Purchasing Improvements
  Most Purchasing departments or systems are still wrought with excessive paperwork and approval processes, most of which could be eliminated with very little effort. Look for day-to-day procedures that are task orientated, and refocus on functionality by simply asking staff if the process adds value to the employee’s job or to the entity’s or company’s product or service.

  Reduce the number of POs, even to the point of eliminating them all together. Once the all encompassing major contract is in place, use draw down slips, the telephone, procurement cards or EDI to place the order.

  In exchange for reduced bureaucracy and faster delivery of items, the empowered line staff should be willing to accept the responsibility for poor judgment, operating procedure violations and successful implementation. Both good and bad should be reflected in employee pay and evaluations. This would then allow Purchasing to concentrate on developing major contracts with a majority of the suppliers, while allowing line staff to order directly from the suppliers without a purchase order or Purchasing staff involvement.

  Purchasing, in conjunction with a cross-functional team, could identify the major suppliers, then bid or negotiate an all-encompassing agreement that can be utilized by the user. Purchasing should be responsible for monitoring or administrating these major agreements.

  Purchasing should remain responsible for all procurement for items not on the major contracts. These procurements should fall within existing buyer authority, or be so small that the item can be purchased by a user via a credit card or petty cash.

  Purchasing must take a leadership role in continuously transmitting information to and from the user staffs about existing contracts and projects in progress. This includes the offering of training to all potential users of the contract in group and one-on-one meetings. And it means the Purchasing staff must get away from their desk in order to visit the workers and line supervisors. Top down and bottom up quality information is an absolute must for an efficient purchasing operation.

  When analyzing your approval process, think about this: “If there is a master contract for electricity, does each worker need to ask for approval every time they are going to switch on a big motor.” Of course not! So why do we require users to find approval for a necessary item when that item is covered by a major agreement and is properly budgeted? Who should know what is needed? The operators! And this is especially evident when most approvals are rubber-stamped transactions with little or no denials. Once this paradigm is shifted, the staff doing the ordering should also be responsible for lowering inventory, obtaining the material only as needed, and evaluating vendor performance.

  When the products needed are covered by an existing contract, Purchasing should not be involved with the order or payment processes. Purchasing professionals should be kept busy establishing new master agreements, training users, administering existing contracts, identifying items for long term contracts, keeping abreast of current and future concepts, and their continuing education.

  To be effective, Purchasing must be included in the planning stages of all major projects and acquisitions. They are the best source of cross-functional information for the entire plant or entity, and should be able to offer procurement expertise on how to accomplish the purchase efficiently, timely and at the best cost.

  Invitations to high level meetings, inclusion on the circulation list of written information, and daily one-minute oral updates would help the Purchasing staff be an effective contributor to the success of the entity or company. Here the Purchasing manager needs to cultivate information opportunities with all individuals in upper management. This valuable asset can only be gained through trust and confidence.

  Take a look at Purchasing staffing. When purchasing professionals must do their own typing, filing, faxing, etc., their salaries are being wasted on low-value functions. There are many ways to address this issue, but before additional staff is employed, there should be an analysis of all current and future tasks to determine which are really necessary, elimination of those that are not mandatory, and then utilization of other support staff on a part-time basis to accomplish repetitive procedures. Remember that an employee subconsciously adds work to fill a work day, so you must be constantly vigil and eliminate nonessential, no-added-value tasks at least weekly.

© 1997 by Donald L. Woods, All Rights Reserved