Procurement processes control a large percentage of organizational expenditures. Other than labor costs, most organizational expenses are controlled through requisitions / sourcing / PO processes. An analysis of an organization’s procurement process is critical to ensuring that materials/services are available for use in the right quantities at the right prices and at the right time. Inaccurate planning will affect the purchasing department’s ability to ensure volume requirements. Delays in the acquisition process can delay the manufacturing process. The organization’s use of ordering methods, such as e-Procurement and EDI, can expedite the ordering process.
John Hare of Toronto reviews the whole procurement process and identifies the cycle times associated with the major activities within the process. Some of the critical questions asked are:
- How efficient is the process of acquiring goods and services?
- Where are the bottlenecks/problems associated with the acquisition processes?
- What are the impacts on purchasing of inaccurate planning and forecasting?
Drilling down to the root of these questions will assist in the qualification of the areas of improvements, the associated financial benefits, and the development of the action items by which these benefits will be realized.
From our analysis, we develop an OPPORTUNITY ASSESSMENT chart that describes procurement process improvement opportunities. Quantify potential improvements / cost savings / cycle time reductions.
Sample Opportunity Assessment Chart to Identify High Impact Opportunities
John Hare is a Supply Chain Executive working in Toronto.