What really is Lean Procurement?
Lean Procurement® is the trademarked strategy that can help you dramatically reduce what you spend in time and money on the large categories of products such as the wide range of low value high velocity business supplies.
Lean means the elimination of waste and that is exactly what the Lean Procurement strategy does to the procurement process. It utilizes innovative web technology and web solutions to streamline your procurement process, reduce spending and provide measurable accountability. And common sense solutions.
The Lean Procurement strategy uses a Lean team approach to optimize the total end-to-end procurement process; eliminating wasted activities and making ordering efficient. Multiple departments feel the relief. It is typically a byproduct of lean best practices, leadership and tools, not a focus. Lean has to be done intelligently. Workflows need to become more efficient, and more importantly, the actual workflows and their underlying assumptions need to be questioned. When Procurement asks the question: how can I approach the work of Procurement so that I add more value to the customer (both internal and external), many exciting possibilities will open up.
To ensure competitiveness in today’s global marketplace, organizations must go beyond the concept that going lean is just for manufacturing companies and associates on the factory floor. It is true that historically speaking, manufacturing has always been at the forefront of going Lean. Because manufacturing has been the leaders in lean procurement, it is an area when professionals will find the most case studies and the most dramatic transformations. Lean Procurement can go beyond the manufacturing vertical, all the way to the supply base. It is applicable to all industries, both in manufacturing and the services sector. Adapting a lean procurement strategy can yield fantastic results financially and operationally.
How to become strategically focused in Lean Procurement
Question why particular activities being performed a certain way, and ask if it increases procurement’s total value
Instead of focusing primarily on cost reduction, ask how procurement can add value to the organization either through process improvements or adoption of technologies to reduce errors and manual processes
Examine if your procurement approach is solely-focused instead of holistic
Lean in Procurement and Supply Management can be viewed as a way to:
Improve the procurement process and workflows, reducing time and eliminating waste
Reduce/lower costs while improving the quality of products and services
Improve the performance and responsiveness of suppliers
Increase the focus on those activities that add value to the firm
Enhance procurement’s strategic rather than transactional focus
STEPS TO LEAN PROCUREMENT STRATEGY
Finding a solution to the challenges discussed above is now easier because the area of focus is always the shadow of the concerned problem. Below we’ve listed five simple steps of lean procurement strategy followed by an exhaustive to-do list for you to check out every accomplishment.
The first step to bring lean procurement management discipline to effect will be to dig deeper into the requirements of all internal customers.
In the second step, you got to simplify, automate, and streamline processes to efficiently and effectively contribute to strategic procurement.
The third step will be to develop the skills and build structures that’ll help procurement achieve operational goals besides strategic.
In the fourth step, consider improvising performance management through indicators that’ll signal the function’s overall profit-and-loss contribution.
And finally, it is time for behavior management to systematically build a culture that orients people toward preventing waste and recycling opportunities.