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Purchasing and Manufacturing
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Benefits to Purchasing

The purchasing department consists of only two people, and the pri­mary purchasing activity is to release fabric and hardware against blan­ket purchase orders that are placed every six months or a year. At the end of each working day, purchasing can log onto the system and see what orders are being placed for each style and color in their catalog. This instant aggregation of information shows the purchasing depart­ment what styles and colors are moving and which are not. Based on

this they can increase or decrease planned releases of raw materials with their suppliers.

The Learning Curve and Pitfalls 

The Internet has been around for a very long time but has been in use effectively for a very short period of time. The Internet poses new com­munication problems for us. Of particular concern is the degree of se­curity that is available or lacking when communicating with your trad­ing partners over the Internet. You read stories every day about hackers getting into systems and destroying data files and the like. A second pitfall to watch out for is "data overload," that is, having so much data available over the Internet that it is difficult to interpret it into mean­ingful information. In time these pitfalls will be overcome, and both EDI and the Internet will coexist into the 21st century.

 

PURCHASING'S NEW ROLE IN THE TOTAL SUPPLY CHAIN

 

Before we begin discussing supply chain management, figure 2 de­fines the supply chain.

With all the talk about supply chain management, some things never change. Purchasing buys the parts and manufacturing "makes" things from these parts. However, what is changing is the fact that the compe­tition today is worldwide and customer lead times are getting shorter. Even the supply chain itself is shrinking. The result of all these are that manufacturing and purchasing must work closely together and com­municate better.

One small manufacturing company that I have done work for has literally taken supply chain integration to the ultimate degree. They have physically placed the plant manager and the purchasing manager in the very same office with their desks facing each other. Granted this is an extreme measure—but it works well for them. This is a very small manufacturing company with only one person in purchasing, and this arrangement obviously won't work well for large companies with large staffs. Information is communicated immediately and there is no lead time problem for passing paperwork between the two. Their office hap­pens to be right in the middle of the plant floor and the walls are mostly windows. They literally can see most of the plant activities from this spot. They also have an open door policy. Plant workers, supervisors, maintenance workers, and shipping and receiving personnel are en­couraged to go into the glass-walled office and communicate about any particular problem they may be having.

One company I've done work for has gone to the buyer/planner concept, in which the traditional role of purchasing has been given to the planners. The buyers who used to spend about 20 percent of their time "buying" and 80 percent of their time expediting now spend about 60 per­cent of their time "buying" and only 40 percent of their time on traditional purchasing activities. Their goal is to completely reverse their old 80-20 rule so that they spend 80 percent of their time on true purchasing (buying) activities and only 20 percent of their time on traditional purchasing activities such as order processing and expediting. Manu­facturing is doing these activities today. Purchas­ing places the blanket orders, and manufacturing releases the raw materials from suppliers as needed. Manufacturing calls the supplier directly to release the goods. The following is a list of activities that    can be accomplished by manufacturing and pur­chasing working together:

      Visit the supplier's plant and take a plant tour
and actually see them manufacture the parts that
they are making for you.

      Have those key suppliers visit your plant and
have them see how you actually use their parts
in production of your product.
 

      Share your long-term manufacturing plans with them. If possible
provide them electronically with weekly copies of your MRP re­
ports as it relates to their products.

      Set up meetings between your product design people and their prod­
uct design people so that they can discuss possible enhancements
to the parts under discussion.

      Together, visit some of your key customers and, if applicable, meet
with their product design people.

      Ask your suppliers to provide a desk or work area for your design
or quality assurance people to use as a base of operations at their
site. Reciprocate and offer the same to their design engineers. How­
ever, this will only work if it is positioned as a sincere gesture of
help, not viewed as a "watch dog" of their operation.

      One company has instituted a program called "Supplier Recogni­
tion Day." Once a quarter they invite their suppliers (not all, usu­
ally the top 10 or so) to visit them for a day. The day usually starts
out with a message from the president about highlighted results of
the quarter just concluded and the expectations for the current and
future quarters. Suppliers are then taken on a plant tour accompa­
nied by the plant manager, who might point out particular points of
interest, such as which suppliers' parts are being used in a particu­
lar work center, or to show the suppliers some new technology they
are using or plan to use in the future (nondisclosures are usually signed). After lunch, hosted by the company president, the suppliers meet with the buyers and manufacturing teams that use their parts, and discussions focus on how to improve the products, processes, or services. Previous notice was given so that the groups came to the breakout sessions prepared to discuss solutions—not problems. Over the years this has proven to be an effective way to improve relationships between suppliers and manufacturing. Refer
to
figure 3 for a view of where purchasing and manufacturing is positioned in the supply chain.

To Be Continued


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