What Is Lean Procurement?

Lean procurement in supply chain management is defined as ‘’achieving more with less’’. This whole process is perceived differently by companies and procurement professionals. For example, some companies try to reduce their headcount. Others do it by reducing their inventory. Lean procurement is a systematic approach that defines what adds value within a manufacturing system. It reduces everything else that does not.

Let us learn the areas where lean can be applied in the procurement process.

Lean procurement is based upon lean production. The primary focus is on operational efficiency and customer satisfaction. It’s a cycle of continuous improvement that has the target to streamline processes within the supply chain. It eliminates non-value-added activities and waste; waste can be termed as inventory, time, or costs.

Improving the quality of goods or services while reducing or lowering costs, and reducing time and eliminating waste are a must for improving the procurement process and workflows. Enhancing the performance and responsiveness of suppliers is also crucial. Adopting procurement technologies can add huge value to businesses; it automates the process and reduces the chances of manual error, providing real-time visibility of the whole process.

The process can be streamlined by applying lean in procurement. Improved efficiencies and performances, reduced process waste, and the total cost reduction will help deliver maximum value to customers internally and externally.

Key Factors for Successful Lean Procurement

The following are the key factors for successful lean procurement:

Segregate

Split up the different functions linked with procurement –supply, procurement, tactical purchasing and strategic purchasing. Lean approaches particularly prove to be efficient for downstream activities. It can streamline third-party risks and reduce related exhaustion.

Focus

Stay focused on the resources that add more value. Adopting procurement technology tools will help automate the repetitive and manual tasks of buyers. It allows them to focus on the purchasing process, where the greatest value is created.

Differentiate

Depending upon the type of products involved, from essential and risky to commodities or productive investments, the sourcing process needs to be adjusted.

Motivate

Motivate all departments for taking up these changes with attractive incentive systems. They can also be encouraged by the execution of new, directed solutions.

The lean procurement approach adds strength to a company’s core strategy, whether it is based on costs, quality, or growth. Lean methods should be imbibed in the company’s DNA for continuous improvement and to stay competitive in diverse scenarios. Adhering to a set of principles will enable procurement to fully realize cost management objectives.