Entering in a new year is a priviledged moment to take good resolutions. But which ones? That is the question (!). To help, I’ve listed below 27 purchasing leading practices that might give you some new bright ideas. Enjoy, and why not to let me know the ones you’ve pick-up (which are not necessarily the most trendy ones…)
- Develop and document a corporate purchasing policy statement
- Develop and document a two to three year sourcing plan based on a strategic sourcing diagnostic
- Supplier invoice, company receiving reports, and purchase order are matched automatically and the invoice paid, if no discrepancy exists
- Use the Corporate Purchasing Card to buy small ticket items
- The Purchasing Organization is centralized regarding ordering and control and decentralized regarding execution
- Shift purchasing focus from processing purchase orders to managing relationships with suppliers
- Shift purchase agent/buyer responsibilities from a domestic many commodity perspective to a global commodity specialist perspective, coordinating company and supplier processes for specific commodities
- Develop longer term relationships with key suppliers and strategic alliance where applicable
- Develop new strategic products/equipment with supplier involvement
- Company uses its knowledge and expertise to train supplier’s personnel and improve their operations
- Self directed commodity teams evaluate and select suppliers
- Establish and enforce supplier qualification requirements
- Select suppliers using the Least Total Cost technique
- Evaluate suppliers based on actual results achieved against established benchmarks in the quality, delivery, service, lead-time, price and inventory investment areas
- Motivate suppliers and achieve continuous improvement by providing rewards, performance reviews, and ongoing close communication
- Implement and use an eProcurement application
- Incorporate the use of expert systems to improve purchasing efficiency and effectiveness in decision making
- Use workflow management to achieve greater purchasing productivity and customer s atisfaction
- Use eSourcing to exchange information, manage and negotiate contracts with you suppliers
- Use B2B e-Marketplaces
- Execute pro-active supplier market scans to locate new competitive suppliers
- Learn and test Emerging Technologies
- Companies are using an approach to capital purchased items which includes both qualitative and quantitative factors in the analysis
- Acquire capital equipment based on an incentive based contract
- Companies are establishing relationships which give almost complete control of inventory management to suppliers for various commodity groupings
- Implement bar coding or RFID
- All inventory has been segmented on an ABC classification basis
If you ask for more, have a look at my Top 10 Best Practices in spending analysis post.
Jean-Philippe,
your blog is great and full of useful information.
I do have a question – I just started as head of sourcing for medium sized company which has never done sourcing before – any recommendations for the first 45 days?
I have no staff but will be allowed to add some by taking over “purchasing” resources – I have received the spend data divided by major cartegories and am now talking to IT/Finance about next steps (drill down on spend).
Any and all ideas are appreciated.
Holger Baeuerle
(I am German but work in the USA)
Hey Holger. Thanks for your comment.
With regard to your question and to a regular strategic sourcing program, the size of your company and team is critical. To make a long story short: you don’t have the resource and time to apply a strategic sourcing methodology extensively. You have to make shortcuts and concentrate on high-value actions and categories (the 20% that represents 80% value).
Let me give you 2 recommendations for your first 45 days:
– Focus on analysing the situation
– Conduct change management
The first thing to do, for sure, in the 45 first days, is to assess the situation (see my post: http://www.massin.eu/how-to-qualify-a-sourcing-group-ssms-step-17/.
Even if you have good findings within a couple of weeks, just concentrate on understanding the situation: objectives, figures, contract planning, working methods, organisation are the main topic to understand and qualify. Sounds easy but it is not as your company management team might push you to take quick actions.
1. The Analysis
I’m impressed you’ve been able to get spend data already, that’s amazingly good but unfortunatly not enough. An excellent shortcut way to dig into the details is to retreive major contract key-information and to lay them down on an excel sheet: how went the purchasing process, how many suppliers have been involved, on what criteria has been selected the winner, who are the key decision makers (internally), what was the lenght of the contract, what has been the price evolution, what is the performance of the selected supplier, when should the contract be renegotiated, etc…? In the meantime, if you find something interesting which is not requiring much of your time to be implemented, just do it as ‘quick wins’.
2. conduct change management
If you are to be successful, get in mind that 100% of your findings are due to the current organisation (current stakeholders, ie CEO, CFO, COO, CTOO, your team, key requisitioners etc…). As a consequence, without their support and whatever your bright ideas are, you won’t make anything: It is critical to involve stakeholders in the analysis process, solution design and implementation. Get it clear: Your objective is to get them agree your analysis. Don’t be shy to adjust the way you describe your findings if 1) it brings you the support of some stakeholders, 2) you see it is -still- an argument to implement a solution you have in mind.
There would be much more to say, but those are the 2 first recommendations that came to my mind. As Sourcing is new for your new company, why not – as well – to explain during a couple of conferencing sessions what strategic sourcing is all about?.
Your challenge looks great. Good luck!
Jean-Philippe
Holger,
Another interesting and short post for you: