process (transition to demand planning), or a non-stock item that must be procured manually (decentralized procurement).

Approval by Budget Management

After the technical review by procurement, the demand request is forwarded to the Finance department for budget approval. The budget management team reviews all submitted demands and, if necessary, tracks them on a dashboard to determine the total amount of all requests.

- Approval: If the budget is approved, the process continues.
- Rejection: If the budget is not approved, the request is returned to procurement for revision.

Generation of Purchase Proposals and Supplier Orders

After budget approval, a purchase proposal for stock items is created in the system, similar to automated demand planning, which includes all monitored inventory levels up to the reorder point in a purchase proposal.

The purchase proposal leads to one of the following actions:

External Order: Placing an order with suppliers for externally sourced items.
Internal Production Order: Issuing a production order for items manufactured internally.

Procurement of Non-Stock Items

For non-stock items, the demand request is used as a workflow in procurement to ensure that the required items or services are acquired in a timely manner.

Value benefits of the process

Efficiency Gains

Streamlined procedures lead to faster processing and reduced delays.

Cost Savings

Effective cost control measures and optimized resource usage help in reducing overall expenses.

Enhanced Resource Utilization

Automated and well-planned procurement processes improve the use of resources and lower inventory costs.

Improved Transparency

Detailed documentation and approval steps enhance clarity and accountability in decision-making.

Organizational Structure and Responsibilities

Team (Requirement Owner)

Responsible for creating and submitting demand requests.

Procurement

Reviews the requirements for price, market availability, and stock items; decides on the ordering process.

Procurement Budget Approval (Finance) (Finance)

Reviews and approves the budget for the demand request. Is a ToDo mailbox.

Purchasing release manual procurement

May carry out procurement without requirements planning, ordering (without expected receipt of goods).

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