Purchasing Systems
In most organisations, 60-70% of the value of goods and services are bought in from outside, few have implemented structured process improvement programmes in purchasing.
Organisations need to be able to objectively assess the approach and performance of their purchasing functions and develop strategic implementation plans that align the function as part of the overall business strategy.
What is the Purchasing Systems programme?
The Raising Purchasing Performance (RaPP) programme has been developed to provide a quick, detailed and standardised assessment of the current purchasing approach within your organisation. It is designed to ensure you are using the most effective and appropriate buying processes, achieving the maximum overall cost savings.
The Raising Purchasing Performance assessment can be combined with a supplier Business Improvement Review (BIR) to include a detailed assessment of your whole supply chain performance. The actions and strategies proposed will then encompass both the internal activities required and the supplier development needs to cover the whole purchasing function.
NB: Multiple sites will require additional activities.
The Benefits of the Purchasing Systems programme
Implementation activities normally have payback within 3 – 6 months and include:
- Development of the purchasing business plan aligned to the organisation business plan
- Training and implementation of internet tenders or robust ‘Fast-track’ tenders
- Developing effective negotiation skills and Service Level Agreements
- Waste elimination in purchasing and demand management to reduce administrative burden
- Introduction of effective Vendor Rating and management of suppliers
- Introduction of consignment stocking and improved stores management
- Alignment of supply chain development and purchasing activity
For an organisation with a 5% operating margin, seeking to double profitability to 10%, achieving a 5% reduction in the cost of purchasing could support 60% of the target profitability improvement (from 5% to 8%, assuming that the purchasing function and supply chain accounts for 60% of the operating cost).