Lean in Procurement

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Lean in Procurement

Applying Lean in procurement refers to the streamlining of procurement processes and practices in order to improve efficiencies and performance, minimise transactions, eliminate process waste, reduce total cost and work as an integrated team to provide optimal value to internal and external customers. We all know of inherent wasteful activities in procurement such as tracking down purchase order status; multiple approvals; multiple vendors; use of spreadsheets; misuse of ERP systems and messages etc. The adoption of Lean in Procurement can, therefore, generate substantial savings.

Research data in the USA conducted by APQC (www.apqc.org) indicates that organisations that have invested in Lean procurement practices spend less on procurement than organisations that have not invested in Lean process improvement. Organisations that invest in Lean procurement spend $1.27 less per $1,000 in purchases on the entire procurement process than their counterparts that have not invested. For an organisation with $1 billion in purchases annually, this difference would translate into $1.27 million in potential savings directly associated with investing in the development of Lean procurement practices.

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