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Supply Chain Audit - Purchasing And Supplies

Supply Chain Audit - Purchasing And Supplies
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Supply Chain Audit - Purchasing And Supplies

Supply Chain Audit is a quick way to reveal the process improvement & cost reduction opportunities that exist in your business. Supply Chain Audit is one of the most powerful business improvement tools available today.

Supply Chain Audit - Purchasing And Procurement.

Reviews and supply chain audit of current purchasing methods, to identify the opportunities to reduce costs of the administration of purchase orders, invoice matching, invoice paying.

One-off and ongoing, Supplier negotiations on pricing, lead-times, discounts & payment terms. Feasibility studies and the management of implementing consignment stocks or vendor managed inventory systems.

Implementation of supplier delivery performance systems. Supplier consolidations for reducing the number of suppliers without reducing the number of products in your product offer.

Stock obsolescence management systems and prevention techniques. Stock management system reviews and implementations for stock keeping records, goods inwards, goods outwards, inventory cycle counting, and stock-takes.

ABC classifications of stock by value and usage. Small parts kitting techniques, cost-saving ideas reducing the burden on labor resources.

Packaging materials replenishment systems to ensure you always have what you need, but without having to have large storage areas taking up factory space needed for production.

Key Benefits of Supply Chain Audit Reviews

Independent advice and coaching will deliver opportunities for improvement to reduce costs associated with the purchasing and replenishment activities.

One-off, pricing, payment terms, and lead-time negotiation exercises with suppliers pay big dividends, especially when negotiated by a consultant who is not close to the supplier base.

Supplier delivery performance systems help you manage the on-time delivery performance to your customers whilst ensuring stock levels are kept to a minimum.

The administration costs associated with a large supplier base will be reduced, this will save time and money.

Stock obsolescence comes straight from the bottom line, managing it correctly saves money and frees up space in your storage location areas.

Stock management systems can be the make or break for businesses, we can suggest changes to your processes that will improve your throughput and give an accurate status of the location and quantities of stock held.

Packaging suppliers love to burden you with big quantities so they can do long production runs. We will show you how to combat this type of thinking, and obtain the quantities you want when you want them.

Food for thought - How does your business score:

Manufacturers can reap tremendous profit and customer satisfaction improvements from effective supply chain reengineering. In my role as a management consultant, I have suggested that companies use the following 10 questions to benchmark their supply chain performance improvement potential.

If you answer "No" to any one of these questions, it is a solid indicator that if you're not experiencing decreased profits and/or overwhelmingly heavy competitive pressure now, you will soon.

Your score from these audit questions can help you to generally evaluate your company's improvement rate in the following table. Remember, your careful consideration and accurate response to these questions are essential to gain any value from this self-assessment of your supply chain capabilities.
  • Have we reduced our total cycle time (order to shipment) by at least 50% over the past three years?
  • Have total inventories decreased by at least 50% over the past three years?
  • Do 98% or more of our orders reach customers on time?
  • Has our supplier base been reduced by 2/3 over the past five years?
  • Have our supplier lead times been reduced by 50% or more over the past three years?
  • Have we reduced scrap, rework, and warranty costs by at least 50% over the past three years?
  • Has our cost to produce decreased by 20% or more over the past three years?
  • Have we reduced our cost of quality by at least 50% over the past three years?
  • Have we reduced direct material costs by at least 10% over the past three years?
  • Have we reduced our product development cycle time by at least 50% in the past three years?
Scoring

9-10 You are in an elite class of highly focused and top-performing manufacturing companies. Of course, "Yes" answers do not guarantee market leadership or profitability. Your competitors may be just as aggressive. Keep the improvement momentum in high gear. 

7-8 You are in the high-performance group of companies and may actually be outperforming most, if not all, of your competitors now. However, any "No" answer may present an unacceptable risk for which immediate action is mandated. Keep reengineering your business processes following a well thought out plan to make sure you are, in fact, out in front of your competition. 

5-6 Some progress has been made but you need to reach new levels of performance. Delay will cost money and, most importantly, remember the competition has not stopped searching for how to win. 

4 or less You are in a very high-risk category with a need to intensify or initiate a high priority supply chain reengineering effort. Delay most certainly has cost you money and limited or no action will ultimately lead to major problems.

Razor-sharp synchronization in your supply chain will undoubtedly be the major performance success factor in competitive markets. Customers are rapidly becoming more sophisticated and demanding. Manufacturers that offer customer-defined quality products, reasonable prices, and quick-order turnaround outperform their competitors now and will easily gain more market share in the future as customers clamor for more.

The successful and most profitable manufacturers will have reengineered their entire supply chains from beginning to end over the next five years. Five years is not a long time given the magnitude of the effort required to get the job done right. 

By the year 2020, companies that haven't re-engineered their entire supply chain to drive out the unnecessary costs, time, and other waste so they can deliver high quality, best value products at lightning speed will be history. It's happening across the board with many consumer items going to the retail level on a just-in-time basis.

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