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Procurement Process

Lean Event
Value Stream Analysis of
the Procurement Process
at UTPA

Procurement Process Charter


Problem Statement
The sequence of procurement events could be
further streamlined to reduce friction and
improve overall process cycle time
Approach
We will use value stream mapping as a method
to visually represent the process, identify value
added activities and improve or eliminate nonvalue added activities

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UTPA Procurement Improvement


Team

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The UTPA Procurement Process


Start: User Need

Stop: Closed
Order

Evaluate
Request

Approval

Receive
Part or
Service

Pay &
Close out
Order

Purchasing + Central Receiving


+ Accounts Payable
=

Procurement Services

General Takeaways
The procurement process is already good. This event allowed us to

see the overall process and determine ways to provide even better
service levels

In a lot of cases, errors created early in the process by the users ripples
downstream and causes delays in the process. We need to address the
upfront process and educate users to enter the right information, so we
significantly reduce effort processing errors.
This requires explicit consideration of the communication and handoffs in the
system. We saw the importance of eliminating handoffs and breaking down
organizational barriers

This process allows various members of different organizations to

communicate and work together to fix problems.


We think this type of process is valuable and could be used to improve
more processes at UTPA. We can do this ourselves, but it will require
University leadership commitment!

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Philosophy of a Value Stream

Seek perfection by identifying and eliminating all


activities that are non-Value Added.

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The 7 (or 9) Deadly Sins of Waste

8. Human Potential

(Spending Effort Doing


the Wrong Thing)

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9. Scatter

(Inability to focus on
completion of a task)

Value Steam Map Agenda


Day 1/2/3

Day 1/2
CI Training
SIPOC
Boundaries
Voice of the

Customer
Set up the Current
State map
Walk the value
stream and gather
facts

Complete Current

State
Floor Plan Spaghetti
Diagram
Info Exchange Circle
Diagram
Analyze the Current
State map
Time Value Analysis
Brainstorming
Cells and Pull Systems
Inventory strategy

Day 2/3
Dealing with

Monuments
Pacemaker Process
Future State Map
Rapid
Improvement Plan*
Improvement
Metrics
Out brief

The Transformation Plan, or Rapid Improvement Plan, is the most


important output of the VSA. It is the list of actions you will take to
remove waste and implement change.
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UTPA Procurement SIPOC Map


Current Procurement Process

Suppliers

Inputs

Vendors

Process

Outputs

Customers

Need

Goods

Users

Requesters

Request

Services

Departments

Govt /University

Funds

Satisfaction

Vendors

UT Systems

Specs/Reqs

Acceptance

State

Department

Proposals

Documentation

Insurance

Contracts

Compliance

Audits

Technology

Forms

Warranty

Dates and regulations

Visibility

Procurement Process

Process Steps
Stop: Closed

Start: User Need

Order

11

Evaluate
Request

Approval

Receive
Receive
Part
Part or
or
Service
Service
11

Close out
Order

Reconcile

UTPA Procurement
Current State Process

12

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Voice of the Customer


System Requirements
Low Cost
Minimum Time
Skilled Services
Low Hassle
Compliant to Regulations
Acceptance / Validation
Visibility and Communication

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Overall Process: Capable, Reliable, Agile, Predictable, and


Sustainable Procurement Process

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Analyzing the Current State


Collect Data on Current State
Process Efficiencies
Fill Out
Travel Voucher

Process
Step

Calculation
Time and
Yield
Estimates

Defect
Analysis

M
Simu onte Ca
rl
lat io
n Mo o
deli n
g

Yields

Gaps in Time between


Work and Wait Times
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Unclassified

Sources of Friction
Lack of Visibility
Lack of Flow
Choosing the Wrong Path / Routing Errors
Training / Insufficient Knowledge
Infrastructure Tools
Current purchasing experience is cumbersome
Organizational silos (MM & Accounts Payable)

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Themes in the Future State


Visibility

Understanding where the information is, who has it, and the status of the

process

Priority Understanding which tasks are more important than others


Trigger How to signal that work needs to be done, or that additional emphasis/priority
is needed to keep the procurement moving forward

Handoffs

Minimize the in box / out box waits from handing tasks back and forth to
different functional organizations. Maximize the amount of work that can be accomplished
at one time by each group.

Delegate

Trust others to accomplish their jobs, and hold them accountable for

success

Metrics

Measure the current process to establish how well it services the


stakeholders needs

Better Tools

Improve the ability to flow work, provide priority and visibility and
extract information out of the Oracle Database

Organizational Efficiency

Reorganize the group to be more efficient. House


complementary functions under the same organization

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Procurement Process Future


State

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Key Changes to the Procurement


Process
Improved Information for Users

Customer Service Center


Who to call for questions
How to fill out forms correctly
Visual work flow
Improved Website Information

Improved Flow

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Better information in = Fewer errors and overall less delays


Fewer handoffs = fewer inbox and outbox delays

Fewer Errors
More useful operator training
Better Software Tools to do the job
Fewer Organizational Boundaries AP and MM reporting
to same organization streamlines consistency of vision
and message
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Organizational Efficiency
Combined AP and MM groups
Break down organizational boundaries between MM
and AP

1.

Similar to UTD(?), a single procurement services


department with responsibility from need through delivery.

More manageable fewer organizational boundaries

More Communication Shared leadership and collaboration

Convene a UTPA procurement services task force to


look at restructuring procurement services
organization. Look at organization and tasking.

2.

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Consider the leadership skills required to accomplish this in


the current AP Manager supervisor search

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Modeled
Improvements

By pushing sequential
task into parallel and
minimizing delays due to
handoffs, significant
improvements are
possible in the modeled
performance of the
Future State

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Rapid Improvement Plan

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Seitz, Dec 2006

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Progress has already begun!

(Preliminary) Work Flow


Process for SPO
Completed LAST NIGHT!

Parking Lot Items


Other groups can Debit department accounts (i.e.

Telephone and Police Services) without department


cognizance or approval
Disencumber remaining funds of P.O.s to
completely close out order
Reconciliation process
Communications Forms should be in one place
(Oracle)

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Unclassified

General Takeaways
The procurement process is already good. This event allowed us to

see the overall process and determine ways to provide even better
service levels

In a lot of cases, errors created early in the process by the users ripples
downstream and causes delays in the process. We need to address the
upfront process and educate users to enter the right information, so we
significantly reduce effort processing errors.
This requires explicit consideration of the communication and handoffs in the
system. We saw the importance of eliminating handoffs and breaking down
organizational barriers

This process allows various members of different organizations to

communicate and work together to fix problems.


We think this type of process is valuable and could be used to improve
more processes at UTPA. We can do this ourselves, but it will require
University leadership commitment!

24

Unclassified

Its up to you
If you think that you can, or think that you
cant ...

youre right.
Henry Ford

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Unclassified