Analysis and Diagnostic of Current Purchases

Details
October 21st, 2011, 05:39 pm

Summary

Aim

One of the major challenges to the competitiveness of a company resides in its purchasing performance. Optimising purchases enables a company to increase its operating margin. For example, a reduction in costs of 5% can represent an increase in terms of margin equivalent to an increase of 20% or 30% in turnover. Moreover, purchasing optimisation has very little internal impact for the company.

Our analysis allows you to:

  • Compare your purchasing against current standards for the profession
  • Identify possible short and long term savings opportunities (with respect to your purchasing organisation and your purchases spend)
  • Evaluate the financial impact of possible savings opportunities
  • Determine KPIs (Key performance indicators) in order to monitor savings generated during a defined period

Deliverables at the end of the assignment

Upon completion of the assignment the customer will receive a detailed report including the following:

  • A comprehensive analysis of your purchasing spend (per purchase category, per amount: direct (production) and indirect (non-production) purchases, etc.) presented both graphically and in table form.
  • An overview of the purchasing process from the definition of need up to the receipt and payment of goods and services including an analysis of the purchasing function’s role throughout the process
  • A presentation of results with recommendations for actions to be taken (including an estimate of potential savings and associated costs) in order to optimise the company’s purchasing strategy.

Typical overview of an assignment

Step 1 – Collection and analysis of spend data

Based on spend data over a period of one year (or more), a statistical analysis (in the form of an Excel file or other) of all company spend (production, non-production, investments) is carried out.

Step 2 – Interviews with the principal actors involved in the purchasing process

Following the identification of the company’s purchasing process, it is important to carry out interviews with all those involved in the purchasing process from the identification of need (internal customer) up to the receipt and payment of goods and services supplied (warehouse, accounts payable, etc.) as well as key actors in the purchasing dept. An interview with the manager or the director of the company or his representative will enable the identification of the company’s global vision and the strategic axes.

Step 3 – Information processing and presentation of a preliminary report

Following the collection of data and information, a preliminary presentation of them will be made during a meeting organised within the company. During this meeting, the results will be presented as well as an interim Action Plan whose aim is to optimise the purchasing function and the purchasing process.

Step 4 – Presentation of the final report with recommendations for approval by the company

Preparation and presentation of a synthesis of the recommendations as well as an Action plan for approval by the company (the customer).

Further to the company’s approval, MLB Conseils can propose assistance for the implementing of the action plan as well as monthly or quarterly reviews....

Average duration of an assignment

According to the company’s size, the number of actors involved in the purchasing process as well as the total spend amount, the average duration of an assignment implies 5 to 10 days’ work within the company.