Long Business Systems, Inc. (LBSi)

Transcription

1 Long Business Systems, Inc. (LBSi)

2 Who am I: Keith Taylor My background: 22 years of hands on purchasing and materials management experience with a Cleveland, OH area manufacturer and distributor of municipal and industrial truck mounted sewer cleaning equipment, parts, and supplies 15 plus years experience implementing business systems and helping companies improve their efficiencies and bottom line through Business Process Improvements

3 Ten ways to improve your purchasing department 1. Establish, monitor and follow Department Goals 2. CRM and now VRM 3. Requisitions 4. Purchase Orders 5. Purchase Order Acknowledgements

4 Ten ways to improve your purchasing department 6. Expediting of Past Due Purchase Orders 7. Vendor Managed Inventory (VMI) 8. Vendor Performance Reviews 9. Vendor Purchase History Analysis 10. Networking and Continued Education

5 Establish Department Goals o Some examples: o Cost Savings by buyer / product line or other measurement. Establish measurable cost savings goals. Monitor and report on progress monthly. o Vendor Reductions. The more vendors you maintain and use the higher your costs. o Vendor on time delivery improvements o Vendor quality improvements

6 Establish Department Goals (continued) Measure and track the goals: o If you are not utilizing a business software or your business software does not provide tools to help you monitor and measure your goals you probably will not meet your goals. Manual or antiquated methods of tracking goals: o Excel or other spreadsheet tools o Word Processor o Many Software packages include methods and tools to allow you to easily monitor and track your department goals.

7 CRM and now VRM Are you utilizing VRM to run your purchasing and materials management departments? o CRM (Customer Relationship Management) has been around for several years. Many organizations utilize this to manage their prospect and customer relationships but surprisingly we find that few organizations incorporate methods to manage their relationships with their vendors. o VRM (Vendor Relationship Management) can be used to effectively keep track of vendor quality issues, expediting of purchase orders, request for quotes and other every day purchasing functions.

8 VRM (Vendor Relationship Management) Examples of manual methods: o Hand written notes on purchase orders pertaining to expediting and other issues. o Keeping track of purchase order receipts by hand on the purchase order. o Manual vendor correspondence concerning quality issues.

9 VRM (Vendor Relationship Management) Examples of state of the art methods: o Notes, documents, drawings, etc that can be attached directly to purchase orders or vendor records so that they are visible to all personnel. o Manual vendor correspondence concerning quality issues. o The benefits of including VRM in your business system are huge as you have one source for all information that can be viewed by all departments and users. o Examples of some of the above in SAP Business One

10 Requisitions Does your company utilize requisitions in their day to day operations? o Requisitions are used by many companies to control and limit purchases. o Sometimes used in conjunction with dollar amount restrictions: o Maximum per requestor o Approval limits by approver

11 Requisitions Does your company utilize requisitions in their day to day operations? o Be consistent. What ever the polices and procedures say follow them always.

12 Requisitions (continued) When to use requisitions: o When to use requisitions: o All materials, capital expenditures, expenses, and supplies o Only capital expenditures, expenses and supplies Manual vendor correspondence concerning quality issues. o Again, be consistent and follow the company s policies in all cases

13 Requisitions (continued) Manual Methods: o Hand written forms o Excel or Word Forms o s o Notes o Verbal

14 Requisitions (continued) When incorporated within a Software solution: o Many software business systems include requisition capabilities with functionality such as the following: o Users create their own requisitions o Ability to track and monitor open, in process, closed and converted requisitions. o Ability to send requests for quotations to multiple vendors

15 Requisitions (continued) When incorporated within a Software solution: o Functionality (continued) o Easily convert requisitions to purchase orders o Ability to send requests for quotations to multiple vendors o Examples of requisition capabilities in SAP Business One

16 Purchase Orders o Purchase Orders are legal contracts with your vendors. o Should always be placed in writing. Verbal purchase orders lead to errors or disputes as to what is being purchased. o o Fax o Snail mail

17 Purchase Orders o Must be complete including: o Complete descriptive information for all items, supplies and services requested including your company s part numbers, vendor part numbers, etc. o Include prices o Required delivery dates o Terms and conditions

18 Purchase Order Acknowledgements o Require your vendors to acknowledge receipt of your purchase orders o Track acknowledgements either manually or within your software solution. o Manually this can be time consuming and is usually done by just making notations on printed purchase orders o Utilizing a software solution to track acknowledgements o Examples of purchase order acknowledgement capabilities in SAP Business One

19 Expediting of Past Due Purchase Orders o Throughout my purchasing and materials management career this was one of the most inefficient tasks to be conducted by purchasing and sourcing departments. Many companies still struggle with this area on a daily basis. o Many companies employ several expeditors whose sole jobs are to verbally phone suppliers to check on the status of shipments that are late or due to arrive. o Methods used may include: o Run open purchase orders and manually highlight vendors to call

20 Expediting of Past Due Purchase Orders the hard way (continued) o Pull the old hard copy of the purchase order out of the file drawer and call the vendor. While we have the hard copy on our desk let s make notes on it and then re-file the purchase order back in the file drawer. Great concept but only the expeditor knows the details of the call o Do nothing and wait until the shop floor, warehouse, customer service personnel, owner or your boss calls you to ask where the material is.

21 Expediting of Past Due Purchase Orders (the pro-active way) o Some software business systems provide you with tools, features and capabilities to easily perform this function without adding personnel to the staff. In fact if properly setup, you can actually reduce staff while maintaining better on time shipping performance and customer satisfaction. o Think of how much more business you can realize from your customers if you improved your on time delivery performance from industry averages of 80% to more than 95% and above.

22 Expediting of Past Due Purchase Orders (the pro-active way) o Sound hard? o Actually very easy by setting up alerts to notify buyers in advance that purchase orders are either due to arrive or are late. o Send notices to vendors regarding their late shipments requesting responses via o Update purchase orders with new delivery dates

23 Vendor Managed Inventory (VMI) o Once an unheard of concept Vendor Managed Inventory concepts are a great way of reducing your inventories and cost of doing business. o Negotiate with your vendors to place their inventory in your facilities without cost to you until you use it. o Benefits for you include: o Improved cash flow o Lower cost of doing business no need to constantly be checking with your vendor and placing purchase orders for the same materials over and over again

24 Vendor Managed Inventory (VMI) o Benefits for you include (continued): o No stock outages o Benefits to your vendor include: o A happy customer o Less worry of you constantly shopping for a better price or different vendor.

25 Vendor Performance Reviews o Conduct periodic performance reviews with your top vendors: o Areas should include: o Ease of doing business o Quality and Customer Service o On time delivery o Cost

26 Vendor Purchase History Analysis o Ability to track: o How many times an item or service is purchased over a period of time o Dates o Quantities o Costs o Detailed Purchase Information o How much better job can you do with vendor negotiations of you have the ability to easily track and retrieve information such as listed above.

27 Vendor Purchase History Analysis (continued) o Many companies maintain this information in spreadsheets, manual cards, or files or not at all. o The ability to easily track and retrieve this information from your software solution can in many cases pay for the software solution. o The following are some examples of how information such as this is easily stored and maintained in SAP Business One.

28 Network and Continued Education o Network. Network.Network o Meet with your vendors and ask them for suggestions, solutions and recommendations for other vendors. o Meet with your peers and other professionals o Constantly be changing yourself. The way we are doing business today is very different then when I began my purchasing career back in 1973 o Join local and national purchasing organizations such as: o APICS (The association for Operations Management) o American Purchasing Society o National Purchasing Association

29 Long Business Systems, Inc. (LBSi) A technology firm that helps other companies run more efficiently and become more productive Questions? Keith Taylor, Vice President keith@lbsi.com Phone: ext 26 Connect with me: