Dr. Tom DePaoli
If You Are Serious About Reducing Cycle Time Start First In Purchasing
Purchasing needs to lead the way in cycle time reduction. Before any company hopes to seriously reduce cycle time or time to market it must first radically reduce its internal cycle time. At the top of the list are its often burdensome procedures for procuring materials or services. Progressive new options are available to reduce the internal time that it takes end-users and purchasing professionals to purchase parts. Not only can new purchasing methods be used to quickly get needed parts directly into the hands of end-users, but suppliers are often more than willing to negotiate quick delivery requirements in exchange for more business volume.
Step 1: Benchmark Your Internal Cycle Time
Start out by finding out how long it takes your typical purchase order to be processed. Process map all the steps in the cycle. Investigate and randomly sample the time it takes to perform other purchasing procedures such as requests for quotes, bid packages, delivery tracing, supplier evaluations, supplier certifications, and expediting. Don’t stop at this juncture. Challenge the value or return to the business of many of these procedures. They are similar to specifications for equipment. Once in place, their need or effectiveness is rarely challenged. Quite often ponderous procedures are no longer necessary or effective.
Use Purchase Credit Cards Wherever Possible
At the top of this quick list are corporate purchase cards. This is one of the most resource efficient techniques for reducing the time that it takes to place an order and often merely requires a phone call to a supplier with minimal paper work. Negotiating quick delivery parameters especially with preferred suppliers can yield even better results. For example, four of our preferred routine consumables suppliers guarantee same day delivery for over 2000 items if ordered before 11:00 AM. The end-user makes the phone call and the box is delivered directly to them to inspect and receive.
Set Up System Buying Procedures And Establish Continuous Replenishment
Set up continuous replenishment systems with suppliers especially for all “C” type or non-strategic items. Put these low value items on a continuous replenishment system that suppliers basically “turnkey” manage for you. This requires very little attention from purchasing or end-users. It also eliminates the receiving process and makes the supplier responsible for inventory control and usage history. These low value items are notorious for wasting the time and resources of many individuals. Attack these parts with a passion and avoid any burdensome auditing procedures. Their dollar value is such that they are not worth any major control procedures.
Go Electronic With Your Links To Suppliers
Get out of the bureaucratic paper age and target for direct electronic links with suppliers. Many choices are available to help your efforts. EDI, E-mail, and the Internet are just a few of the options available. Direct electronic business links to strategic suppliers should be considered with the most optimal being a direct link to your production schedule requirements. The electronic links should extend throughout the supply cycle to include electronic fund transfer for payment and supplier evaluation.
Outsource Where Appropriate
Many companies stubbornly cling to internally running areas or departments in an inefficient manner. Vast technological strides have been made in particular areas that most companies cannot keep up with their own internal resources. Companies are increasingly outsourcing areas such as computer programming, office services, publications, communications, transportation, and training. Purchasing needs to lead the way and evaluate if some internal departments or areas are competitive with outside sources. The goal is to outsource particular areas. Target areas that take the longest time to complete a task or project first. Next target non-strategic areas that are necessary but not a competitive factor. Make sure that the new outsourced supplier meets ever increasing speed of delivery and accuracy goals.
Set Cycle Time Standards In Purchasing
Hold buyers and the entire purchasing department accountable for processing speed especially for purchase orders. Visibly track your goals and results preferably graphically for all to see. Set processing time goals for every purchasing related transaction that is performed. Start a problem solving process that targets the streamlining of all procedures in the purchasing department. Don’t underestimate people’s ingenuity to reduce the time it takes to perform a purchasing procedure. Create an atmosphere that encourages innovative time reduction methods throughout the entire supply cycle. Ask your suppliers if they have any rapid or innovative procedures that reduce internal purchasing time. Adapt them and get agile.
Purchasing needs to first “lead by example” in all cycle time reduction efforts. The purchasing arena, with all its many bureaucratic devices, can yield impressive time reductions.