Lean Purchasing

In the past decade the concept of Lean Manufacturing has picked up in a great deal. Companies are looking forward for reducing wastage in the system and improving performance and efficiency. This resulted in reduced inventory, increased throughput and improved customer service levels. Using the similar dynamic concept of lean companies are now moving fast ahead in Lean Purchasing. This concept helps companies to broaden their framework of Lean concept deeper into their supply chain.

Lean Purchasing is a long term commitment to combine elements of strategic sourcing and Lean principles. It provides visibility to suppliers about customers current and future business and stressed at lasting, collaborative relationships with suppliers and business partners.

The key to lean purchasing is visibility. Suppliers must be able to "see" into their customers' operations and customers must be able to "see" into their suppliers' operations. Organizations should map the current value stream, and together create a future value stream in the procurement process. They should create a flow of information while establishing a pull of information and products. Lean purchasing calls for partnering with supplier and understand the total cost of doing business with a particular supplier.

The first step in conducting any type of Lean Sourcing initiative involves understanding where dollars are spent. Companies often track expenditures by supplier, but this approach is limiting, particularly if there are a large number of parts (e.g., over several thousand). Companies that manage their expenditures by part groupings or categories typically have a better handle on where their dollars go and can analyze pricing trends over time.

The Benefits:
Lean Purchasing provides four key benefits to organizations. These are:
· Greater buy-in from key functional areas—operations and purchasing which care about both price and performance
· Greater likelihood of implementing identified sourcing savings
· Improved quality and reduced waste
· On-going additional cost reduction opportunities via collaboration with supply partners
More advanced organizations that begin to experiment with lean purchasing quickly realize that strategic sourcing does not have to be in conflict with lean. Rather, they observe that strategic sourcing is really a precursor step to identifying long-term supply partners and more tightly coordinating purchasing efforts with operations and manufacturing. They also realize that in an increasingly global supply market, conditions change and leading companies need to regularly go to the market to identify, qualify, benchmark, ensure best global supplier capability and competitiveness.
Today, Lean Purchasing is making its way into the middle market, where smaller organizations are beginning to realize that strategic sourcing provides a means for substantial cost savings and at the same time addresses the concerns of operations personnel. Many are beginning to bridge the gap between procurement and operations by getting started with Lean Purchasing. At its core, Lean Purchasing is really about reducing Total Enterprise Cost.