Implementing Structured Purchasing Processes

It is important to encourage "out of the box" ideas

Many of the best ideas for saving money have come out of sessions designed to challenge thinking and take individuals out of their comfort zone. If significant, double digit, savings are to be delivered a "paradigm shift" is often needed. However, ideas are just the start. Typically one-in-five ideas (20% confidence) will get through a structured gateway process. It is also important that there is a good portfolio of different types of idea - near certainties, quick wins, long term strategies and the odd "this is a crazy idea which might just work".

Projects often assume purchasing place orders

Even in recognised and respected project methodologies, the role of purchasing is just to "buy" and is a small subset of the overall process. This is particular true in technical fields where the engineer is actually the real "buyer". Hermetica sees the role of professional purchasing as being the commercial arm of any project - providing market insight, helping to develop suppliers, challenging scope and change, etc. throughout the life-cycle. It should be fully integrated into the project life-cycle (and may require uplifting of skills to deliver this).

Purchasing has a whole armoury to call on

Hermetica has roots firmly in engineering (both mechanical and IT). It became involved in purchasing because it believed, by putting in place the available tools, money can be saved..

A structured process for handling ideas (& filtering them)

Hermetica has worked with some big name consultancies who, during the relatively easy opportunity identification phase, claim benefits based on simple ideas. Hermetica prefers a more rigorous gateway process involving confidence levels.

Putting purchasing in the right context with projects

This model, originally developed for a major pharmaceutical producer, linked purchasing into the full project life-cycle. It put in processes to ensure purchasing were involved early enough to influence the cost - not just the price of a pre-selection.

Applying a range of techniques to ensure structure

Working alongside the senior VP for purchasing, Hermetica helped introduce new governance, improved sourcing methodologies, a "framework" based approach, and simple rules to to improve the ability for purchasing to influence spend.