IMPROVING PROCESS EFFICIENCY AND EFFECTIVENESS
Once the basic information flows and communication techniques that comprise the supply
management process are understood, we return to the initial questions: (1) What process(es)
will be most effective and efficient to support the buyer–supplier exchange? (2) What in-
formation systems might be used to support or enable efficient and effective processes?
A Supply Process Flowchart
The flowchart in Figure 4–2 demonstrates one way an organization might improve ef-
ficiency and effectiveness of the supply management process. This begins with an assess-
ment of the nature of the spend. Is the purchase strategic?
Strategic Spend
A common definition of strategic spend is goods or services critical to the mission of the
organization. This definition allows for high- and low-dollar-value purchases. How can the
supply process for strategic spend be made more efficient (get more things done in a set
amount of time) and more effective (get more of the right things done)? And what is the
trade-off between efficiency and effectiveness?
Early Supply and Supplier Involvement
As the flowchart depicts, a cross-functional sourcing team fosters communication through-
out the process, especially during the critical stages of need recognition and description. It
makes sense to apply time, money, people and other resources to mission-critical spend.
The goals are to assure continuous availability at the lowest total cost of ownership. In-
formation management tools enable this communication process and support decision
Nonstrategic Spend
For nonstrategic (nonmission-critical) purchases (the right column of the flowchart),

dollar value and repetitiveness drive process decisions. First, a small dollar threshold is

established and efficiency tools, especially electronic ones, are used. Second, suppliers are

prequalified and tools for efficient order placement are used.

Efficiency relates to the number of tasks performed in a set amount of time. For nonstra-

tegic spend, efficiencies are gained by reducing the number of requisitions coming into the

supply department, the number of purchase orders issued to suppliers, and the number of

invoices and payments processed. Two continual problem areas for supply managers, small

IMPROVING PROCESS EFFICIENCY AND EFFECTIVENESS
Once the basic information flows and communication techniques that comprise the supply
management process are understood, we return to the initial questions: (1) What process(es)
will be most effective and efficient to support the buyer–supplier exchange? (2) What in-
formation systems might be used to support or enable efficient and effective processes?
A Supply Process Flowchart
The flowchart in Figure 4–2 demonstrates one way an organization might improve ef-
ficiency and effectiveness of the supply management process. This begins with an assess-
ment of the nature of the spend. Is the purchase strategic?
Strategic Spend
A common definition of strategic spend is goods or services critical to the mission of the
organization. This definition allows for high- and low-dollar-value purchases. How can the
supply process for strategic spend be made more efficient (get more things done in a set
amount of time) and more effective (get more of the right things done)? And what is the
trade-off between efficiency and effectiveness?
Early Supply and Supplier Involvement
As the flowchart depicts, a cross-functional sourcing team fosters communication through-
out the process, especially during the critical stages of need recognition and description. It
makes sense to apply time, money, people and other resources to mission-critical spend.
The goals are to assure continuous availability at the lowest total cost of ownership. In-
formation management tools enable this communication process and support decision
Nonstrategic Spend
For nonstrategic (nonmission-critical) purchases (the right column of the flowchart),
dollar value and repetitiveness drive process decisions. First, a small dollar threshold is
established and efficiency tools, especially electronic ones, are used. Second, suppliers are
prequalified and tools for efficient order placement are used.
Efficiency relates to the number of tasks performed in a set amount of time. For nonstra-
tegic spend, efficiencies are gained by reducing the number of requisitions coming into the
supply department, the number of purchase orders issued to suppliers, and the number of
invoices and payments processed. Two continual problem areas for supply managers, small
value purchases and rush orders are largely resolved through the use of efficiency tools.
purchases and rush orders are largely resolved through the use of efficiency tools.

 

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