Lean procurement: eliminate waste, but don't neglect to add value

What really is lean procurement? From some of the descriptions of lean procurement that I’ve seen, it seems to have morphed into something that is either myopically focused and/or totally unrecognizable as lean to me. Let’s start with myopically focused.  Yes, it is a good thing to do more with less, i.e., run procurement with fewer people. But what are the survivors doing? Are they focused primarily on transactions or are they focused on strategic activities? Reducing procurement headcount is much like reducing inventory in manufacturing. It is typically a byproduct of lean, not a focus.  It 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: how would what I’m doing add value to the customer (both internal and external), then many exciting possibilities will open up.

Lean procurement can be viewed as a way to:

  • Improve the procurement process and workflow, 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 activities that add value to the firm
  • Enhance procurement’s strategic rather than transactional focus

Many companies need to get beyond the notion that lean is primarily for manufacturing companies and the associates on the factory floor.  While manufacturing historically has led the lean charge, opportunities can and should go well beyond it. It’s natual to assume that lean means lean manufacturing, as it’s the area that has gotten the most focus and has shown the most dramatic transformations. Lean procurement is applicable to all industries, in the manufacturing and service sectors.

Lean procurement questions why particular activities are being done and how to increase procurement’s total value. Cost reduction is, of course, important. However, how lean helps procurement add value should remain foremost in mind. The lean mindset knows that adding value typically requires eliminating waste and cost. The approach to lean procurement should be holistic and not solely cost-focused.

Many tools in the lean toolset (value stream mapping, 5S, Kaizen, standard work) can apply. However, as in all lean practice, focus should be on the overall strategy, people and culture rather than primarily on the tools.

Sherry R. Gordon

Author of:
Book: Supplier Evaluation and Performance Excellence: A Guide to Meaningful Metrics and Successful Results
CloudDVD: Supplier Evaluation and Performance Management

 

 

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One Response to Lean procurement: eliminate waste, but don't neglect to add value

  1. CharlesP says:

    For Lean Procurement, it sounds like another buzzword to me. Anyway, when it comes to actual lean practice, it think Target Costing and Relationship Management (Keiretsu) can represents the word “Lean Procurement”.

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