Benchmarking Purchasing Costs
PART III.
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Additional Key Observations • In most companies, the purchasing function reported to the materials or logistics manager and was on the same level as the planning manager. (We have subsequently established the same type of organization.) • Most companies funnel all purchase orders through the purchasing group on their way to the supplier. (We have automated purchase order launching systems, and once the buyer has established a price and a supplier, the materials planner can launch all orders direct with no dollar limit approval required.) • In all but one company, the materials function reports through a materials/logistic manager to the plant manager. While the personnel works quite closely with and are dedicated to production, they are not integrated into the manufacturing department. This allows for a focus on maintaining functional excellence in the planning and purchasing discipline. • Most companies did not have nonexempt employees except for clerks and secretaries. (We are still reviewing that issue. Approximately 50 percent of our personnel are nonexempt buyers and planners.) • Most companies have a solid set of expectations of their master schedulers. They typically are highly qualified individuals earning $40,000 to $50,000 annually. • In most cases, the finished goods demand and supply planning function is the domain of manufacturing including management of finished goods inventories. Forecasting, however, remains the function of the business unit, brand manager, or product manager. (We chose to split the supply-planning and demand planning function and are now reevaluating this position.) By February 1991, we had completed visitations to 12 other companies. As we promised when we initially engaged our benchmarking partners, we planned a meeting at our plant to review all our findings. Our thought in doing this was to create a networking atmosphere that will allow us to build from the new relationships we had made. In addition to sharing data, we asked each of the companies to share with others something that was especially impressive in our meeting with them. This allowed for not only a learning experience, but also an R+ for the company doing such an excellent job. After the initial 12 visits, we decided we had sufficient data around cost of services and determined we would focus on engaging companies that could help us with the following key causes: • An analysis of the master scheduling function with emphasis
In summary, we feel we met and exceeded all the goals we had at the start of the process. We have now engaged 12 companies in this process. We chose outstanding companies—those we felt we could learn from and then could use these findings as part of our continuous improvement process. Benchmarking Purpose Statement Purpose: To benchmark other companies planning/scheduling and materials purchasing planning staffIn a way that: • Allows a comparison of planning systems • Compares ratio of personnel to volume and CAT numbers sold • Includes organization alignment and reporting responsibility • Reviews asset level and management policy • Outlines positions on MRP II and world class manufacturing • Reviews cost of services • Compares training method and content
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