The purchasing department also handles the procurement of intangible goods, such as services.
Assessing the quality of services can be quite difficult since services cover a wide variety of tasks, including both minor services like cleaning and major services like product testing and design. Obtaining services can be complicated and may require the coordination of multiple teams from different departments.
Service – Activities that support the production or distribution functions in any organization, such as customer service and field service.
Logistics services are another important type of strategic service. The transportation costs are already included in the total landed cost of the products. It is crucial to ensure that the incoming products arrive on time and that a competitive price is determined.
Many companies understand the significance of logistics services in terms of cost savings and strategic importance. To efficiently manage logistics, some companies create a centralized group that works on establishing relationships with a core group of carriers. Another option is to outsource logistics to a third-party logistics (3PL) or fourth-party logistics (4PL) provider.
Transportation – The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization.
Landed Cost – Includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.