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