Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Procurement Role In Forecasting, Inventory Management And Lean Manufacturing Sample

13,122 views

Published on

Published in: Business, Technology
  • Login to see the comments

Procurement Role In Forecasting, Inventory Management And Lean Manufacturing Sample

  1. 1. Procurement’s Role in Forecasting, Inventory Management and Lean Manufacturing
  2. 2. Contact Details <ul><li>For more information on how to receive this full training course or other PMMS portfolio offerings, contact: </li></ul><ul><li>Julie Brignac, Principal </li></ul><ul><li>+1 305 890 9078 </li></ul><ul><li>[email_address] </li></ul>
  3. 3. <ul><li>Describe the roles and responsibilities of Procurement in the forecasting, inventory management, and lean processes </li></ul><ul><li>Identify the key forecasting principles and the role Procurement plays in a successful forecasting model </li></ul><ul><li>Articulate the vital link between forecasting and inventory management, and how Procurement contributes to a successful process </li></ul><ul><li>Define the elements required to execute a successful interface between Procurement, planning and manufacturing </li></ul>Objectives
  4. 4. Tactical Buying & Strategic Procurement What’ s the difference? <ul><li>Tactical Buying </li></ul><ul><ul><li>Driven by specifications/requisitions </li></ul></ul><ul><ul><li>Often buying a solution </li></ul></ul><ul><ul><li>Buying what the market offers and sells </li></ul></ul><ul><ul><li>A function </li></ul></ul><ul><ul><li>Not part of strategic planning </li></ul></ul><ul><ul><li>Contract Managers </li></ul></ul><ul><li>Strategic Sourcing </li></ul><ul><ul><li>Driven by business needs </li></ul></ul><ul><ul><li>Solving a business need </li></ul></ul><ul><ul><li>Influencing and developing the market to meet the needs </li></ul></ul><ul><ul><li>A cross-functional business process </li></ul></ul><ul><ul><li>Part of strategic planning </li></ul></ul><ul><ul><li>Market & Relationship managers </li></ul></ul>
  5. 5. Role Definitions <ul><li>Strategic and tactical purchasing </li></ul><ul><li>Influence over all areas of expenditure </li></ul><ul><li>Involvement in corporate strategy and stakeholder consensus on Procurement strategy </li></ul><ul><li>Cost, quality, availability and sustainable performance measurement </li></ul><ul><li>Prediction of some future event or condition to reduce risk </li></ul><ul><li>Requires data and development of some preliminary hypotheses </li></ul><ul><li>Use the past to tell a good story for the future </li></ul><ul><li>Provide the business with scenarios for proper planning </li></ul>How are these linked? <ul><li>Balance the needs of manufacturing by providing parts just in time </li></ul><ul><li>Understand financial impact of inventory balances and mitigate additional cost and risk of obsolete inventory </li></ul><ul><li>Coordinate with Procurement and manufacturing on appropriate buying levels </li></ul><ul><li>Meet customer demands by providing goods at highest quality and on time delivery </li></ul><ul><li>Manufacture goods in most productive timeframe </li></ul><ul><li>Eliminate waste in operations to improve throughput </li></ul>PROCUREMENT INVENTORY MANAGEMENT FORECASTING LEAN MANUFACTURING
  6. 6. <ul><li>An easy life - minimum processing </li></ul><ul><li>Choice </li></ul><ul><li>User friendly transactions </li></ul><ul><li>Reliable transactions </li></ul><ul><li>A fast service </li></ul><ul><li>Accountability </li></ul><ul><li>The absence of Procurement presence </li></ul><ul><ul><li>no overt enforcement </li></ul></ul>Challenges: Internal customers will seek
  7. 7. <ul><li>There are five basic principles of forecasting that Procurement, inventory managers, and manufacturing personnel must remember </li></ul><ul><ul><li>Forecasts are always wrong </li></ul></ul><ul><ul><li>Forecasts must be measured and improved </li></ul></ul><ul><ul><li>Forecasts are more accurate for groups of products, rather than for individual components </li></ul></ul><ul><ul><li>Forecasts are more accurate closer in </li></ul></ul><ul><ul><li>Low-volume or erratic forecasts are most difficult </li></ul></ul>Five Principles of Forecasting
  8. 8. <ul><li>Many companies fail to link vital operational functions to their overall business strategy </li></ul><ul><ul><li>Resulting in siloed functions and redundant activities </li></ul></ul><ul><li>For Procurement, primary strategic challenges are </li></ul><ul><ul><li>Linking the Procurement strategy tightly to the business objectives </li></ul></ul><ul><ul><li>Developing strategic relationships with suppliers, but ensuring flexibility in the relationship </li></ul></ul><ul><ul><li>Acting as the focal point for the operational process </li></ul></ul><ul><ul><li>Defining Procurement as focusing on four key elements </li></ul></ul><ul><ul><ul><li>Availability Quality </li></ul></ul></ul><ul><ul><ul><li>Cost Sustainability </li></ul></ul></ul>Linking to the Business Strategy
  9. 9. <ul><li>Supplier Alliances </li></ul><ul><ul><li>Traditional long-term buyer/seller relationships </li></ul></ul><ul><ul><li>Cross company supplier partnering </li></ul></ul><ul><li>On Site Supplier Programs and Representatives </li></ul><ul><ul><li>Facilitates constant communication with key suppliers for high volume or critical parts </li></ul></ul><ul><ul><li>Part management by supplier representative, not company rep </li></ul></ul><ul><li>Kanban/JIT Philosophy Implementation </li></ul><ul><ul><li>Positive inventory impact </li></ul></ul><ul><ul><li>Frequent repetitive orders </li></ul></ul><ul><ul><li>Multiple deliveries just prior to floor use </li></ul></ul>Supplier Involvement
  10. 10. JIT / Kanban / Pull System Benefits <ul><li>Prevents manufacturing overproduction of end product </li></ul><ul><li>Provides visual controls so processes are managed efficiently </li></ul><ul><li>Improvements in all processes are imminent </li></ul><ul><li>Reduces lead times </li></ul><ul><li>Conveys production instructions between work centers </li></ul><ul><li>Eliminates waste </li></ul><ul><li>Reduces or eliminates some parts in inventory </li></ul><ul><li>Best when material is supplier owned until placed into WIP (work in progress on production floor) </li></ul>
  11. 11. <ul><li>Business treats the forecast as reality – not a potential scenario </li></ul><ul><li>Procurement establishes supplier alliances that drive cost reduction through volume, but does not confer with planning </li></ul><ul><li>Procurement does not consider the forecast when negotiating volume commitments </li></ul><ul><li>Manufacturing does not consistently evaluate the use of lean tools in its processes </li></ul><ul><li>Inventory managers do not consult purchasing or manufacturing when planning inventory levels </li></ul>Potential Failure Modes
  12. 12. <ul><li>BusinessDictionary.com website. www.businessdictionary.com : 2008. </li></ul><ul><li>Cavinato, Joseph L., Flynn, Anna E., Kauffman, Ralph G., The Supply Management Handbook . McGraw-Hill, Seventh Edition: 2006. </li></ul><ul><li>Lean Procurement ™. Website of Consumers Interstate Corporation. www.leanProcurement.com : 2008. </li></ul>Resources

×