May 27, 2010 Leave a comment
This post over at 21st Century Supply Chain got me to thinking a bit about the trade-offs between planning and expediting. 90% of the expediting we see at Calyptus could be eliminated if organizations put more time and effort into better planning and increased linkages between user departments and procurement. Expediting is expensive, planning isn’t.
Time and again we hear clients tell us that the procurement cycle time is just too long to meet their needs. In some cases this may be true, but in others it is just a reflection of poor planning on the part of the end user. If you know that the procurement cycle time for your organization is 30 days, then you need to take those 30 days into account when determining when to reorder.
It can get more complicated for one-off purchases that are not part of your regular requirements cycle. But rather than accept expediting as the rule in these cases, I would argue that better planning is even more important. As soon as you begin discussions that may ultimately result in the need to make a purchase, notify the procurement group, get them involved in the discussions. If procurement knows a likely purchase is coming, they can begin their own planning process and potentially cut down on the total cycle time for the procurement once the official requisition is submitted. This is part of planning just as much as entering data into your MRP system.
Organizations spend huge amounts of time, money, and resources on expediting requirements (as 21st Century points out, sometimes there is even a “Master Expediter”), time, money, and resources that could be better spent somewhere else. In an economic environment where more and more personnel are subject to furlough days and organizations are cutting back, eliminating expediting through better planning is an easy way to save.