The following article was prepared by Mike Taylor, C.P.M. for distribution to NAPM affiliate newsletters.
September 22, 2002
A few notes and comments from the conference in Portland
index: Supply Chain Management / Risk Management / Contracting Opportunities / 20/20 Vision / Conference 2003
Why do we need to get more involved? What are the opportunities for purchasing to add value?
Consider any item that you purchase on a regular basis.
If so, get involved, pull together the key players and "manage the supply chain" to solve one or more of the underlying causes.
A few examples:
The end user requests 30 parts even though the need is only for 5 per week.
To cover the in-house order processing time of 5 weeks
A few extras just in case he doesn't get all he needs on future orders
Uncertainty about long term need prevents a long term planning for scheduled releases
Uncertainty about price fluctuations and the potential budget impact of future orders
We buy 50 parts, even though our end user only asked for 30, to compensate for;
Delays in getting the next shipment, so we have "safety" stock
Parts defects
Uncertainty about supplier financial viability prevents an annual agreement for scheduled releases
Uncertainty about the stock being kept by distributors that might run out
Lack of perceived authority to enter into a long term agreement
Concern about a way to limit contract liability to a small number of unneeded parts if the end user need changes
The manufacturer makes 60 parts
To cover uncertain shop rework levels
To cover shipping losses
To put extras on the shelf for the emergency "Fed Ex" shipment to cover freight delays of the order for 50
hmmmmm....... sounds familiar, maybe we can do something to help....
Greg Hutchins, PE described significant changes in corporate auditing which will directly affect how we manage the supply chain. New legislation and SEC requirements are being adopted by state and federal agencies and so will become ubiquitous. Internal Auditing and senior management accountability will expand to include "operational effectiveness" and how the organization manages and controls risks. Since purchased materials and subcontracted services form a significant (and expanding) part of the company expenditures, the risks involved with managing the supply chain will be a prime target and an expanded opportunity for purchasing professionals.
Check out Greg's web site at www.valueaddedauditing.com
There are creative ways to construct contracts. Mike Taylor, C.P.M. described several ways to think outside the box when building contracts. When considering the risks involved in preparing and administering contracts, there are ways to get beyond traditional ponderous paper-trail contract practices. Corporate practices and audits can be challenged with sound rationale to show that risks have been considered and are being managed. This does not mean risks are being completely eliminated, but that risks are being evaluated and mitigated commensurate with the potential impact.
Even Government Contractors can [and should] successfully implement this approach. Consider the following definition of Risk Assessment from the DCAA Audit Manual
"..the entity's identification and analysis of relevant risks to achievement of its objectives, forming a basis for determining how the risks should be managed."
Visit www.mltweb.com/seminars/index.htm to download a copy of the powerpoint slides from the presentation.
Thomas G Jones, Phd, Small Business Management Instructor for Clackamas Community College hit the nail on the head in his dynamic opening presentation. Consider that the sum of human knowledge is doubling every four years and by 2010 it is predicted that the rate of doubling will have increased to every 37 days. Increases in computer power will fuel changes in technology as we approach "virtuality". Anytime, anyplace service delivery and the elimination of time and place as significant factors. If it is available anywhere in the world it can be found and delivered in time to meet the need.The Information Age has already brought massive changes to the purchasing profession and significant opportunities in managing the Supply Chain. www.cccsbdc.org
Regional Educational Conferences such as this are a great way to stay in touch with new developments, establish relationships and hone supply chain management skills. Cost effective and close to home, local conferences maximize our educational ROI. Check out the Northwest Purchasing Events Calendar for upcoming regional events.
The Pacific Northwest Purchasing Conference will be hosted by NAPM-Columbia Basin in the Tri-Cities October 9-11, 2003. We have already booked several nationally known speakers; Helen Pohlig and Ross Reck. Keep up with 2003 Conference program plans at www.napmcb.org/60thPurConf2003.htm
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MLTWEB is assembled and maintained by Michael L. Taylor, C.P.M. |
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Materials and articles prepared by Mike may be shared for purchasing education provided that this source is cited and no fee is charged. The rights for any other use are withheld. |
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Copyright; Michael L. Taylor, C.P.M. |
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Last Updated: 05/21/2008 |