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| Client: | A $300-million
division of a multi-billion dollar global manufacturer of high-quality
fine particles, dispersions and compounds. |
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| Problem: | Need to conduct
an assessment of Purchasing to develop short-term recommendations
with a corrective action plan, and to develop a long-term strategic
direction. |
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| Approach: | Analyzed policies
and procedures, inventory programs, systems, organizational functions
and processes, and conducted audits on requisitions and purchase orders.
Created process maps, identifying value-added and non-value-added
steps, and used tools such as FMEA, fishbone diagrams, and cause-and-effect
matrices to create a process improvement plan. Assessed purchasing
activity within IS, Finance, Manufacturing, Maintenance, Capital Engineering
and R&D and assessed the effectiveness of Purchasing as a support
function. Compared departmental knowledge and skill set with a world-class
purchasing organization. |
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| Results: | Developed short-term
and long-term action plans to re-direct the focus of the purchasing
department from tactical to strategic. Recommendations: Departmental / Functional Changes: ·Redefine goals and objectives, roles and responsibilities, streamline purchasing procedures (remove non-value-added steps), utilize information systems to full capability, define data-gathering methods to measure historical internal transactions and conduct training programs for users ·Increase use of e-procurement ·Implement plan to reorganize / restructure the purchasing department ·Purchase order cycle time savings: 25-35% short term; 35-50% long term Business Strategy Changes: ·Develop supplier metrics and evaluation criteria, business-critical RFQ, negotiations, supplier selection and SRM criteria ·Establish vendor managed inventory and consignment inventory programs ·Cost savings: $2-4 million short term; $6-8 million long term |
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