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1. Put speed into the process by eliminating hand-offs

In American Manufacturing, we have known for many years that the majority of the time our products spend in our plants is in queue. We know that only a small portion of the product cycle is taken with actual value-added activity. What is even more distressing, if we care to look, is how much time is spent from the receipt of an order until the materials actually arrive to begin work.

"Speed Kills." That is, it kills the competition. The planner/ buyer position puts speed into the organization. Aplanner/ buyer performing five tasks is much faster than five people performing one task each. At Company G the planner/ buyers were organized along product lines. Each planner/ buyer "owned" their product from the engineer's drawing board until it shipped out the back door.

Let's look at a list of the basic planner/buyer functions at Company G:

A. The planner/buyer is a permanent member of the engineering change board for his/her product. All new or revised engineering must be approved by the planner/ buyer. The planner/buyer knows immediately about mate­rial changes, and does not have to wait on anyone to tell him. The planner/buyer brings other benefits as well. Being responsible for the entire product, the planner/buyer is aware of the inventory position of his materials. Engineer­ing changes that may cause obsolescence can be identified readily. Engineering changes become more of a planned event than one to which everyone reacts.

B. As the position title states, the planner/buyer is the material planner for his commodities. This function is critical as it drives a company's investment in inventory and related costs. By virtue of the establishment of order policies, lot sizes, lead times, etc., the planner is establish­ing the levels of inventory and cash commitments. The position incumbents must be accountable for, and given authority to, manage their part of the business. To many companies this may mean re-thinking their business and challenging sacred cows.

The planner/buyer's position on the engineering change board (ECB) makes the material planning function effi­cient. Fresh out of an ECB meeting, the planner/buyer knows exactly which items have changed, been added, or deleted. He can move immediately to establishing or revis­ing material planning data, so that the system can react promptly. No delay is encountered while documents mean­der through the organization.

C. Buying is the second of the major thrusts of the planner/ buyer position. Buying means buying, and not simply submitting requisitions. Planner/buyers place business, solicit quotations, award contracts, issue purchase orders and schedule their suppliers. No one is closer to the material plan than the person who developed it. No one is in a better position to schedule the supplier than the planner/buyer.

Many skeptics challenge the planner/buyer concept at this juncture, and such was the case at Company G. Some upper level management people and especially the corporate purchasing function felt that the planner/buyer had much to do with just planning and that this would dilute the purchasing efforts. This could happen if management does not keep an eye on the size of the planner/buyer's area of responsibility. Too much responsibility certainly could dilute one's efforts, but maintaining the proper size of span of control makes the entire function more effective. The planner/buyer knows more about their items than any pure buyer is ever going to know.

As you might guess, one does not simply take a planner and say, "You are now a planner/buyer." Nor does one take a buyer and do the same. Training and education are re­quired to prepare people for these positions. Education and training alone, however, do not a good planner/buyer make. These people need authority if the function is to move quickly and efficiently. This was a lesson learned for Company G.

Company G assigned each of their planner/buyers to a product line. The products were typically built one at a time, but it was not uncommon to build the products in lots of 2 or more. Each item had a material content of $160,000 on the average. So, two or more units at a time could mean large material purchases. Corporate-recommended pur­chasing authority limits were as low as $10,000 per pur­chase for the planner/buyers. This meant that they had to get their manager's signature for any purchase over $ 10,000, and that meant putting more time and hand-offs into the process. Something had to be done to streamline the process, so this writer revised the authority of the planner/ buyer to a level high enough to buy all but one commodity for his product. The practice of having a manager review every order over $10,000 was non-value-added activity, and here is why.

During the sales and operations planning process an agreed-upon master schedule was developed. By definition any product introduced into the manufacturing process was already approved at its end item level. Since the top level managers of the company had already approved the end item, then there was no value in the incremental approval of purchases within that end product. In other words, if the end item is approved, why go back and re-approve the components? The planner/buyer was free to requisition and purchase any items recommended by the system, without further approval. This was a difficult concept to get across to the diehards of ancient corporate purchasing, but once they accepted the concept of sales and operations planning, the process moved nicely and more quickly.

D. Company G's planner/buyers were assigned to a par­ticular product line. Their responsibility extended to the shop floor. After they had planned, ordered and scheduled their purchased components, they did the same for the "make" components. The same person that scheduled pro­duction was responsible for getting the purchased material into the plant. Again, owning the product line from the designer's drawing board, forward, gave the planner/buyer incredible insight into what was going on with his product. This arrangement drastically reduced administrative lead times.

To be Continued