iSixSigma

Six Sigma project identification in Procurement area

Six Sigma – iSixSigma Forums Old Forums General Six Sigma project identification in Procurement area

  • This topic has 16 replies, 15 voices, and was last updated 12 years ago by vxm.
Viewing 17 posts - 1 through 17 (of 17 total)
  • Author
    Posts
  • #37827

    N
    Participant

    Dear allMy management expects me to do cost reduction projects in procurement area.I am finding diffculties in identification of six sigma project even after compltion of Process mapping and VOC.
    1] Has anyone doing the project in procurement areas ?
    2] Can someone provide me with the list of possible six sigma projects being done in procurment area ?
    Thanx ,Manoj Sagari

    0
    #113035

    systhinc
    Member

    Try looking at Quality, Cost, and Delivery first.  Depending on your business, you may also want to look at cycle times, inventory levels, etc.  Consignment stock is sometimes a good place to look as well.  Purchasing projects can save money by reducing inventory levels as well.  Negotiation of delivery kanban  sizes, etc.  There’s plenty to find, but there are also many different issues to consider.  You’ll have to consider the system at every step.  If you get a better price by buying larger lots, what’s the effect on Cash Flow?  etc. etc.

    0
    #113036

    MADHUSUDAN RAO C.H.
    Participant

    Can i get the information too?
     
    Thanks

    0
    #113038

    sree
    Member

    finding financial returns directly in the procurement area is linked to production process.  You have not stated your ‘scope’ clearly, by this I mean…why do you want to improve procurement for? What do you want to improve in procurement? – cost, delivery time, quality…etc.  Procurement can have projects which comprise of causes to delivery delays, quality issues and cost at the customer end.  But this is confirmed by data analysis in production / process.
    projects which have been picked in other industry or even same segment as yours may provide only an idea, but not the conclusion.  It is best to analyze data in your own company and select projects,  direct impact of procurement problems need to be clearly identified, which might involve a weeks or fortnights study.
    If you really solve procurement problems do not ponder over whether it is going to classify under six sigmaproject or not….the goal is problem solving, and intention of six sigma is to reduce variation in performance ensure mean of the process is in line with the target…provided you have identified one!
    rgds
    sreedher
    MBB, SKIL

    0
    #113043

    ALEK DE
    Participant

    Some examples though you have not mentioed the industry type business.
    1. Reduction of  landed cost of material wrt budget by — by way of logistics control.
    2.Reduction of inventory carrying cost by — .
    3. Reduction in cost related to inward goods inspection ( reduction in cycle time , no of inspections etc)
    4. Reduction in material cost by development of alternate items
    5. Establishing minimum inventory using Kanban
    You mentioed you have collected VOC. Who are the customers & what are their requirements ? Can you match any such requirement with above examples ? Best , find out the business need. Possibly you are trying to find out an opportunity for doing a six sigma project without having a definite issue in hand. 
    Thx
    Alek
     

    0
    #113047

    Bryan
    Participant

    Careful of where you aim the VOC… as the MBB answered in one these threads… you have to define that for your business.   As a “VOC” you could put together a survey of your management peers as well as your internal customers.  Then look to your suppliers.   Are they delivering ontime?!
    Is your process flow (order entry to order fulfillment) as LEAN as possible (considerations for Sarbanes-Oxley, if applicable).  We found it took 2.5 weeks from when an order was received until “procurement/purchasing” had any clue a new order had arrived.  It is now less than a day.   We discovered issues with MRP/ERP, order release software, etc.
     The rest is as suggested… what is your replenishment system?….Kanban, lean consumption (like the auto guys {two door car…only two doors show up}), from there… the sky is the limit. Inventory is big…but the supporting processes have to be in place. Here is a challenge… can you get one more turn each year out of your inventory?   So if you turned 4 turns in 2004, can you do 5 in 2005.   And turns is not the “goal,” yet it will show you where you are weak in smart inventory practices.  My department had inventory turns of 13 two years ago… thus we went and met 14 the next year.    We discovered a slew of inconsistencies that opened pandora’s box for Green Belt projects across a variety of product lines.  
    I got a bunch… you can write back and we can chat offline.

    0
    #136759

    Taylor
    Member

    Take some clues from your mfg departments, then go to your suppliers and make sure all concepts are applied there.  If your suppliers are not efficient, this can be a large area of opportunity.

    0
    #165985

    Ningi Shezi
    Participant

    I a doing a Lean six sigma project for procurement on Supplier OTIFs, I do not even know where to begin, can anyone help or else help me identify other projects in procurement
    I got a bunch… you can write back and we can chat offline.

    0
    #165986

    Bharathi Mathivanan
    Participant

    Hi,
    You can start off with your high level process map/value stream map. Once you map your current process, you can see where all you need improvement.
    Regards,
    Bharathi

    0
    #165987

    Deanb
    Participant

    Manoj,I think your question of “where” gets answered by starting a study or documentation system of CTQ variables such as Extras, Lateness, Non-Conformances, etc and studying these in aggregate for commonalities. Once that initial data is collected for a reasonable period FMEAs can help you dig deeper into possible assignable causes which also need to be documented in your study. A rough COQ analysis on the associated failure costs, as well as prevention and appraisal costs (surveillance, expediting, etc) will point you to where the priorities are for improvement. This will tie you to dollars org-wide, not just in the procurement dept, which I gather is your true assignment. Good luck.

    0
    #165993

    Brandon
    Participant

    Ningi, I suggest you look at the Project Selection Packet in eBooks on this site. With it you would get the procurement mngt team together and brainstorm opportunities for improvement within the procurement group.
    My experience with this is it will facilitate the generation of more ideas than you can imagine. It will not only help you find a project, it will set the stage for more projects and give the mngt team a view of how much they can expect from SS projects in their area.
    Subsequently you can certainly use this process with other areas of the business.

    0
    #166003

    Deanb
    Participant

    Anytime an objective is stated in general terms to improve a functional area (procurement in this case), I read that to necessitate beginning with a “total” view of the situation as it economically affects the “total” enterprise, followed by targeted drill downs to solve problems. IMHO, this makes your situation more of a TQM problem than a six-sigma one at this point in time.Lets say you find that the more economical materials available for purchase requires a new shop capability. Or, perhaps you discover that procurement needs to know which product variations your operation can best handle. Then in such cases you have the makings of potential six-sigma projects. You first need to assess economic failure costs arising from the function. A good cost accountant coupled with expert insights in the organization can probably generate much of your initial information. Good Luck.

    0
    #166029

    Adam L Bowden
    Participant

    Procurement drives inventory procurement.Inventory is an indicator of waste.Waste is an opportunity as well as process variation that causes
    increases in the levels of inventory (process variation is waste)Just mapping out the process is ok as a baseline. To be honest
    you need to strategically throw out your old process and drive Lean
    into the whole supply chain and use Six Sigma as the enabler.You should be able to reduce inventory (driven by you) by 50 to
    95% depending upon the inventory type and category.You should have NO problem what so ever in identifying
    opportunities. It sounds like you do not have any support to
    strategically assist you which is a shame as you will only make
    small incremental changes versus the radical ones that will really
    transform your business..Just shout if you need help.Best regards,Adam
    (1) 720 938 0321 (GMT – 7hrs)

    0
    #168632

    K
    Participant

    yes you have a lot of scope in material procurement. See the pattern of procurement ie a regular or a stray procurement and then carryout the project in procurement

    0
    #168633

    K
    Participant

    I meant in my previous message about the pattern of procurement. Please see if there is a contract for all procurements. If there are no contracts then insist for contract procurement so that the rates do not fluctuate and if you have a long term contract then you’ll have a cost benefit. Moreover see the payment term and the cash discount/ time discount facility which the vendor is offering. Please compare and then go ahead with the project. The project will mechanically follow once you do a SIPOC and VOC.

    0
    #169914

    Rogers
    Participant

    I would love to hear some of your procurement projects and how you implemented a “leaner” process. 
     
    I am new to Purchasing and we have lots of “opportunities”.  I guess I want to know what/where to start first.
     
     

    0
    #186825

    vxm
    Member

    Hi Deanb, could I get your email ID? I am working on a Six Sigma project in procurement and getting some insights from you would help.Thanks.
    Vandana
    [email protected]

    0
Viewing 17 posts - 1 through 17 (of 17 total)

The forum ‘General’ is closed to new topics and replies.