Supply Chain Excellence
In almost every industry the ability to procure raw materials and services efficiently and effectively will directly impact the viability of the business. Even small improvements in how well a purchasing function performs can have a massive impact on profitability and success.
It is for this reason that Applied Acumen recommend a detailed examination of the supply chain function, and in particular the purchasing function. Typically, not least due to the acute effect that this function can have on overall business performance, people in purchasing tend to be both smart, enterprising and hungry: all the right ingredients for benchmarking functional performance to identify potential incremental improvements.
To find out more about our Purchasing benchmark audit contact us here.
How long does an audit take?
Our audit can be done in two parts:
1.Quick Audit: we benchmark your function across a number of key parameters, including how the function is structured and the division of duties and responsibilities, the nature of the supply contracts, the integrity and quality of your data, the nature and understanding of the levers of negotiation, the purchasing process and a few more, including sample price comparisons.
2.Pricing trials: more in depth investigation in to one or more specific products or services supplied in order to create a ‘proof of concept and claim’.
The quick audit can be conducted over a several days, whereas the pricing trials may be conducted over several weeks.
Where do you find savings?
Savings are found principally in two areas: one is in unit price of items procured (being cheaper on a like for like basis – no change of quality), and secondly in purchasing administration (man-hours).
There are other areas where savings can be realised, for example in reduced write offs, or waste, in cost hidden in operations or distribution, and also within the construct of product costings themselves.
How do you measure savings?
It is important to understand the pricing dynamics of a given product or service in order to ascertain the level of benefit delivered.
For example, in a deflationary environment we might expect the price of a given product to decrease in any event without intervention. Similarly, if a product has been increasing in price steadily every year for the last 3 years, it is reasonable to expect such a trend to continue without intervention.
However, inflation is not the only dynamic at play. We would examine the market dynamics, seasonality, the trends in the sector, and also supply and demand behaviour.
In considering all the relevant dynamics we would seek to establish a baseline against which we could measure performance.
Our people are all CIPS qualified – what else can you bring?
CIPS is an excellent qualifications basis for good purchasing, and following the understanding of such principles allows professionals the opportunity to capitalise on the opportunities that our audit reveals.
The combination of data analysis, process excellence benchmark and our methodical approach to improvement brings fresh perspective to a function often simply too busy to reflect on true potential.