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Excellence in planning has frequently been measured by achieving
MRPII Class "A" certification. Achieving excellence in Materials
Management requires integrating both "Class A" planning and
purchasing functions. Companies that are successful in doing this
are the companies that will ultimately be World Class. This paper
will share the steps necessary to attain this status by development
of a world class purchasing organization.
Purchasing's traditional role has been:
• Cost reduction through negotiation, competitive bidding and
buying large lot sizes.
• Delivery improvements utilizing longer lead times versus reduced
cycle times.
• Quality improvements through complaints, not quality improvement
initiatives.
• Relationships involving only the buyer and the salesman,
excluding planning and manufacturing.
• Finding success in negotiating downward requested price increases,
not eliminating costs.
Those actions have typically led to a focus on the price of
material, not the actual value of the material.
Selection of vendors can be a time consuming task in today's work
environment. This activity is usually characterized by:
• Using current standbys, saves time and effort.
• Using those designated by engineering, often leading to
elimination of looking for the best supplier.
• Using request for quote with contracts based on lowest price, not
best value.
• Selecting those who have the material available. Much of today's
buyers time is spent:
• Phoning in orders, not exploring better sources of supply.
• Processing individual orders including handling purchase
requisitions and getting them typed. (In many companies all purchase
orders pass through the buyer for sourcing/approval.)
• Expediting past due orders through phone calls and letters;
non-value-adding efforts.
Price negotiation has frequently been viewed as the key measure of
success of a buyer. While certainly an important aspect, this method
seldom leads to the optimum value for their company. Today's focus
tends to be very short term in nature utilizing very tactical
techniques such as:
• Playing one supplier off against the other.
• Negotiating prices down from quotes, not striving for value-added
conditions.
I am sure all of this sounds familiar in describing many of
America's current purchasing departments.
To be Continued
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