- This topic has 3 replies, 2 voices, and was last updated 9 years ago by
.
- Posts
Hi friends, would appreciate if anyone could provide some enlightenment.
From Porter’s value chain, it is said that Inbound logistics falls under primary activity, while Procurement is considered as secondary activity. It is understandable that Inbound logistics is primary activity because it’s the receiving of raw material, but why is Procurement not under primary activity as well, as it is the action of purchasing (obtaining) raw materials?
I’m also currently studying P3 and I can explain the way I understood it.
Raw materials are primary activity as without that you can not begin to deliver value as a business.
The procurement function is a support function as involves selecting your suppliers, negotiating deals with them and setting up contracts. It kind of sets you up to be able to have raw materials etc. for your production.Visually I would look at it like – inbound logistics would be people in the factories/warehouses taking delivery of the materials to initiate production and the procurement function would probably sit in the head office or such, making calls, inviting tenders, etc.
You can not have raw materials without the procurement function (the support) however it is not the procurement function that leads to the delivery of product or service, the value delivery initiates with the raw material.
*I would really like to hear if someone else has another point of view or if I said something incorrect – this is just my understanding.
Hi Aprajita, thanks for your insight.
Now that I see their relative job scope as you’ve explained, I understand both the positions better.Indeed, inbound logistics functions to obtain raw materials from the supplier to be used for producing the end product, while procurement just adds in value to the inbound logistics by finding good quality vendors and negotiating best prices. In this sense, procurement is providing support activity to the inbound logistics.
Thanks and all the best for your P3 sitting! 🙂
- You must be logged in to reply to this topic.