Optimizing Business Processes

OPTIMIZING PROCUREMENT PROCESS

Project Overview

The project aimed to optimize the procurement process of Moore, a mid-sized manufacturing company, to improve efficiency, reduce costs, and enhance supplier relationships.

PREVIOUS STATE OF THE PROCUREMENT PROCESS

Challenges Identified:

Manual Processes: The procurement process was heavily reliant on manual tasks, including paper-based purchase orders and approvals.

Inefficient Supplier Management: Lack of a centralized supplier database led to delays and inconsistencies in communication.

Long Cycle Times: The average procurement cycle time was 30 days, causing delays in production schedules.

High Costs: Due to the lack of competitive bidding and bulk purchasing, procurement costs were higher than industry standards.

PROCESS AND TOOLS USED

Process Analysis:

Conducted a comprehensive analysis of the existing procurement workflow.

Identified bottlenecks and areas for improvement using value stream mapping.

Gathering Data for the Presentation

1. Initial Data Collection:

• Document Review: Gather historical data on procurement performance (cycle time, costs, supplier performance).

• Interviews and Surveys: Conduct interviews with key stakeholders (procurement team, suppliers) to understand pain points and gather qualitative data.

• Process Mapping: Create detailed maps of the current procurement process to identify bottlenecks and inefficiencies.

Tools Implemented:

Procurement Management Software: Implemented a cloud-based procurement management system (SAP Ariba).

Supplier Portal: Established a centralized supplier portal for better communication and management.

Automated Approval Workflow: Integrated automated workflows for purchase order approvals.

Data Analytics: Utilized Excel Pivot to track and analyze procurement metrics.

Improvements Made

Automation: Automated purchase order generation and approval processes, reducing manual effort and errors.

Centralized Supplier Database: Created a centralized, digital supplier database to streamline supplier communications and negotiations.

E-Procurement Platform: Implemented an e-procurement platform for competitive bidding and bulk purchasing.

Training and Change Management: Conducted training sessions for procurement staff to ensure smooth transition to new processes and tools.

RESULTS WITH METRICS

 Reduced Cycle Time: The average procurement cycle time was reduced from 30 days to 10 days, a 67% improvement.

 Cost Savings: Achieved a 15% reduction in procurement costs through competitive bidding and bulk purchasing.

 Improved Supplier Relationships: Centralized supplier database and improved communication led to better supplier relationships and more favorable terms.

 Increased Efficiency: Procurement staff productivity increased by 40% due to reduced manual tasks and streamlined processes.

Before Optimization: Procurement staff handled an average of 5 orders per day.

After Optimization: Procurement staff handled an average of 7 orders per day.

 Data-Driven Decision Making: Enhanced data analytics capabilities provided insights into procurement trends and supplier performance, leading to more informed decision-making.

CONCLUSION

By optimizing the procurement process through the implementation of automation tools, a centralized supplier database, and an e-procurement platform, MooreAdvice Group significantly improved efficiency, reduced costs, and strengthened supplier relationships. This project demonstrates the value of process optimization in achieving operational excellence and driving business success.