Page 393 - Design for Six Sigma for Service (Six SIGMA Operational Methods)

Design and Improvement of Service Processes—Process Management 353

Order Processing and Information Flow Lead Time
Information flow lead time means the time needed for a piece of information
to move from one point of the process to another point of the process. For
example, how long it will take from order request to purchasing order issuing.

Order Processing Accuracy
To ensure high accuracy for purchasing transactions, order processing
accuracy is usually expressed as number of errors per thousand transactions.

Inventory Turnover and Obsolete Material Inventory
Purchasing and supply also influences levels of inventory to a very great
extent. Inventory turnover is one measure of inventory performance;
obsolete material inventory is another.

These metrics interact with other factors in other areas such as manufacturing
to determine the operations or production effectiveness. In addition, the
material cost will depend on purchasing and supply’s ability to identify the
best suppliers and negotiate the most beneficial terms for the orders. Over
the long term, purchasing and supply’s efficiency and effectiveness will con-
tribute to every organization’s profitability, and hence to its business viability.

Purchasing and Supply Process Analysis
Typical activities in purchasing and supply include everything that is
required to work with suppliers. Purchasing and supply activities include
• Vendor identification
• Vendor evaluation and selection
• Contracting
• Request for quote and request for purchase development
• Ordering and purchase order development
• Supply verification
• Payment authorization
• Vendor relationship management and supplier auditing

These are some of the standard purchasing and supply activities; however,
each organization may need to customize exactly how these processes are
implemented. There are factors relating to the nature of the product, the
market that is served, and the type of suppliers, which will require an
application of process management to improve the process.

Information is the primary commodity that the purchasing and supply
process works with. The primary tool that is required for purchasing and
supply is a purchasing information system. This system should be integrated